Physiatry Practice Management Resources

Checking credit history. A credit report may not be necessary if you're hiring a switchboard operator. And, in fact, under antidiscrimination laws, you could get in trouble if there's no good business reason for the credit check. But if you're hiring a bookkeeper or someone who'll be handling cash or checks, there's obviously a reason. After all, if the applicant has gotten into trouble with her own finances, or worse, is deeply in debt, she may not be the best choice to be handling your practice's finances.

A typical credit report will list outstanding loans, tax liens, judgments, bankruptcies, and child-support obligations. Credit reporting agencies typically charge $15 to $25 for a single report, but prices vary depending on the number of reports requested, and whether the employer or the requesting entity has a contract with the credit agency.

Before ordering a credit report, be aware of the legal restrictions set forth in the federal Fair Credit Reporting Act. That law doesn't apply if you gather that information on your own. But it does if you request it from a commercial credit bureau.

In fact, that law—and some state laws—require such agencies to get the applicant's written permission before conducting such a search. Under the FCRA, if you decide not to hire the applicant based on a negative credit report, you must give her a copy of the report, plus a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act," available from the Federal Trade Commission (www.ftc.gov/os/statutes/2summary.htm).

Asking about a criminal record. Some county, state, and federal courts now maintain websites on which you can find out if an applicant has been involved in a criminal case. But many states place legal restrictions on checking criminal records. You can generally ask about felony convictions, but not arrests, since they're often dropped for lack of evidence. In some states, convictions for misdemeanors or minor or youthful offenses may also be off-limits.

What you do with such information is up to you. While a criminal record may not necessarily be grounds for rejecting the applicant, it's certainly not a recommendation, particularly if the job involves handling practice finances.

One note of caution: Because employers are often unwilling to press charges against someone they've fired for embezzlement, a criminal check may not produce evidence of such theft. And while local county courts can provide criminal records, that won't help if a conviction occurred some years ago when the applicant lived elsewhere. That's why the application form should ask for prior addresses.

Finally, be sure to find out if the applicant has been excluded from Medicare or Medicaid. If she has, she can't legally be involved in billing for patients in those programs. You can check that information online at www.oig.hhs.gov/fraud/exclusions.html.

Bonding. One way to protect your practice against employee theft is to buy fidelity bonds —through your insurance broker—covering those with access to cash or responsibility for practice finances. If a covered employee does steal from your practice, the insurance company will repay your verifiable losses up to the amount of the bond. Karen Zupko, a practice management consultant in Chicago, recommends telling bookkeeping applicants that they'll have to apply for a fidelity bond. As she explains, "That's a disincentive to someone with a checkered past."

Documenting the background check. To protect yourself against negligent hiring claims, document every step in your background check, with the name, title, and date for each reference you contact. Include notes on what you're told by phone, and keep copies of any documents or written reports you receive. If a former supervisor refuses to tell you anything, record that also.

Keep this documentation in the employee's personnel file in case a problem arises after she's hired. Sensitive material such as credit reports, criminal records, or medical records should be stored in a separate confidential file. Even if you don't hire the applicant, keep those records for at least a year in case she files a discrimination suit.