4 Steps to Breaking Up with Managed Care

Breaking Up is Hard to Do

We've talked a lot recently about the benefits of switching from using a managed care system to a private pay model. It benefits your clients, it benefits you, and overall it just benefits your practice (click here for a post detailing the math and financial advantage of a self-pay model)! But how exactly do you do it? It's quite a change, so it can be difficult to know where to start. Here are 4 strategies to help you make the transition:

 1) Resign in Waves       

Instead of trying to go cold turkey by leaving your panels at once, pick one or two to begin. I suggest choosing the companies that cause you the most headaches, give you unreasonable hoops to jump through, are infamous for not paying on time, and have the lowest reimbursement rates (most therapists I've consulted have no problem identifying which ones these are). Make the transition by weaning off of managed care panels one at a time.

While you are doing this, you need to be ramping up your REST "marketing" process. This will help you attract full-fee clients. Do them simultaneously to secure future business for your practice.

2) Review Your Contract   

Carefully and meticulously read the details of your contract with the insurance companies. What is the length of time required before resignation? You don't want to get hit with fees or have your transition timeline thrown off because you didn't quite understand your contractual obligations, so do your research and give yourself plenty of time.

3) Write An Official Resignation Letter    

After you've determined the timetable you have, sit down and write your letter to officially resign from the insurance panel(s) you've chosen. Be clear, concise, and professional. No need to go into detail about your reasons for ending your business with a certain company. Firmly express your decision to resign. Also, it's a good idea to follow up to ensure that your letter was received.  

4) Prepare Your Clients

And finally, perhaps the most important step to take in making the transition to a private pay model is to let your clients know. Give them plenty of notice (three months minimum), and present them with a considerate and professional letter that clearly states the upcoming changes. Also, offer them options. If they are close to completing treatment, work with them to finish their sessions before you resign from that particular panel. If your clients desire to stay with you and will be transitioning to paying out of pocket, begin to decrease the length or frequency of their sessions if needs be. It's amazing how some people can turn on the motivation when they have to! You also can educate your clients and encourage them to explore out-of-network benefits. Or you might prepare to transfer clients to a trusted colleague.

When I made the change, my clients were exceptionally understanding. I believe part of this was that I informed them in a confident and considerate way, and I was open to feedback and helping clients process their emotions about it. I was also able to use this experience as a way to model self-care and making difficult decisions. Overall, this was remarkably successful, and the majority of my clients stayed with me!

Click here for access to the full webinar of all the ins and outs of Breaking Up With Managed Care.

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8 Steps to Launching or Relaunching a Psychotherapy Practice

In this guest post, Miranda Palmer LMFT and Kelly Higdon share eight ways to thrive in the current private practice climate. The process of building a successful private practice has changed considerably over the last twenty years. Most therapists we speak with who have been in practice for a few decades started by getting their credentials from an insurance companies. Reimbursement rates were relatively high for the cost of living from the 80s into the early 90s. Things flowed. Maybe they had a listing in the phone book, but back then there was no need for websites, Facebook pages, or Twitter accounts!

Fast forward to now: the financial picture for therapists in private practice has drastically changed, as we are in a time of low or stagnate reimbursement rates combined with an increase in cost of doing business and living.

The old model is simply that, old. It doesn’t work for today, and thus we find experienced therapists with a full practice that isn’t profitable enough to prepare for retirement, and new therapists often feel lost when they ask their mentors for direction and get answers that don’t resonate with the current economy.

We want to simplify the steps required for launching and successfully running a private practice in 2014. Whether you are starting out fresh, have moved to a new city, or need to make some significant changes in your business foundation, these steps will help you get things on track!

1) Develop a clear vision of your life

We tell our clients to do this regularly. We help them reassess and ask them to be accountable for the choices they make that lead them toward or away from that vision becoming a reality. This is your road map. When you begin with a plan for your life, your business can be formed to support that plan. So before you come up with an awesome group therapy curriculum or some other great idea, write down a super clear vision for your work AND home life.

2) Take that vision and break it down into pieces

Having a simple vision, with no basis in reality, can be difficult. How much money do you need to make that vision come to life? What would it take for you to go home at that time each day? Are you preparing for quarterly taxes? Are you realistic about how many clients you can see regularly while avoiding burnout? Are you leaving time for networking and marketing your practice? Leaving time for going to trainings? For being sick? Are you leaving enough time to return client phone calls and be available for crisis situations?

