Utah Family Practice Fraud

This story is from my brother, John Updike, who has an MBA, was a former Hospital CEO and is now a Physician Recruiter & Consultant.

More than a decade ago John recruited a board-certified family practitioner MD working in a Central Utah city. Dr. Jim spent four days a week in the emergency room and had a small, one-office, one-other-employee, medical practice on the side, seeing patients three times a week.

In a face-to-face meeting in Dr Jim’s office, the conversation went something like this.

Dr Jim: “John, I am not making money seeing patients, which is one of the reasons I contacted you and want to move. All I want to do is practice medicine.”

John: “Is your assistant honest?”

Dr Jim: “Yes.”

John: “If you don’t mind, let’s do some back-of-the envelope calculations.”

“How many patients are you seeing a day?”

Dr. Jim: “About ten or fifteen each day, three days a week.”

John: Can we estimate that each patient represents $50 revenue?”

Dr. Jim: “Yes.”

John: “Then you should see revenues between $8K and $10K each month before expenses.”

“What are your monthly expenses?”

Dr Jim: “About $2K a month utilities and rent and about $1K a month goes to my office manager.”

John: “Is your billing okay and up-to-date?”

Dr Jim: “Yes, I am sure we get the bills out.”

“But I am not realizing any money coming in from seeing patients. In fact some months I have to put in a little money from my emergency room job, maybe a thousand dollars or so.”

John: “You should be clearing about $5K to $6k per month, after office expenses from seeing patients in your office.”

Within a few weeks of this conversation, Dr Jim accepted a job in Washington and moved away from Utah. But he was slow to get his medical license in Washington. Why? Dr Jim discovered there was an investigation of his medical practice going on in Utah that interfered with his ability to get a medical license in Washington. He then hired an attorney to protect his interests, and he finally procured his license.

It turns out that the investigation in Utah was looking into the fact that there were multiple prescriptions traced back to his office for a controlled narcotic commonly used on the street. Then Dr Jim discovered that his supposedly honest office manager had used his signature stamp to fill out prescriptions that she then sold to other people, as he had never prescribed this drug.

The bottom line is that in addition to embezzling between $90K and $100K from Dr Jim’s medical practice, she also sold illegal prescriptions for money.

You may be interested to know whether the fraudster was ever prosecuted? No, as Dr Jim did not want to spend any more time or money or travel out of state, because he wanted to stay in Washington to practice medicine.

The moral of this true story is that in order to practice medicine, one needs to be business-wise and fraud-aware too.