Here’s an uncomfortable number. The average dental theft case costs a practice $109,000, stolen over roughly two years before anyone notices (Prosperident, ongoing). That’s not a rogue edge case. Industry surveys consistently show 60% of dental practices will face internal theft at some point in their operating life (Dental Claims Support, 2024).
The person doing it isn’t the new hire you’re still watching. It’s usually someone you trust completely. A long-tenured front office coordinator. Your office manager of eight years. The billing specialist who knows your PMS better than you do. Almost half of employees caught stealing had worked in the practice for four or more years before discovery (With Wisdom, 2025).
This guide is for practice owners and office managers who want more than a list of warning signs. You’ll get a full theft-methods breakdown, a 12-item red flags checklist, a monthly self-audit protocol with specific PMS reports to pull, and a step-by-step guide to what you do the day you discover fraud. See also our guide to dental practice SOPs and improving practice profitability.
TL;DR
In short: Dental theft is common, slow-moving, and expensive. The average practice loses $109K over two years. The best defenses are personal financial oversight, separation of duties, and a monthly audit routine you actually do.
- An estimated 60% of dental practices will experience internal theft (Dental Claims Support, 2024). Most dentists assume it won’t happen to them.
- Prosperident reports the average loss is about $109,000, and it goes undetected for nearly two years.
- Theft typically drains 3-7% of monthly practice revenue (Trojan Professional Services, 2024).
- The single most effective prevention measure is mandatory separation of duties, not software alone.
- If you discover theft, do not confront the employee first. Secure evidence, then contact a dental fraud investigator.
How Common Is Dental Fraud, Really?
The numbers are sobering. A 2020 survey cited by Prosperident found that 48% of dentists reported being hit by fraud at least once, up from 35% in 2008. The trend is moving in the wrong direction. Dr. Gordon Christensen, a widely respected figure in dental education, has estimated the lifetime risk at 90% for a practicing dentist (Oral Health Group, 2023).
Why are dental practices so exposed? Three structural reasons drive the risk.
First, dentists spend most of their working day in a treatment room. Financial oversight takes a back seat to clinical production. By the time a month-end report shows something unusual, the fraud may have been running for six months.
Second, most general practices run with one or two people handling all financial tasks. That concentration of access creates opportunity. One person can control posting, adjustments, deposits, and refunds all at once, with nobody cross-checking.
Third, the trust factor is real and is exploited. Dentists build long-term working relationships. The coordinator who has been with you for seven years is the last person you’d question. That comfort is exactly what makes them effective at hiding the crime.
From our practice consulting experience: In reviewing practice financials across multiple offices over seven years, the pattern is consistent. Theft doesn’t look like missing money. It looks like production being slightly off, adjustments that seem reasonable, and a bank balance that’s just a little lower than it should be. Nobody notices until it’s been running long enough to total six figures.
How Does Dental Theft Actually Work?
Dental theft drains 3-7% of monthly revenue in a typical case (Trojan Professional Services, 2024). In a practice billing $100,000 per month, that means $75,000 or more disappears annually. Here are the seven most common methods your team could be using right now.
Scheme 1: Adjustment and Write-Off Fraud
A patient pays their balance in cash. Instead of posting the payment, the employee writes off the balance as a courtesy adjustment or insurance write-off. The account shows a zero balance. The cash goes into a pocket. This scheme works because adjustments in most PMS systems require no secondary approval and leave almost no audit trail unless you’re actively reviewing adjustment reports.
What makes this particularly hard to catch is that adjustments are a normal part of dental billing. Every practice has legitimate write-offs. The fraudulent ones hide inside the volume of the real ones.
Scheme 2: Insurance Check Interception
The practice receives an insurance reimbursement check by mail. The employee intercepts it, endorses it to a personal account, or alters the payee name before deposit. Practices that still accept paper checks are the most exposed. Electronic fund transfers address this scheme almost entirely, because there’s no physical check to intercept.
Scheme 3: Payroll Tampering
This scheme runs in several forms. Ghost employees receive wages for hours never worked. Real employees pad their timesheets by rounding up hours or clocking in early and out late. In some cases, an employee with payroll access gives themselves unauthorized raises or adds personal expense reimbursements to their paycheck.