This is where people can get stuck in magical math. If I see 20 clients at $100/hr, that is $2,000 per week for 50 weeks – that’s six figures! YET there are expenses, taxes, real life stuff that happens. Be honest with your capabilities and your needs. Also, be open to the idea of reaching your goals in different ways. You might discover that face-to-face sessions is only a part of the plan. Now go crunch numbers, write down the schedule, and look at the specific pieces that are needed to fully form your vision.

3) Develop a business plan based on your vision and those realistic pieces

Every therapist in private practice needs a written business plan. He/she must know exactly how the fee was developed, how many sliding or pro bono slots there are, how much money is put toward retirement, etc. There is also a bit of research to be done here. Surprised? Sure, people need mental health services, but who and where are they, and what are the holes in the market in your area? Have a clear idea of who you want serve and how you plan to serve them. Write it down; be accountable to yourself.

4) Develop a sustainable plan to let your community know who you are

Notice I didn’t say develop a sustainable plan to let people know your business exists. People decide to work with therapists they know, like, and trust. Being authentic in how you present your private practice to the public doesn’t have to mean complete self-disclosure. Maintain professional boundaries, but don’t be afraid to let your personality shine!

The beauty of our current world is that people can advocate for themselves by choosing a provider who they believe is prepared to help them heal. If a potential client doesn’t get a chance to hear your “voice” and how you practice, how can he/she determine if you are a good fit? How hard is it for you to choose a therapist for yourself? Can you imagine how much more difficult it would be without an advanced degree and a deep knowledge of psychological theory?  Make sure to clearly communicate what unique things you can offer as a therapist.

Be aware of your insecurities and how you demonstrate those to the world. Now is the time to believe in yourself and honestly take stock in what you bring to the table. It is not prideful to share your craft with others. It is necessary in order to build relationships and instill hope in members of your community.

5) Develop and maintain clear business boundaries

Your business is your service to your clients. You may think that the things you are doing on a daily basis are serving your clients, but you need to be honest with yourself. If your business is struggling, it will impact your clinical work. What would happen if your clients talked to one another? Do more assertive clients pay a different fee than passive clients? Do clients with poor money management skills pay less than a client who has better budgeting skills?

Stick to your plan. Go back, and if you start to waver, remember #1 – why you are doing this in the first place? What is the life you are seeking to create? Who are the clients you are seeking to transform? When you break those boundaries, you are holding yourself back from the dreams you have for yourself and from helping your community in a profound way.

6) Streamline your business processes

The best way to do great clinical work is to free yourself up to do great clinical work. Whether this means transitioning to a paperless office to reduce late cancellations or no shows and decrease unpaid balances, or outsourcing your insurance billing so you never have to sit on hold with insurance companies again, find a way to make the business process work efficiently. If you feel like you can’t afford to streamline your process, you need to look at return on investment and/or whether you have set a fee that fully integrates business and overhead costs.

7) Streamline your marketing process

It takes more energy to start from a stopped position. The start of launching or re-launching your practice takes a LOT of energy, gusto, and enthusiasm. Know that it won’t always be as hard as it is in the beginning. Watch what works for growing your practice most effortlessly, and make a way to continue the bare minimum even when you are full with clients to keep things flowing. Maybe that is blogging once a month, speaking a few times a year, or monthly lunch dates with new contacts in your area. If you don’t have time to do some minimal tasks to keep things moving, you need to reassess if you are being honest with yourself about the time it takes to run a business.

Your marketing must align with who you are and your core values. If you don’t want to write a blog, don’t. If you don’t want to speak, don’t. BUT, do something and analyze if it works. If it isn’t working, then tweak it until it works, or let it go and move on to other options. Just because your neighbor gets referrals from Psychology Today doesn’t mean that is what YOU should do. You must only do what is best for your business, not necessarily what is best for others.

8) Celebrate your accomplishments!

Be good to yourself; kind to yourself. There is a lot to learn when starting a private practice. Know that everyone has a learning curve, and seek out a supportive community. However, no matter how awesome your community is, you will be struggling to stay energized and enjoy private practice if you are being unkind to you. Start from the inside out! And don’t be afraid to celebrate all the great accomplishments you’ve made in your private practice.

