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Embezzlement exert David Harris and software entrepreneur Manuel Barroso have teamed up to help you predict embezzlement in real time.
Overcoming a troubled adolescence, David Harris has become the world’s leading expert on dental office embezzlement. He is the CEO of Prosperident, the world’s largest dental embezzlement investigation firm. Prosperident’s team of specialized investigators is consulted on hundreds of frauds annually committed against both general dentists and dental specialists. David has had the distinct pleasure of hearing cell doors slam shut on many embezzlers. David is a licensed private investigator with a graduate degree in applied mathematics and a CPA. David is “dual certified” in fraud investigation – he possesses both the Certified Fraud Examiner designation from the Association of Certified Fraud Examiners and the Certified in Financial Forensics designation from the American Institute of CPAs. David is a Mensa member and belongs to several organizations for dental consultants and speakers. David has been interviewed on the subject of embezzlement by many leading dental publications and organizations. He is also a prolific writer and authors or co-authors a dozen or more articles annually that appear in major dental publications. David has lectured at several US and Canadian universities in the faculties of business, law and dentistry. David has spoken at regional, national and international dental conferences. He is a highly entertaining and engaging speaker who draws on a vast amount of experience in his field.
Howard: We're at the Greater New York Meeting in Manhattan, having a phenomenal show. You guys have all seen David Harris before, he's a Canadian who has always been the number one expert in embezzlement. We did a podcast on that. In fact, your firm started out just specializing in embezzlement.
David: That's what we do.
Howard: I was talking to you, I was saying hi, and you said there's a new product, a new software that ... You're Manuel Barroso?
Howard: You're from Miami?
Howard: You started a software that helps predict embezzlement?
Howard: I think most dentists are wondering about that. Tell us ... Here, you take this because it's your product. Tell them how it works.
Mauel: David and I met actually last year. We own Pedo offices in Miami. We've been thinking about embezzlement for a while.
Howard: Are you a pedodontist?
Mauel: My wife is a pedodontist in Miami, a high-volume practice. David actually had to be in town on a [pedison 00:01:10], was it a meeting or something?
David: I was speaking for a [inaudible 00:01:15].
Mauel: Correct, so a [Pedison 00:01:18]workshop or meeting. I happened to be there, and as a software entrepreneur, I got an idea. I said, "Why don't we actually get David to expand his reach in a new distribution channel called the internet." That's a little bit about how the idea started. I went to David and said, "Hey David, I'm Manuel. I'm a software entrepreneur. I build tech companies for a living, and I would like to actually get the intellectual property that you guys have built for the last 20 years, and make it affordable for every doctor out there."
Howard: This is your software?
Mauel: It's his idea.
David: It's our software. We've supplied the algorithms for detection of embezzlement and Manuel has built, with his software development team, has built the ability to extract.
Howard: When you told this idea to your pediatric dentist wife, did she give you a time out?
Mauel: No actually-
Howard: Did she put her hand over your mouth-
Mauel: No, not at all. All the contrary. She was the one most interested in having it. Again, as a high-volume Pedo practice seeing between 40-60 patients a day, we were starting to feel the pain in terms of the amount of transactions, financial transaction, in the practice and the management of that data. Every software company here in the US really didn't actually help us. Not on their understanding of the data, that was important, but on the most important factor, that's not losing the money and making sure that the revenue was controlled in terms of ultimately getting to the bank.
My wife, as any doctor here in the US actually, that probably had many nights without sleep, thinking about embezzlement, thinking about staff members that they trust, and then ultimately that leads to embezzlement. My wife came and said, "This is a great idea, make it happen, and us my first office actually as a test pilot for the product."
David and I met back in November, by March we were live with an initial version, and then we started to pivot the product towards what we call now financial automation. We are like the smoke alarm and David is what we call the firetruck or the fire company. When the fire is there, shield doctor will call David and say, "Take a look at this, call the doctor, and definitely it's a case you want to handle."
We're similar in terms of what we call the credit score monitoring services. For 20 bucks a month, we don't cost 20, but, similar analogy would be, for 20 bucks a month you get a credit score company such as TransUnion, Experian, and those guys actually monitor your credit score. For 100 bucks a month, we not only monitor you from embezzlement, but we also automate several tests that actually are important for the practice.
