Health Care Finance

Full Answer Section

     

• There is cash far in excess of that needed for daily operations in the cash drawer. This suggests that the cash is not being deposited in a timely manner, which increases the risk of theft and loss.
• There are dozens of IOUs in the cash drawer where Dr. Powers has taken cash for lunches. This suggests that Dr. Powers is using the cash drawer as a personal piggy bank, which is a violation of sound financial controls.

2. Develop a Plan for Improvement

Based on her assessment of the current situation, Teresa Ruiz should develop a plan for improving the cash handling process. The following are some specific steps that she can take:

• Implement a segregation of duties. This means that different people should be responsible for different aspects of the cash handling process, such as receiving payments, reconciling the cash drawer, and making deposits.
• Reconcile the cash drawer daily. This means comparing the amount of cash in the drawer to the amount of cash that should be in the drawer based on the daily records.
• Deposit cash receipts daily. This will help to reduce the amount of cash on hand and reduce the risk of theft and loss.
• Prohibit personal use of the cash drawer. This includes prohibiting Dr. Powers from taking cash from the drawer for lunches.

3. Communicate the Plan to Staff

Once Teresa Ruiz has developed a plan for improvement, she should communicate the plan to all staff members. She should explain the importance of following the new procedures and the consequences of failing to do so.

4. Train Staff on the New Procedures

Teresa Ruiz should provide training to all staff members on the new cash handling procedures. The training should cover the following topics:

• How to receive payments from patients
• How to record payments in the patient records system
• How to reconcile the cash drawer at the end of each day
• How to make deposits
• How to handle IOUs

5. Monitor the New Procedures

Teresa Ruiz should monitor the new cash handling procedures to ensure that they are being followed. She can do this by reviewing daily reconciliation reports and deposit slips. She should also conduct periodic spot checks of the cash drawer.

6. Make Adjustments as Needed

Teresa Ruiz should be prepared to make adjustments to the cash handling procedures as needed. For example, if she finds that the new procedures are too cumbersome or time-consuming, she may need to modify them slightly. Conclusion By taking the steps outlined above, Teresa Ruiz can establish reasonable financial controls over the cash handling process at Dr. Powers' practice. This will help to reduce the risk of theft and fraud, and improve the overall financial health of the practice. Additional Recommendations In addition to the steps outlined above, Teresa Ruiz may also want to consider the following recommendations:

• Implement a cash register system. This will provide a more accurate and efficient way to track cash transactions.
• Use a lockbox for deposits. This will help to ensure that deposits are made safely and securely.
• Require all employees to sign a confidentiality agreement. This will help to protect the privacy of patient financial information.
• Have the practice's financial statements audited on a regular basis.This will provide an independent review of the practice's financial controls and help to identify any areas of improvement.

 

Sample Solution

   

1. Assess the Current Situation

The first step for Teresa Ruiz is to assess the current situation and identify the areas of greatest risk. In this case, the following red flags are apparent:

• The medical assistant responsible for opening the mail and posting patient payments has been instructed to only place the cash and checks received into the cash drawer and that Dr. Powers' spouse would handle the cash from that point. This lack of segregation of duties creates a high risk of theft and misappropriation of funds.
• There are checks dated over the past 2 weeks in the cash drawer. This suggests that the cash drawer is not being reconciled daily, which increases the risk of errors and fraud.