Miranda Palmer is a Licensed Marriage Family Therapists who is passionate about teaching and empowering other clinical counselors to successfully run a private practice. Visit her site www.zynnyme.com to learn more. 

Kelly Higdon wants to make a difference by sharing her expertise to help clients and business owners reach their full potential. Check out her Business School Bootcamp to learn more.   

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5 Steps To Resigning From Insurance Panels

One of the most common questions that private practice therapists ask me is "How do I get off of insurance panels?" This question just came up today in my Private Practice Toolbox Facebook Group so I thought it would be a great topic for a blog post. In previous posts I've written about why I broke up with managed care (part 1) & (part 2), but this post will focus on how to do it.

The thought of letting go of the comfort of being on insurance panels can create a lot of anxiety for private practice therapists. After all, if we don't have clients, we don't get paid. Find comfort in knowing this equation. You only need about half the number of clients in a self-pay practice to make the same income (or more) than you made in an insurance based practice. Once I realized this fact, I felt a lot more comfortable resigning from insurance panels. Let's do the math...

Insurance:

Say you are seeing 20 managed care clients per week and you are reimbursed an average of $70 per client.

20 clients x $70 session = $1,400

20 clients x $70 session x 4 weeks = $5,600 per month

(then subtract your time or money spent in billing and paperwork)

Fee-for-service:

2o clients x $125 = $2500/wk

20 clients x $125 session x 4 weeks = $10,000 per month

10 clients x $125 session x 4 weeks = $5,000 per month

(with NO extra paperwork, NO delay in payment, NO denied claims, NO required diagnosis...)

So often we focus on number of clients instead of the quality of clients and the amount collected per client.

5 Steps To Resigning From Health Insurance Panels

1) Rank the insurance companies

Make a list of insurance panels and rank them from your most favorite to least favorite based on:

• reimbursement rates
• paper work requirements
• how quickly you're paid
• number of clients you see from each panel
• the type of clients generally referred
• your general feeling working with each panel

2) Resign in waves starting with your least favorite

Generally, I recommend to my consulting clients to resign in waves over the course of a year. Resign first from the panels with the lowest ranking - the ones that pay the least and are the most difficult to work with.

3) Check your contract for resignation requirements

Review your contract to check on the resignation process that you agreed to. Look at the time frame required. Do you need to give them 30, 60, or 90 days notice? Do you need to send in a written letter?

4) Beef up your web presence

As part of your plan to resign from insurance panels, it critical to invest in creating other referral sources. The most important being your web presence. Google is my #1 referral source. The majority of our clients who come to my clinic Wasatch Family Therapy find us online. The benefit of clients finding you online is that they've already read about you, your services, and your philosophy on your website and have chosen to contact you. This increases the likelihood that they will be willing to pay your full fee.

• Website - If you don't have a website, make that a top priority. If you have a website, make sure it's effective. Here are some common website mistakes and how to fix them.
• Blog - If you don't have a blog on your site, add one and start blogging weekly.
• Therapist finder sites - join PsychologyToday.com, GoodTherapy.org, and your professional organization's "find a therapist" site to help potential clients find you.

5) Know the benefits of self-pay and be prepared to educate clients

There are benefits to the client for paying out of pocket, instead of going through their insurance company, that they may not be aware of. As you make the transition away from managed care to a fee-for-service practice it's important to familiarize yourself with these benefits so you can educate your clients. A few of those benefits are: control over which provider you choose to work with, the course of treatment decided on by client and therapist instead of insurance company, and no diagnosis requirement.

Here's an example of how a provider educates her patients on the benefits of self-pay. Utah Psychiatrist Kelli Hyland, MD my colleague and consultation client, shares her philosophy in this blog post "Why Self-pay?"

(c) Can Stock Photo

5 Signs It's Time To Raise Your Fees

It's common for therapists in private practice to have anxiety around money issues like how much to charge per session, how to ask clients for payment, and when to raise your fees. Getting comfortable talking about fees with clients is crucial to private practice success. After all, you own a business. In general, I think therapists charge too little for their services.

Several years ago, I resigned from managed care and I raised my psychotherapy fees at the same time. Fortunately, my practice didn't suffer financially from those decisions. What surprised me most about raising my per session fee was that the perceived value of my services went up. "You don't take insurance and charge a lot? You must be really good," was a sentiment that I heard frequently from potential clients.