For example, just the practice management software by itself doesn't help us prevent embezzlement. We needed to actually reconcile the information with the banks and merchant, or the credit card companies. We developed technology to real time reconcile whatever that's in the bank to the practice management software.
David: When Manuel first approached me, there's other software in the market that looks for embezzlement, but it does it in a really simplistic way. What it does is it looks inside the practice management software for certain types of transactions. Shieldr does that as well, but I said to Manuel initially, "We need to go beyond that. This is 2015, and we can access other types of information."
The brilliant innovation that Manuel and his team came up with was the ability to, for example, read information from the clients bank. When somebody's practice management software says that a certain amount was received, let's say, by credit card, to reconcile it, and to confirm with the bank that that money was actually received. No we've going beyond simply looking inside the practice management software into taking a much bigger look and being able to access other sources of information, and kind of comparing one against the other.
Mauel: Correct, so a lot of the innovation and evolution of the product has been in conversations that we're having with other doctors. Because the platform is very easy to actually install, it takes about 2 minutes and it's available on the web or an iPhone app, we starting to have meaningful conversation with other doctors in terms of what other need they might have that fit under the financial automation and embezzlement protection umbrella. The software keeps evolving towards fitting, satisfying those needs that the doctors have in order to maximize their profits but at the way, protect the practice against embezzlement by automating several financial tasks that are there.
For example, doctor payment distributions are huge in this industry, especially if you have several practices. It can actually become a pretty important and complex task to actually execute on a monthly basis. That's one other area we're looking into. HR is another area we're looking into. Anything that creates an unbiased source for the doctor to trust on financial transactions, that ultimately protects them against embezzlement, something that we're going to be interested in actually doing, and are currently actually trying-
Howard: How much does this cost? What's the bottom line?
David: It's peanuts. To give it some context, and you and I have had this conversation before, there's about a 60% chance that a dentist will be embezzled at some point in their career. Last time we looked at our numbers, the average amount that a thief stole before they got caught was $100,000. That doesn't count what I would call remediation cost. In other words, when you're embezzled, what the person stole from you is only the beginning. There are more costs. Against that, for $99 a month, you can monitor embezzlement and the other kinds of automation that this will do, will save anybody easily many times the cost in labor.
Howard: It's $99 a month, you would download this onto your server, and that would be Microsoft?
David: Yeah, there's a little-
Howard: Is there an Apple version?
David: No, right now there isn't. The software that's currently supported is Dentrix Eaglesoft and Open Dental, but Manuel's bright guys are now building bridges to other software. I think the Carestream products are going to be next. Softdent practice works. Mac practice, which is probably the biggest Macintosh-based software for general dentists will be on the list eventually. It's just a case of priority.
Howard: It's $99 a month, but you also said you can download it on an app?
David: The interface comes on your iPhone. Just to clarify, there are kind of three parts to it. There's a data transfer part that sits on the doctor's server. That sends data to the central processing, which is cloud based. That's where the embezzlement engine functions. This is the part that's looking for embezzlement. Then, data is sent, virtually real time, to somebody's iPhone. The beauty of this for the doctor is, they have right in there hand their practice management information.
Mauel: Related to embezzlement and related to revenue leakage.
David: Just to manage their practice. There's a dashboard function that's been built for the iPhone. There's an Apple based interface, or there a web-based interface. If somebody's using a Samsung phone, they can get it by the web interface instead. Either one will give you the information about what's going on in your practice, how much receivables are unpaid, what amount of receivables is overdue, write-offs, adjustments, things like that.
Howard: This is going to be the smoke detector and then you'll come and do the fire fighting.
David: I'm the fire department.
Howard: Explain what's going to set it off and what would he actually come in and do.
Mauel: David has developed technology, we call it paper technology for the last 20 years, to detect embezzlement. It does take a ton of time to do that. It used to be non-scalable, because it was very human intense in terms of labor cost. We actually got that technology, paper technology, and put that into algorithms, into software.
What happens is, it works actually silently on your background, and then we start populating the dashboard with different type of alerts. They go from red alerts, green alerts, and blue alerts. I'm sorry, red, blue, and green. Whenever the red alert start to be more bigger and bigger and bigger, definitely there's where we tell the doctor, "You want to have a call with David." Again, embezzlement, by only analyzing the practice management software data is not relevant. You need to have financial information from the banks, credit cards, merchants, and so forth. That's where the key component went into.
