A med spa owner suspects her best hire of refund fraud. A forensic CFO walks through the signs an employee is embezzling and how to look into it without accusing anyone.
Dear Dangerously in Love with Finance,
Eight months ago I hired an operations manager for my two medical spas. Her references were excellent, she had run a larger practice before mine, and from her first week she made my life easier.
She took over the payments, the refunds, the deposits, and the daily close at both locations. Revenue looked steady, the front desk hummed, and for the first time in years I stopped worrying about the money side of the business.
A month ago something small nagged at me. Our daily deposits had been coming in lighter than a full week should produce, and I blamed the slow winter.
Then a patient came in upset last week. She paid in full for a ten-session IV package, and reception told her she had none left. When I went looking, her package showed refunded and closed, but the refund never reached her card. She had never asked for one. The money had already left our account, and I cannot yet tell where it went.
Now the light deposits and the missing refund line up in my head, and I cannot un-see it. The person who made everything run smoothly is the same person who counts the cash, sends the refunds, and records both.
How do I look into this without accusing someone who may have done nothing wrong?
— Second-Guessing My Best Hire
Dear Second-Guessing,
Trust your stomach on this one. A refund that left your account and never reached the patient is what owners hire me to chase.
The part that should worry you sits above the refund. Your refunds, your deposits, and your voids all run through one person across both locations. This arrangement is called no segregation of duties, and it is the one condition almost every refund fraud case I work has in common. When she moves the money and records it, the only thing stopping her is whether she decides not to.
So before you move, move in a way she cannot see. Do not confront her, lock her out, or let her know you went looking. The moment she senses it, the internal records start to change, and you lose the clean version of what happened. While you look, read the deposits and refunds yourself each morning from the bank side, so anything new shows up the next day instead of months from now, as you gather the record.
Catching an employee who steals starts in the records, so pull every refund, void, adjustment, and deposit from the last eight months yourself. Match each refund to the patient who should have gotten it, and each deposit to what that day actually rang up. The signs an employee is embezzling show up as a pattern, not in a single transaction. Look for refunds routed to the same card, deposits lighter than a full schedule supports, and adjustments that come in at round numbers. One light deposit is a slow week, and one refund is an error. The two together are where I find the money.
Then bring in a forensic accountant who knows medical practice billing before you accuse anyone. If she took the money, you want evidence that survives a dispute, not a confrontation that warns her first. If she did not, you want to know that before you lose a strong hire over a processing error. Clean references are what a careful thief shows you, so the records outrank how much you like her.
Lots of Love, Coffee and Chocolate,
Dangerously in Love with Finance and the HBoF Family
| CFE + Fractional CFO | Healthy Bodies of Finance Helping health and wellness practices generating over one million dollars annually build the financial infrastructure that keeps what they earned.
Frequently-Asked Questions
How do you catch an employee stealing money?
Diagnostic reviews have separate pricing and are necessary before we begin. Before we begin, you know exactly what you are paying for and what support you will receive. We keep pricing clear so you can plan with confidence.
What is no segregation of duties?
Segregation of duties means the person who collects the money is not the person who refunds it or records it. When one role does all three, a second set of eyes never reviews the work, and a theft can run for months. It is the one condition almost every embezzlement case shares.
When does a medical practice need a forensic accountant?
When the practice passes seven figures, runs more than one location, or hands all of its money handling to a single person. At that scale, a yearly tax return is not a review of your controls. A forensic-trained fractional CFO runs the assessment that shows where the money can leak and who can move it unseen.
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