Scheme 4: Vendor Kickbacks and Supply Fraud
An employee who manages supply ordering steers purchases to a vendor who provides personal rebates, gift cards, or direct payments in return. Alternatively, they create fictitious vendor invoices, pay them through the practice, and collect the funds through a personal account or an LLC they own. Supply costs climb slowly enough that the owner attributes the increase to inflation rather than stealing.
Scheme 5: Day-Sheet and Production Report Tampering
The daily production report is the foundational document for catching fraud. If an employee controls both patient payments and day-sheet reporting, they can alter production figures to match the deposit. This hides the fact that cash was skimmed before the deposit was prepared. That’s why the person who prepares the day sheet should never be the same person who makes the bank deposit.
Scheme 6: Patient Refund Fraud
A patient overpays their account. Instead of returning the funds to the patient, the employee processes a refund to a personal credit card, a prepaid card, or a bank account they control. Some employees generate fictitious overpayments on patient accounts specifically to trigger refunds. Modern PMS systems log refund transactions, but only if someone reviews those logs regularly.
Scheme 7: Credit Card Skimming and Terminal Fraud
In this scheme, an employee processes a patient’s credit card on a personal reader alongside the legitimate terminal. The patient’s card is charged twice, but only one transaction hits the practice’s merchant account. Alternatively, the employee refunds completed transactions back to their own card after processing. Both methods require the employee to have physical access to the payment terminal and control over the matching process.
According to Trojan Professional Services, dental theft typically drains 3-7% of a practice’s monthly revenue. In a practice billing $100,000 per month, that translates to $75,000 or more stolen annually, often across multiple overlapping schemes running at the same time.
What Are the 12 Red Flags That Should Trigger a Probe?
Red flags don’t prove theft. But each one on this list has appeared in confirmed fraud cases. One flag calls for monitoring. Three or more flags call for a forensic probe.
Behavioral red flags:
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Never takes vacation. The most cited behavioral warning sign in dental fraud cases. An employee who controls the books can’t afford to let someone else see them, even for a week.
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Lifestyle inconsistent with salary. New cars, frequent vacations, expensive clothing, and home renovations on a front office salary deserve a second look. This isn’t about judging how people spend their money. It’s about noticing a mismatch.
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Insists on being the only one handling certain tasks. Territorial behavior around financial functions, refusing to cross-train colleagues, resisting backup coverage for their role. This is a structural red flag, not just a personality trait.
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Resists software updates or process changes. Fraud schemes depend on established routines. New software or workflow changes threaten the method. Employees with an unusual amount of resistance to system upgrades sometimes have a reason to keep things as they are.
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Unusual after-hours PMS access. Reviewing audit logs will show you login times. Legitimate after-hours access happens occasionally. Regular late-night or weekend sessions on billing and financial screens, without a clear reason, deserve a review.
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First to arrive, last to leave. Consistent early arrival and late departure can reflect dedication. It can also reflect time needed to adjust records before and after the business day, when no one else is watching.
Financial red flags:
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Declining collections despite stable production. If your production numbers hold steady but the money hitting your bank account is drifting down, the gap is going somewhere. This is one of the clearest financial signals of active theft.
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Unexplained write-offs or adjustments spiking. Pull your monthly adjustment report and compare it against the prior six months. A sudden increase in courtesy adjustments, insurance write-offs, or “billing errors” without an operational explanation is a serious flag.
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Bank deposits that don’t match daily production reports. The daily deposit total should line up with the day sheet within a reasonable variance. Persistent gaps, even small ones, accumulate into large discrepancies over time.
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Patients calling about balances they paid. When patients dispute a balance your system shows as unpaid, and they have a receipt or bank record of payment, someone posted that payment incorrectly. Isolated incidents happen. A pattern means something is wrong.
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Missing or altered Explanation of Benefits records. EOBs are the paper trail for insurance payments. Gaps in your EOB filing, or EOBs that don’t match deposit entries, indicate payment interception.
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Unexplained supply cost increases. If your supply spend climbs without a corresponding increase in patient volume or a supplier price change, dig into the invoices. Vendor kickback schemes and fictitious supply invoices both surface here.