Those three actually type of alerts will let us know, similar to our credit score, the propensity of the practice to be embezzlement. If it's close to 600 ... Again, you have a really bad credit score at 600. If your close to 600 on our score, we call it a shield doctor score, then we'll pass that all on to David. We'll tell the doctor, "Listen, it's important that you ... You have a conversation with Prosperident for that purpose."
Howard: You guys are in the thousands of dentists right now. Thousands of dentists are driving to work, you're making them sick because their thinking, "My office manager's Shirley, she's my daughter's grandmother. She baptized my grandmother, I don't think she would do it, but would she?" They're all alone, they're driving to work, they're on a treadmill, what are some red flags, give us some cases, how does your office manager who is your daughter's grandmother on her baptism, how does she actually steal money from doc?
David: Howard, I have always maintained the principle that we will not, in a public form, discuss specific methodologies. If any-
Howard: You don't want to teach anybody how.
David: I have this nightmare about turning embezzlers into better thieves.
Howard: Tammy, will you go for a walk right now?
David: I'm not going to give a do it yourself kit. I will say a couple of things. First of all there's no such thing as a safe practice. We have seen embezzlers who fit that profile you mentioned about a relative. We've seen spouses embezzle from doctors, we've seen in group practices, doctors stealing for each other. There is no amount of trust and there is no amount of religion that somebody has that will stop them from stealing from you.
Howard: You've seen, devoutly religious people do it, atheists do it, young, old. Is there any profile that a thief looks like?
David: No, and here the things about that; everybody walks around with this mental picture of what, to them, a criminal looks like. They will never hire anybody who is remotely close to that profile. Everybody you hire has already been through your implicit screening process. The only problem is that that process is flawed. It isn't perfect. It only weeds out certain people. The comments we get when somebody finds out who their embezzler was, that's the last person I would think would steal. In a lot of cases, these people are actually, believe it or not, Sunday school teachers. There is no safe practice. There is no particular profile where we can say, "Okay, somebody fits that demographic, therefore, they must be an embezzler." Embezzlers can be young, they can be old, they can be of any educational background.
Howard: You told me they are never a short, fat, bald guy. You told me that.
David: But I was talking about me, not you. Yes that's right. Short, fat, bald guys are the one safe group.
Howard: The safest group ever.
David: That's us. However, it could be anybody. How they steal? Well, the first thing I can say about that, they can steal cash, they can steal checks, they can steal credit card payments. Any form of wealth transfer can be monetized. We see a never ending variety of clever ways to do it. About once a month, I get a kind of almost [juvulant 00:13:43] phone call from one of my investigators, and they found some new methodology. For them, this is an exciting as it must've been for the guy who discovered root canals.
Howard: David, how sure are you if someone went to .... It's shielddr.com? If one of my homies went to www.shield ... S-H-I-E-L-D-R.com.? Is it sheildr.com?
Mauel: Shield doctor.
Howard: Shield doctor. If someone went to S-H-I-E-L-D-R.com, signed up, gave you 100 bucks a month, what percent of the time do you think the smoke alarm would go off if they were stealing from you to where you would get the smoke alarm, fire sensor, and you'd be looking into it?
David: Once all the algorithms are fully implemented, and we're still in a testing phase, one of the things that means is that right now people can use shield doctor without paying, for the next few months anyway.
Howard: I didn't know that.
David: We don't tell everybody that but your [towny 00:14:48] should have a little head start on the rest of the world.
Mauel: We just launched it actually back in 88 and Washington.
Howard: Right now it's free.
Mauel: We want to get as much doctors in our pilot program as possible. Group practices, DSOs, MSOs. For multi-practices by the way, it's really interesting because we generate a multi-practice dashboard. The doctor owner or the management team can see all the practices under one single dashboard, and then go to the specifics per practice, as well.
Returning to David's comment, it's free for a while, until we're sure that the features that we want to have are there. It's an ongoing conversation with ... The features, not the algorithms. The algorithms are there because of prosperident. All the features that the doctors see as valuable, that's something that's still in development and based on the pilot program that we've launched, it helps us actually get to the next level. It's $99 a month, but for now it's actually free.
