7 Factors That Affect Private Practice Income

Maintaining a successful therapy private practice takes a lot of time, effort, and skill. There are countless aspects of your business that require painstaking attention in order for things to run smoothly. It can be difficult to work so hard and still sometimes experience economic uncertainty, so it's important to analyze the causes of financial inconsistencies. Here are 7 factors that affect private practice income: 1) Client Retention Rates     

The ability to keep a client engaged in meaningful and helpful therapy is a learned skill that greatly impacts your private practice income. It doesn't get as much attention as generating new referrals, but in my experience it is equally important. While it would inappropriate to continue seeing an individual who no longer needs or desires therapy, keeping clients committed to the therapy process and attending sessions regularly not only helps them adequately work through their struggles and meet their goals, it also helps practitioners maintain their business. Conversely, clients who prematurely discontinue therapy put both themselves and their mental health professionals at a disadvantage.  

2) The Number of New Referrals   

Acquiring new clients is of course an excellent way to increase income, but it can be hard to predict the ebbs and flows of exactly when new individuals will seek your services, so it's not a guaranteed strategy. I have found that it's helpful to begin tracking the number of new referrals and then chart them so you can anticipate and prepare for business lulls in coming years.

3) Economic Climate        

The general state of the economy can greatly impact whether clients will go to sessions as often or are willing to pay out of pocket. For some individuals, therapy is considered a necessity, while others may be view it as a luxury. Your income as a practitioner is in part dependent on the current economy of your community and state.

4) Season/Time of Year     

The time of year can affect when current and/or potential clients ramp up their therapy time, as well as when they often take breaks. In my experience, the last two weeks of December is when everyone (clients and providers) take time off for the holidays. Just as with new referrals, tracking the dips in client numbers can help you save for those times when you will not be getting paid.  

5) Fee Collection

You may have a steady stream of clients, but your income can be significantly lowered if a number of them have outstanding financial balances. How much money do people owe you? Are you good at collecting your fees? If you work with insurance companies, are you able to get reimbursed in a timely manner? All of these play a major role in the financial stability of your private practice (click here for how to set high expectations and create firm financial policies).

6) Moving Office Location        

Relocation will almost certainly affect your private practice income. Depending on how far you move, it can take time to develop relationships, create a strong web presence, and acquire referral sources for therapy. Even if you are moving to another location in the same city, you may find that this may temporarily impact your client hours.

7) Leave of Absence/Taking a Vacation       

One of the biggest complaints I hear from private practitioners is that if they are sick and have to miss a few weeks, they are left without an income. Taking some time off from seeing clients means we are not getting paid; understandably, this can create financial concerns.  

These and other factors (some within your control, others not) can greatly affect how financially stable your practice will be. And as one of my goals is to help therapists experience income stability, I again strongly encourage you to pursue multiple income streams as a way of advancing professionally, serving your community, and also providing for your own needs.

Click here to access my webinar about how to develop multiple income streams.

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Multiple Income Streams Soothe Therapist's Financial Anxiety (part 2)

Developing multiple income streams is crucial to maintaining income stability in private practice. "Having different income sources allows me to be a bit less stressed when my main funding source, private practice, takes a dip," shares Jill Kristal, President of Transitional Learning Curves. Reducing financial anxiety is not the only benefit of developing additional income avenues. Multiple income streams allow therapists to fully express their many talents, gifts, and passions.

Writing and speaking provides former actor Frank J. Sileo, PhD with creative fulfillment as well. "I used to be an actor in a past life so getting up in front of others has helped get that need met, " Sileo adds. Additionally, multiple income streams allow therapists to make a difference on a larger scale, reaching far beyond the therapy office. "I had a desire to have more impact on troubled eaters than one-to-one sessions or even workshops and talks could provide," shares therapist and healthy eating expert Karen R. Koenig, LCSW, M.Ed.

If you missed "Multiple Income Streams (part 1)" click here

Here are more potential income streams for you to consider as you seek a stable income and fulfilling career.

Teach classes

Therapist Mary Pender Greene, LCSW-R has created paid opportunities through giving workshops, webinars, retreats, seminars, training sessions, keynotes and public speaking engagements that have grown out of her passion.

These streams naturally grew out of my private practice and at the core, are centered on the struggles of adult human interaction… such as improving communication, expressing feelings, reflection, solving problems and refreshing relationships.

Michael Heitt, PsyD of Heitt Clinical & Corporate Consulting, LLC adds to his income through teaching masters students at Johns Hopkins, doctoral students at Loyola University and facilitating an online licensure prep course.

Provide professional training

After several students urged Dr. Carol Clark to teach a sex therapy program, she launched STTI, the Sex Therapy Training Institute, and then expanded it to Addictions Therapy Training Institute, and eventually published a book.

