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The worst-case scenario survival handbook: Veterinary edition
Hurricanes. Embezzlers. Lawsuits. If you put the proper safeguards in place, you can stay out of trouble.
WHAT WOULD YOU DO IF YOUR COMPUTER CRASHED tomorrow and you found out your backup was corrupted and couldn't be restored? Pull your hair out, right? What would your spouse do if you died? Would he or she know how to value your practice and sell it, or would it sit there until it became worthless? Do you know what to do if your practice burns to the ground?
This is the article that you don't want to read, but you must. We think these things will never happen to us. The fact is, they can and do, and we should be as prepared as possible. Taking lessons from that great teacher, experience, I've spoken to many veterinarians who have endured some severe hardships. My heart goes out to them and I hope their lessons help you.
How to outsmart employee thieves
Do you think your employees would never steal from you? I know of one practice that was embezzled out of $68,000 in one year. Another practice found out that one of its employees was selling flea control and heartworm medication on eBay—want to guess where she was getting the product?
There are many ways to embezzle from a practice, but usually the problem lies in not incorporating or maintaining controls that would prevent it from occurring. For example, when was the last time you updated your password protection on your computer? Do you have different levels of password protection? Have you given your password out to someone? Sometimes the password that accesses the practice's most sensitive information is common knowledge.
Here are some other common-sense procedures that need to be implemented and maintained:
- Justify the cash drawer at the end of the day.
- Print out and review itemized audit trails and transaction journals.
- Reconcile the end-of-day computer report with the bank deposit.
- Review credit card transaction journals and tie them into the computer end-of-day reports.
Most software companies will provide you with their recommended procedures if you ask them. On the disbursement side, have bank statements sent to the owner's home for review. Verify whom checks were written to and who signed them. Compare deposits to end-of-day computer reports. How effective is your inventory control? Do you conduct yearly inventories and update your computer system? I'd guess that most of you would say "no"—if someone walked out of your practice with a box of flea control medication or heartworm preventive, you wouldn't know it. There aren't that many products that employees would be interested in helping themselves to. So even if your inventory control isn't what it should be, you should still keep track of food, flea control, heartworm medication, and controlled drugs. You don't want your products sold anywhere but in your practice.
How to avoid a computer meltdown
You walk into your practice in the morning to discover that your computer was fried by a lightning strike. You quickly call your hardware vendor, get a new computer, and prepare to install the backup, only to find:
A. You don't have a backup.
B. It's six months old.
C. The backup system wasn't working and you didn't know it.
D. Some combination of the above.
When was the last time you tried to re-create your files from a backup file or sent the backup to your software company to verify that the system was working? There are now Internet companies that automatically back up your files online. You don't have to do anything but verify the backup once in awhile and pay a bill—which is inexpensive. That's what I call peace of mind. (For more, see "What's Backing You Up?" in the January 2008 issue.)
OK, on to another scary scenario. You just found out that one of your employees has been writing a blog (online electronic journal) and has been dishing the dirt for months about your practice and everything going on in it. The blog talks about you, your clients, and, of course, all the employees—revealing some very sensitive information. Worse yet, that information has now come to the attention of the general media. Or maybe you've found out another employee has been accessing porn or hate sites from your practice's computer.
On the less frightening but still disturbing side, employees may be spending a lot of their time writing personal e-mails, shopping online, or even job hunting while you're paying them to be working. How would you know? There are software programs available that limit where employees can go or inform you where they have gone. For instance, I have a program installed on my home computer that sends me a report every day about where my children have been on the Internet and how much time they've spent at those sites. My children are aware of this, but it's very empowering for me to receive those reports and know exactly what they've been up to.
Another question to ask yourself: Does every terminal in the practice need Internet access? You may find that Internet-related problems can be controlled by limiting the number of computer workstations with online access.
How to defend yourself in a lawsuit
Say an employee has accused you of sexual harassment, discrimination, or failure to pay overtime hours. How's your documentation? Most of you know how important your medical records would be if you were sued for malpractice. But do you also know how important your personnel records can be? I know of a dental-office employee who was fired and went to the state labor board, claiming she hadn't been paid for her overtime hours. The employer didn't have any payroll records or a record of her time, and the board found on the employee's behalf. The moral of this story is this: document, document, document!
Your employee manual should be current and should include all your policies and procedures. (See "Dust Off Your Employee Manual" in the June 2007 issue.) If you haven't already, review the manual with all employees and require them to sign the back page. Then maintain and follow those policies and procedures. Set up a file folder for every employee and keep all the proper paperwork in it. Job applications, reviews, wage changes, and disciplinary actions should all be documented and signed by the employee and employer. Associates, practice managers, and other contract employees should also have their contracts reviewed and updated as necessary, and all parties should sign these documents. I know this is a big pain in the you-know-what, but it's a lot more painful to go before a labor board or court of law without the necessary documentation.
How to survive natural disasters
The raging wildfires in California. Hurricane Katrina. Severe ice storms in the Midwest. Need I say more? I was attending CVC West in San Diego during the fires late last year, when an attendee came to me at a break and said she'd just gotten a reverse 911 phone call that her practice was being evacuated. It happened that fast. What would you do in that situation? Do you have a fire evacuation plan? Have you actually put the plan to the test and conducted a fire or evacuation drill? Have you discussed this with your healthcare team and obtained their input on the plan? Do you have a meeting spot picked out so you can make sure everyone is out of the building? What about your patients—how will you take care of them?
You also need to check out your insurance coverage. When was the last time you updated it and discussed its provisions with your insurance agent? Most insurance companies suggest that you videotape your hospital and all its possessions, storing this tape off site in a safe location. You should also review the various types of insurance coverage you own and make sure you're covered for fire, water, and wind damage.
How to avoid burdening your family members if you die
I receive several phone calls every year from grieving spouses whose husbands or wives have passed away. In this situation, sometimes other veterinarians will help out for a short time, but then reality sets in and the spouse realizes the practice must be sold. However, the practice has diminished in value because clients have gone elsewhere or assumed the practice is closed. I hate these calls because often it's too late to help.
If you're a solo veterinarian, talk to your spouse and tell him or her that upon your death, he or she should first call the mortuary and then call the practice's consultant, accountant, or financial advisor. Discuss with your family the fact that your practice can devalue quickly and that it's important to either keep it running or sell it as soon as possible.
See if your associates would purchase the practice in the event of your death, or at least would stay on board while your estate sells the practice. If you have a partner, this contingency should've been discussed and written into your buy-sell agreement. While we're on this cheery subject, when was the last time you reviewed your life and disability insurance?
Mark Opperman, CVPM
The best methods for avoiding disasters are prevention and preparation. The good news is that many of these safeguards are not difficult to set up, and some of them can be outsourced and delegated. Do yourself and your practice a favor--pick the one potential worst-case scenario that scares you the most and get to work resolving it today. You'll sleep better.
Veterinary Economics Hospital Management Editor Mark Opperman, CVPM, is owner of VMC Inc., a veterinary consulting firm in Evergreen, Colo. Send questions or comments to firstname.lastname@example.org