David: To answer you're question, there are some types of embezzlement that shield doctor will never find. For example, if somebody is using your credit card and buying their personal stuff with it in the office, shield doctor will not find that. This is contemplated for future release, but at the moment, if somebody's abusing payroll, shield doctor will not find that. It's limited to a subset of fraud. The subset is that which takes place in the practice management software. If embezzlement is happening there, I'm fairly confident that shieldr is going to ring some alarm bells. If it's happening outside the practice management software, for now, that outside the reach.
Howard: What are some other things you could do like we hear things that cancelled bank checks should be sent to the doctor's house, not the office. The person making the deposit should not be checking the mail. Besides shield doctor, are there any low hanging fruit things you can do?
David: There is but it's going to be in a little different direction than that. What I think a lot of dentists do is they underestimate the embezzler's who work for them. They believe that they can outsmart the embezzler by locking doors. In order words, I see a lot of doctors for example who take the bank deposit to the bank personally. The reason they do that is they're fearful that if they allow a staff member to make the bank deposit, that money will disappear. Don't misunderstand me, I will never suggest that making the bank deposit personally is a bad idea.
If I work for you, and if I've already decided that stealing is the appropriate thing for me to do, and I can't do it that way, I'm not just going to give up. I will look for another way and I'll probably find it. There are a lot of ways to steal from you. We've cataloged about 300 and we're not done. If you frustrate my first choice, and my second choice, and my third choice for how to steal from you, that's probably not going to turn me into an honest person. It's going to leave me as somebody who wants to steal from you and just needs to figure out how. I will never discourage the implementation of internal controls, but at the same time, I don't think any of them have the power to stop embezzlement.
Howard: Right on. Anything else you want to say?
Mauel: It's very exciting to have conversations with doctors about what they think about embezzlement, what they think about the future of financial automation. We're just here trying to serve our mission, which is help them protect their money, which seems to be something that's a very daunting task until we came onboard. We're just trying to actually get the word out there. It's just been an amazing ride in the last 12 months, 16 months developing this relationship and the software. We hope people sign up.
Howard: I just want you to go home and tell your lovely wife that I think the hardest thing in dentistry would be to be a pediatric dentist. To deal with screaming kids all day. When I refer my patients to pediatric dentists, I just thank God that someone like your wife is willing to. I'd rather be embezzled from them all day long than be a pediatric dentist. What a saint. Does she like it?
Mauel: She's really good at it. She loves it, yeah.
Howard: Does she just come home and drink straight vodka until she passes out?
Mauel: Actually, you'd be surprised. She's a very savvy business person as well. Super savvy.
Howard: It doesn't stress her out?
Mauel: No, and many of the ideas that have come from the software came directly from the operation of her dental office. If you go, for example, to the site, how it works, it works very similarly to a morning huddle. It puts things into perspective, how a doctor is going to use the service. Everything from the morning huddle, having meaningful conversation with the staff. Instead of going through the tons and tons and tons of reports that she used to have at Eaglesoft, now she pulls shield doctor directly, and she's able to have a conversation about adjustments, about cash payments, about credit card reconciliations directly with the staff as opposed to just pulling out report, after report, after report, after report.
Howard: You ought to call your wife and maybe have her call my office manager, Robert, and maybe we should be one of your beta sites.
Mauel: That will be lovely.
Howard: We'll be one of your beta sites and then someday maybe we'll write a column about it or talk about it on dental town.
Mauel: That will be great, fantastic, yeah.
Howard: I will love it. She's in Miami?
Mauel: She's in Miami, yeah.
Howard: Yeah, and tell her to get on dental town and talk about it.
Mauel: Oh, definitely. I will definitely tell her.
Howard: There is 50 forums in dental town, endo ... Pediatric dentistry is about the 5th most active forum on dental town and some of the biggest names in pediatric dentistry like Josh Grant, they're on there all the time. She might really like the pediatric dentistry forums, and that might be a good place for her to tell us about what her and her husband are doing. They all already know you. You're the legend in embezzlement. Thank you gentlemen for all you do and thanks for letting me snag you from your busy booth at the Greater New York and come to my booth to talk to my homies.
David: Great to talk to you. Thanks folks.
Howard: All right guys, take care.