The Monthly Fraud Prevention Audit Checklist
Most practices do no formal fraud review at all. An annual CPA review is better than nothing, but it won’t catch an employee stealing $5,000 per month across twelve months. The audit schedule below can be completed by the practice owner personally. Alternatively, assign it to a trusted manager who has no access to the accounts being reviewed.
Weekly Tasks
- Reconcile daily deposits against the PMS day sheet. Pull the deposit confirmation from your bank and compare it to the day sheet total. Do this yourself, not via a report prepared by the person who made the deposit. The comparison should take five minutes.
- Spot-check one or two payment postings. Select two to three patient payments from the day at random. Pull the patient account in your PMS and verify the posted payment matches what was collected at the front desk.
- Review the prior day’s adjustment entries. In Dentrix, run the Adjustment Report. In Eaglesoft, pull the Transaction Detail Report filtered to adjustments. In Open Dental, use the Audit Trail for adjustment entries. Look for write-offs over $50 without a corresponding insurance EOB or documented reason.
Monthly Tasks
- Review all adjustments over your threshold. Set a threshold (typically $100-$200) and review every adjustment above it for the prior month. Verify each has a legitimate supporting record.
- Spot-check ten patient accounts. Select ten accounts at random. Verify that the current balance matches the expected balance based on treatment completed, insurance payments received, and patient payments posted.
- Verify payroll against scheduled hours. Cross-reference your payroll register against the time clock records for all hourly employees. Flag discrepancies over 15 minutes per pay period for any single employee.
- Review all refunds processed. Every refund in the prior month should have a corresponding patient request and a clear overpayment on the account. Review who approved each refund and where the funds were sent.
- Review new vendor accounts or payees. Any new vendor added to your billing or supply chain in the prior month warrants a quick check that the vendor is legitimate and was approved by you.
Quarterly Tasks
- Full bank reconciliation against production. Compare three months of bank statements against three months of production and collections reports. This high-level check will surface discrepancies that monthly reviews might miss.
- Review all PMS user access levels. Pull the user permission list from your PMS. Verify that access levels match each employee’s current role. Remove access for any former employees right away.
- Audit vendor pricing against contracts. Pull three months of supply invoices and compare unit pricing to your negotiated rates. Price drift without a formal supplier notification is worth examining.
- Review insurance ERA deposits against posted payments. Your clearinghouse or insurance carrier can provide a remittance summary. Compare total ERAs received in the quarter against what was posted in the PMS. The two numbers should be very close.
Annual Tasks
- Independent financial review by a dental-specific CPA or forensic accountant. The cost is $2,000 to $5,000. Against an average theft loss of $109,000, that’s the highest-ROI audit spend a dental practice can make. Use a firm with dental experience, not your personal tax preparer.
- Full PMS audit log review. Most practice management systems retain user activity logs for 12-24 months. Have an outside reviewer pull and examine the full activity log for your top-access users. Look for late-night logins, mass adjustments, bulk account changes, and any activity following patient dismissals.
- Background check refresh for all financial-role employees. Several states permit periodic re-checking of employees in roles with financial access. Consult your employment attorney on local requirements and implement where permitted.
From our practice consulting experience: The single most common finding when a practice finally pulls these reports after years of not looking is the adjustment report. Write-offs accumulate invisibly. A coordinator processing two to three fraudulent adjustments per week for three years leaves a trail, but only if someone compares cumulative adjustment totals against prior-year benchmarks. Most owners have never run that comparison.
What Should You Do When You Discover Theft?
Discovering that someone you trust has been stealing from you is a genuine shock. The natural reaction is to confront the person right away. Do not do that. Your first actions in the 24 hours after discovery determine how much money you recover and whether a prosecution is possible.
Follow this sequence carefully.
Step 1: Secure Evidence Before Taking Any Action
Before you say anything to anyone inside the office, preserve the evidence. Log into your PMS and export audit trails, adjustment reports, and transaction history. Screenshot everything. Download bank statements and deposit records for the period in question. Save copies to a drive stored outside the office and outside the control of the suspected employee.
Do not allow the suspected employee to have unsupervised computer access from the moment you discover the fraud. Every additional hour they have system access is a chance to delete records.