As I taught and counseled, several concepts and interventions really solidified and I realized that these themes were incorporated in everything I did with students and clients, so I spent seven years putting it all into my book, Addict America: The Lost Connection.

Therapist and faith leader The Rev. Christopher L. Smith offers supervision/consultation with other mental health practitioners and other faith group leaders as an additional income stream.

Become a paid TV contributor

After a year of contributing on a local women's lifestyle TV show, Studio 5, I was offered a position as a paid contributor. One of my personal and professional passions is using the media to educate and inspire, so not only has this opportunity created an additional income stream, it's allowed me to doing something I love to do anyway and get paid.

Provide supervision to students and interns

Have you considered leveraging your time by hiring students and interns to provide clinical services through your practice? I started hiring therapists under supervision about 5 years ago, and graduate students a few years ago. Its been a great way to provide clinical services to additional clients without having to increase my direct care hours. My Wasatch Family Therapy colleague and play therapist Clair Mellenthin LCSW, RPT loves supervising therapists. She says that in addition to providing income, "One of the unexpected joys of providing supervision is forming relationships with new therapists and helping them to develop confidence and competence."

Public speaking

From community events, corporate settings to professional presentations, public speaking and presenting is another common income stream that you may want to consider. Dr. John Duffy speaks regularly on parenting issues, and also to corporations on team-building and relationship skills.

Do any of these income streams jump out at you?

What income streams are you developing to add stability to your practice?

Multiple Income Streams Soothe Therapist's Financial Anxiety (part 1)

Relying solely on direct clinical hours may leave private practitioners financially vulnerable to income instability. Since client hours in private practice can vary greatly depending on the time of year, state of the economy, number of new referrals, and several other factors, developing multiple income streams can help you to create a more stable income. "By having the other income streams in place, I have been able to be less susceptible to the ebbs and flows that occur in private practice during difficult economic times," says The Rev. Christopher L. Smith, LCAC, LMHC, LMFT. In addition to providing income stability, diversifying your professional activities with multiple income streams allows therapists to explore a variety of interests, to express creativity, and to get paid for their passions.

In addition to clinical hours, I own and serve as clinical director of a private therapy clinic where I oversee and supervise 10 therapists, write for PsychCentral and other publications, work as a relationship and emotional health media contributor, do public speaking, provide consultation to therapists building a private practice, and I'm currently writing my first book.  Curious about what other private practitioners are doing to add to income stability I reached out to several successful colleagues to see what additional income streams they've developed. Here's a sampling of what other therapists are doing to diversify their professional life and achieve greater income stability.

Write and publish a book

Many therapists have taken their clinical expertise and turned it into a book. For example, Frank J. Sileo, PhD has  written three children's books, including Bug Bites and Campfires: A Story for Kids about Homesickness (Health Press, 2009). Clinical Psychologist Dr. John Duffy took his passion for parenting and authored a book The Available Parent: Radical Optimism For Raising Teens and Tweens (Viva Editions, 2011). What areas of expertise could you write about?

Write for print publications

Supplementing clinical work, Terrie Browning, LPC, CFC, DCC writes for a column "My Healthy Mind" for a local magazine My Metro You. Not only does it provide additional revenue but she says it's also personally fulfilling. Of writing for publications she says, "Writing allows me to share knowledge on topics that are a concern for many people and offers a way for me to network myself."  Therapist Karen R. Koenig, LCSW, M.Ed. has successfully written for professional publications including Social Work Focus, Social Work Today, Addiction Treatment Forum, and The Newsletter for the Society for Family Therapy and Research, adding an additional income stream.

Create a therapeutic product

Have you considered creating and selling a product based on your clinical expertise? Stephanie Ann Adams, M.A., LPC of Beginnings Counseling & Consulting, created a hybrid counseling/video series for premarital counseling through Twogether in Texas. To help families deal with the stress of relocation Jill Kristal, President of Transitional Learning Curves, developed a game and book series called 'Our Move'.

Develop a professional online network

The internet allows for many options for therapists to create passive income through membership sites. In addition to writing a local magazine column and providing clinical work, Browning, with the help of her adult children, developed a professional wellness center online called Experts Now. This online center offers wellness experts an avenue to offer services and sell products for a commission creating additional income for Browning.

Contract as a consultant

Consider asking yourself, "Which companies or organizations may want to tap into your areas of expertise?" Therapist Dr. Mario Kirk, LPC, Director, A Blessed Child, LLC, performs psychological testing for local attorneys and schools. Women's reproductive health specialist Pec Indman EdD, MFT consults and trains for county health programs and for the US Federal government.

Are you developing multiple streams of income to supplement your direct care hours? Please share your ideas in a comment below.

Watch for multiple income streams part 2 later this week!