Interestingly, I've found that clients tend to invest more in the therapy process because they are investing more money out of their own pocket for treatment.

If you're considering raising your fees, consider these 5 signs that the time has come to raise your fees.

1) You haven't raised your psychotherapy rate in over 5 years

If it's been over five years since you've raised your therapy fees, it's time to revisit the issue. Your cost of living goes up approximately 2% every year due to inflation. If you haven't raised your fees you are likely making less than you made five years ago.

2) Your full fee is equal to insurance reimbursement

If you set your fees based on what insurance companies are willing to reimburse, then your fees are too low. Historically, insurance companies reimburse at a much lower rate than the providers full fee.

3) You aren't making enough money to pay your bills

Your private practice needs to serve your clients and provide a sufficient income for you. If you are not making ends meet in your practice or your personal life you may need to reduces expenses and increase your rates.

4) You have a waiting list

A waiting list is a sign that your services are in demand and that clients will pay more for your services.

5) You've completed specialized training or certification

Your added expertise deserves additional compensation. If you have recently completed advanced training, like certification in DBT or Emotionally Focused Couples therapy, for example, you may want to charge more.

When is the last time you raised your rates? How do you decide when to increase your fees?

photo credit: Corey Holms

Why I 'Broke Up' With Managed Care (Part 2)

Several months ago I wrote a post titled, "Why I Broke Up With Managed Care" that stirred up some passionate discussion! While I understand that it's not the route for every private practitioner, I have continued to build a private practice free of managed care and recently hired my 12th therapist.

While we don't bill insurance directly, we do give a superbill to clients so they can seek reimbursement from their health insurance so they can still use their benefits. As I've continued to write this blog, I've come across several therapists who have also "broke up" with managed care and asked them why they decided to build a fee-for-service therapy practice. Here's what they had to say:

Increased Reimbursement Rate

I've been in private practice for over 15 years. So, I experienced the first major transition of health care to "managed" care. I had friends and colleagues who began working in the managed care industry, and it quickly became clear to me that despite all the rhetoric about the necessity for evidenced-based care (which can be a very useful model of care), managed mental health care was really about making corporate the work of individual psychotherapists.

I also did the math. The last time I checked, insurance reimbursement was the average rate charged by psychotherapists in the 1980s. Today, I can afford to have two additional office hours available for new clients, by taking just one fee-for-service patient. This also allows me more discretion in seeing clients who are needing a low fee. Will Courtenay, PhD, LCSW "The Men's Doc"

Control Over Therapeutic Work

I wanted the freedom to determine, along with parents, the course and length of treatment and felt managed care would impede on that. Pam Dyson, LPC, RPT

My training is in social work, which is the source of the old adage "start where the client is at." That's my barometer for treatment, not where an insurance company believes my client and I should start or end our work. Will Courtenay, PhD, LCSW "The Men's Doc"

Increased Client Commitment to Therapeutic Process

Being a Christian counselor, by law I cannot bill insurance, even if I could I think private pay gives each person responsibility in the therapeutic efforts. When people  have to pay it makes them take their  therapy more seriously. Natalie Davis

No Diagnosis Required

My services are specialized in that I will work with children as young as three, something many therapists in my area will not do. The problems child clients present with are often not clinical but rooted in the parent-child relationship. I feel strongly that young children do not need a diagnosis on their permanent health record. Pam Dyson, LPC, RPT

More Time With Clients (Less Time Doing Paperwork)

I had worked in a managed care setting in the past, and I decided that in my practice that I want to avoid the incredible amount of paperwork, defending sessions, and over-diagnosing.  I also think it provides clients with more privacy. Sara Levitsky, LMSW, Birmingham Counseling For Women

Paperwork was the other major decision (in building a fee-for-service practice). I put a great deal of time and energy into my work with clients outside of our scheduled hours, including receiving professional consultation on a consistent basis. I have no time or patience for administrative busywork. Will Courtenay, PhD, LCSW "The Men's Doc"

More Flexibility To Offer Reduced Fees

Like Dr. Courtenay mentioned earlier in this article, when his practice is doing well financially, he has more (not less) time to devote to seeing clients at a reduced fee. I have found the same to be true. As my practice grows I am able to offer more free community workshops and do more pro bono work.

Do you run a fee-for-service mental health therapy practice? What led to your decision?