Step 2: Contact a Dental Fraud Investigation Firm
Two firms dominate this space: Prosperident and DrillDown Solution. Both specialize exclusively in dental practice fraud. A forensic probe costs $5,000 to $15,000 depending on practice size and scheme complexity. That fee is almost always less than 10% of the amount stolen.
Do not hire a general forensic accountant. Dental fraud involves PMS-specific data that most general accountants don’t know. Examiners must understand how Dentrix, Eaglesoft, and Open Dental log each transaction. A generalist will miss scheme types that a dental specialist spots in the first hour.
The investigator will quantify the total loss with records sufficient for law enforcement and insurance claims. That paperwork is the foundation of everything that follows.
Step 3: Retain an Employment Attorney
Your business attorney handles contracts. Your real estate attorney handles your lease. Neither of them is the right call here. You need an employment attorney. Find one who handles wrongful termination defense and employer-side fraud matters in your state.
The attorney will guide you on the termination itself, particularly the records required to terminate for cause without creating a retaliation claim. They will also advise on whether a signed restitution agreement at termination is advisable or whether it complicates the criminal case.
Step 4: File a Police Report
Many practice owners skip this step because they want to avoid publicity or simply want the person gone. Filing a police report serves two critical functions. First, it creates an official record that many insurance claims require before a fidelity bond or crime coverage payout can be processed. Second, a criminal record prevents the same employee from taking a position at another practice and repeating the crime.
You are not required to push for prosecution. Filing the report and cooperating with the probe is sufficient. Let the prosecutor make charging decisions.
Step 5: Notify Your Insurance Carrier
Contact your insurance broker within the reporting window specified in your policy. Employee dishonesty bonds and crime coverage policies have strict reporting deadlines, often 30-90 days from discovery. Missing the window can void the claim entirely.
You will need the police report number, the forensic records, and a written summary of the scheme and dollar amount. Your forensic investigator will often help you prepare the insurance claim narrative.
Step 6: Terminate the Employee With Records in Hand
Termination should occur only after you have secured evidence, retained counsel, filed the police report, and have the attorney’s guidance. Terminate in person with a witness present. Collect all keys, access cards, and login credentials right away. Disable all system and building access before, or at the same time as, the termination meeting.
Do not accept a resignation in lieu of termination without legal advice. A resignation may affect unemployment claims and potentially the insurance claim, depending on your policy terms.
The Emotional Reality
You will feel betrayed. You may feel embarrassed, wondering what you missed and whether your team knew. Most people who steal are well-liked. They’re often the most helpful, reliable-seeming person in the office. That’s not a coincidence. It’s part of why they were in a position to steal.
Your remaining team will look to you for how to process this. Be honest about the fact that a breach occurred. You don’t owe them details, but you do owe them clarity that the situation is resolved, the practice is secure, and their jobs are not at risk.
According to With Wisdom, nearly half of dental thieves had been on staff for four or more years before being caught. This means the highest-risk employees in your practice are often your longest-tenured, most-trusted staff members. Structured oversight systems matter precisely because trust alone is not a control.
Can Insurance Cover Dental Theft Losses?
Yes, but coverage is limited, claim requirements are strict, and realistic recovery expectations matter. Most dental practices recover 10-25% of their total stolen amount, factoring in insurance payouts, tax treatment, and civil litigation outcomes.
Employee Dishonesty Bonds and Crime Insurance
Two coverage types apply to dental fraud. An employee dishonesty bond (also called a fidelity bond) pays out when a named or covered employee is found to have stolen. Coverage limits typically range from $25,000 to $250,000 depending on the policy. A crime insurance rider on a business owner’s policy provides similar coverage and often broader terms.
Review your current policy limits against the $109,000 average loss figure. If your limit is $25,000, you’re sharply underinsured. Most dental practice insurance brokers recommend a minimum of $100,000 in employee dishonesty coverage.
Filing a claim requires:
– A police report or documented probe showing theft occurred
– Forensic records with a dollar figure
– Evidence of loss that meets the policy’s definition of “employee theft”
– Timely filing within the reporting window (typically 30-90 days from discovery)
Tax Treatment of Theft Losses
Under IRS Section 165, theft losses are deductible in the year the loss is discovered, not necessarily the year the theft occurred. The deductible amount is reduced by any insurance recovery you receive. For a $109,000 loss with a $25,000 insurance payout, your deductible loss is $84,000 minus any salvage value from civil judgment.
