At a recent meeting, I was asked to discuss key performance indicators and their use to grow practice profitability and value. As discussed here many times, it is well-known that inventory is the second highest cost area in most veterinary practices. With that, inventory is one of the most important areas to be effectively managed, or it will impact your profitability and practice value negatively.
In my discussion, the topic of locking the pharmacy was discussed in detail. There was some push-back in the audience about how locking the pharmacy would create distrust with the clinic staff. I asked if they would leave stacks of $100 bills unlocked and scattered throughout the practice, and the answer was an obvious 'no'. When asked why inventory should be treated any differently, there seemed to be a discomfort with all of a sudden locking up what has been inappropriately left unlocked for quite some time.
The discussion went further, when I suggested that they should watch to see who the most 'trusted' and 'loyal' employees are who push back the most, who have probably taken few vacations, and are frequently offering to stay late to close up shop. When asked why, I explained that over the years, I've heard many practice owners describe this exact scenario. They were the ones who were resisting the lockup of their pharmacy for fear of sending a message of distrust to their staff. They each described one, very loyal employee, whom years later they discovered was embezzling and stealing from the practice.
This finding came at great cost to the owner in each of these examples. Not only was this 'loyal' employee stealing hundreds of thousands of dollars from the practice, they had been doing so in most cases for more than 20 years. Each owner said "They were like family." Perhaps an even bigger cost to the owner was the emotional toll they took from suffering this enormous mistrust from someone they had trusted for so long. It hurts.
At the end of this meeting, I was approached by a practice owner who said, "you described us exactly". "We refused to believe that this could ever happen to us, and years later we learned that our most 'trusted' employee had been stealing from us for more than 20 years. When you say that we should lock our pharmacies, and implement sound internal controls to prevent this embezzlement and theft from occurring, I am here to acknowledge that you are 100% correct."
Some studies have shown that more than 70% of veterinary practices have acknowledged theft or embezzlement in their practices. Don't be one of them.
Protect your practice from embezzlement today.
Comments
By Lisa Bright on 09/06/2016 07:19:
I believe this is a great idea and I have had inventory stolen from me repeatedly, but… exactly how do you “lock up” inventory? If it is all under lock and key, who has the key? We do a tremendous amount of product sales. We are a small, one doctor practice. Do I have the key? Do I stop an appointment and walk to the pharmacy, watch what is taken then lock it up and return to my appointment? Do I now have to be in my clinic for the 60 hours a week it is open? If you transfer the key between individuals then there is no security unless you run an inventory every time the key is turned over. You have to stop sales while you inventory. Are you going to count your entire inventory? Every pill? Are you going to just count your heartworm and flea medication because they are the most stolen? Are you going to make clients with money in their hands wait while you inventory? I have considered this option before but the logistics make my head hurt. Is there a fast and efficient way to accomplish this without a dedicated inventory person?