Work with a CPA who has experience with Section 165 claims. The rules around what qualifies, what year to claim, and how to record the loss are specific enough that a mistake here costs money you’ve already lost once.
Civil Litigation: When Is It Worth Pursuing?
Civil suits for restitution are theoretically available but practically limited. Most employees who steal don’t have $109,000 in recoverable assets. If they did, they probably wouldn’t have stolen.
The threshold analysis looks like this. If the total loss exceeds $50,000 and the employee has verifiable assets (home equity, retirement accounts, business interests), a civil suit may recover meaningful funds over time via wage garnishment or lien. If the employee has no significant assets, litigation costs often exceed recovery.
Your attorney will advise on this after the forensic probe quantifies the loss and any background asset check identifies recoverable property.
How Do You Build a Theft-Resistant Practice?
Prevention is the right goal, though “theft-proof” is an overstatement. A determined employee with full system access and no oversight can steal from any practice. What you’re building is a structure where theft is difficult, quickly visible, and far more likely to be caught.
Mandatory Separation of Duties
This is the single most effective structural control. In practical terms, it means:
- The person who posts payments should not be the person who makes the bank deposit
- The person who matches up the bank statement should not be the person who processes refunds
- Payroll should be processed by someone other than the person who approves timesheets
- The person who orders supplies should not be the person who approves vendor payments
Even in a two-person front office, partial separation is possible. The dentist or practice owner can personally review daily deposits against the day sheet. That five-minute task eliminates the largest single fraud opportunity.
Dual Signature Requirements
Require two signatures or two-factor approval for any check or EFT above a set threshold (typically $500-$1,000). This prevents an employee with accounts payable access from creating and paying fictitious vendor invoices without approval.
Direct Deposit for All Insurance Payments
If you still receive paper insurance checks, switch to ERA (electronic remittance advice) and EFT for all participating carriers today. Paper check interception is one of the oldest dental fraud schemes. EFT doesn’t eliminate theft, but it eliminates one of the highest-volume stealing methods.
Quarterly PMS User Access Reviews
Every quarter, pull the full user list from your PMS and review each person’s access level against their current role. Terminated employees sometimes retain PMS access for months. Employees who changed roles often retain permissions from a previous position. Both represent unnecessary risk.
Background Checks and Reference Verification for Financial Roles
Run a criminal background check and credit check for every hire in a role with financial access. Verify employment history directly, not just via the resume. Call prior supervisors rather than the general HR number. Ask specifically whether you would rehire the person and whether they handled money in their role.
Some states limit what credit information employers can consider. Check with your employment attorney before implementing credit screening.
Open-Book Accountability Culture
Employees who know you review financial reports personally are less likely to attempt theft. This isn’t about creating a surveillance culture. It’s about making clear that you’re engaged in the financial side of the practice. A simple statement in onboarding, “I review the daily deposit, adjustment reports, and payroll personally every month,” changes the calculus for a would-be thief.
Technology Safeguards
Modern PMS systems have audit trails that log every transaction change. Enable them and review them. Several third-party tools now integrate with Dentrix, Eaglesoft, and Open Dental to provide automated anomaly detection. They flag unusual adjustment patterns or after-hours logins without requiring manual report review. These tools typically cost $100-$300 per month. They pay for themselves if they catch even one month of a $5,000-per-month theft scheme.
From our practice consulting experience: In practices that implement a monthly owner-reviewed deposit reconciliation plus a quarterly adjustment audit, the detected-theft cycle is typically compressed from the industry-average 24 months to under six months. Earlier detection sharply reduces total loss. The same structural controls that reduce loss also function as deterrents. Most fraud investigators report that stealing stops when employees believe someone is watching the numbers.
Frequently Asked Questions About Dental Fraud
Disclosure: The following FAQ is for informational purposes only and does not constitute legal, accounting, or forensic investigation advice. Consult a licensed attorney and a skilled dental forensic investigator for guidance specific to your situation.
How common is embezzlement in dental practices?
Very common, and trending upward. A Prosperident-cited ADA survey found 48% of dentists report experiencing fraud, up from 35% in 2008. The ADA-cited lifetime estimate is 60%, and Dr. Gordon Christensen places the career-long risk at 90% (Oral Health Group, 2023). Most practice owners who haven’t experienced it yet are statistically likely to.
How much does dental theft typically cost a practice?
The average loss is about $109,000, stolen over roughly two years before detection (Prosperident, ongoing). In a practice billing $100,000 per month, active theft drains 3-7% of revenue monthly, meaning annual losses of $36,000 to $84,000 are common (Trojan Professional Services, 2024). Multi-scheme cases involving both cash and insurance fraud often exceed this average sharply.
What are the most reliable warning signs of embezzlement in a dental office?
The most reliable combination of flags is: an employee who never takes vacation, declining collections while production holds steady, and an adjustment report showing sharply higher write-offs than prior-year periods. No single flag is proof. Three or more concurrent flags, especially behavioral and financial flags appearing together, warrant a skilled forensic review rather than an internal probe you conduct yourself.
How do I know which employees are highest risk?
Counterintuitively, With Wisdom’s research shows nearly half of those caught stealing had worked in the practice for four or more years before discovery. Tenure, trust, and financial access are the three risk factors that matter most. The employee with the longest tenure, the highest-level PMS access, and the least oversight is statistically the highest-risk person in your practice. Structured controls protect both of you.
What should I do first if I suspect embezzlement?
Do not confront the employee or mention your suspicions to anyone in the office. Right away, secure copies of audit logs, adjustment reports, deposit records, and bank statements. Then contact a dental-specific fraud investigation firm. Prosperident and DrillDown Solution both handle initial consultations. A preliminary assessment typically costs $500-$2,000 and will tell you whether the evidence justifies a full forensic probe. Confronting the employee before evidence is secured often results in deleted records and a compromised case.
Does dental practice insurance cover theft losses?
Employee dishonesty bonds and crime insurance riders do cover the crime, but coverage limits are often lower than the average loss. Standard limits run $25,000 to $250,000 per occurrence. Check your current policy against the $109,000 average and request a limit increase if you’re underinsured. Claims require a police report, forensic records, and timely filing (usually within 30-90 days of discovery). The IRS also allows theft loss deductions under Section 165, which partially offsets what insurance doesn’t cover.
How Do You Protect a Practice That’s Already Lean on Staff?
Solo and small practices often cite limited staffing as a reason they can’t implement separation of duties. The argument has some validity. A two-person front office makes it genuinely hard to keep payment posting and deposit preparation fully separate.
But “hard” isn’t the same as “impossible.” Even partial separation provides meaningful protection. The practice owner reviewing the deposit personally once a day is a low-cost, high-impact control. A monthly call with your dental CPA to review the adjustment report costs under an hour and two hundred dollars. Those two controls together address the highest-probability schemes.
The economic reality is clear. Spending $2,000 to $5,000 annually on independent financial review is cheap insurance against a $109,000 average loss. Spending fifteen minutes per day on deposit reconciliation is among the most valuable investments a practice owner can make in financial health. See our full analysis of dental practice overhead benchmarks for context on where financial review fits into total practice management costs.
Financial Oversight Is Clinical-Grade Responsibility
You wouldn’t skip infection control protocols because you trust your team to be healthy. Financial oversight follows the same logic. The controls you put in place aren’t an accusation against your staff. They’re a skilled standard of care for your business.
The data is consistent. Internal theft affects the majority of practices over a career. The average loss is $109,000. Detection takes two years. The thief is almost always someone you trusted.
The three most actionable steps you can take this week:
- Review your last 90 days of adjustment reports personally.
- Compare three months of bank deposits against your PMS day sheets.
- Call your insurance broker and verify your employee dishonesty coverage limit.
Those three actions take under two hours. They will tell you more about your financial exposure than anything else you could do this month. If you want to go further, build the monthly audit checklist from the protocol above into your dental practice SOPs and make it a standing agenda item.
Financial health and clinical excellence aren’t separate goals. They’re both part of running a practice worth protecting. For a deeper look at the numbers, see our guide to improving dental practice profitability.
