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.

Get practice tips and blog updates in your inbox! Sign up for the Private Practice Toolbox Newsletter here.

Join my Private Practice Toolbox Facebook group and connect with 3100 therapists around the globe in 2 simple steps:

1) Click request to join the group

2) Fill out this brief questionnaire before you’ll be added to the group.

 

Webinar: How to 'Break Up' With Managed Care and Build a Fee-For-Service Practice

New webinar this Wednesday on building a fee-for-service private practice

I've written previously about my decisions to 'break up' with managed care and build a fee-for-service only practice. This topic comes up often in my Private Practice Toolbox Facebook Group. Group members often ask questions like:

• Is it really possible for private practitioners to build a cash-pay practice in our current economy?
• How do you find clients who are willing to pay your full fee at each session?
• How do I overcome the fear of losing all of my clientele if I resign from insurance panels?
• How do you address the needs of those in your community who can't afford your services if you don't work with insurance?

If you've ever wondered these questions, you may be interested in my upcoming webinar this Wednesday.

Date: Wed. Oct 10, 2014*

Time: 11:00 a.m. (PT)/Noon (MT)/1:00 p.m. (CT)/2:00 pm (ET)

Length: 90-minutes

*If you can't make the live webinar at that date & time, no problem! You'll receive a link to watch the replay video at your convenience, but you do need to register.

Reserve your seat here

Here's why I resigned from managed care:

• Excessive paperwork: I was spending almost as much time performing unpaid work (paperwork, phone calls, tracking authorizations, and billing) as I was spending seeing clients. I went into this field to do therapy, not paperwork.
• Reduced income: I resented writing off 40-60% of my fee upfront just to be placed on a list with dozens and dozens of other therapists. The managed care companies weren’t doing anything to market my practice, and yet I was being asked to take a huge pay cut to work with their clients.
• Mandatory diagnosing: I grew tired of having to diagnose every client who walked into my office in order to get paid. When I met with a client who didn’t have clearly diagnosable symptoms, I was faced with a dilemma. Do I stretch a diagnosis just so I can get paid, or do I do free therapy because insurance won’t reimburse without a diagnosis?
• Denied or delayed payments: Being denied reimbursement for a variety of reasons and receiving payment weeks or months after I had performed the service was extremely frustrating.

Here's what has happened since 'breaking up' with managed care:

• Exponential growth: My private practice grew from a solo practice to a clinic of 20 providers and 3 locations in a fee-for-service model during an economic downturn.
• Immediate payments: We get paid our full fee at each session (including late cancellations and no shows)
• Streamlined paperwork: We do assessment, case notes, and discharge summary.
• Motivated clientele: We work with clients who value our time and expertise because they are more financially invested in the therapy process.
• Diagnosis has become a tool, not a requirement for payment: We don't have to diagnose anyone.

In this webinar, I'll show you how to:

• Identify and attract your ideal clients.
• Demonstrate the value of your services to your community through building a strong online and media presence so clients will be willing to pay your full fee at each session.
• Wean off of managed care contracts and smooth this transition for your current clients by offering many options.
• Talk confidently about your services, your fees, and financial policies.
• Provide options for potential clients who can not afford your full fee or who want to use their insurance benefits.

The decision to resign from manage care panels and build a fee-for-service practice is not the right path for every practitioner. However, there are some private practitioners who want to go this direction but lack the knowledge, skills, or confidence to implement their desired changes. If you fall into this second group, this webinar is designed for you.

I hope to see you on Wednesday!

Here's the link to reserve your spot for the webinar and access to the replay video

Oh, and if you have any specific questions you'd like me to address in this upcoming webinar, contact me here with "Managed care webinar Q" in the subject line.

Getting 3 'Fs' In Private Practice Is A Good Thing!

My motivation for starting my private practice, Wasatch Family Therapy, was very clear. I wanted to create my ideal work environment and I knew that no one else could do that for me. I felt called to help people heal themselves and their relationships.  I knew that I wanted work with therapy clients who valued my services and time, and who were dedicated to working hard to improve their life. I wanted the flexibility to set my own schedule and take time off to be with my children and attend school and sporting events. I wanted to do paperwork that was relevant and helpful for treatment. I wanted to invite other clinicians into my professional space who were gifted therapists, genuine people, and who I enjoyed spending time with. I wanted to work as a social worker part-time and make a full-time income (a lofty goal in a profession where many work full-time and make a part-time income).

I know why I chose to go into private practice but I was curious if other therapists and counselors around the country had similar motivation opening private practice. I recently asked several therapists about their reasons for taking the leap into the business world of owning their own practices and noticed three common themes emerged. I call them the 3 "F"s of private practice: flexibility, freedom, financial opportunity.

1) Flexibility

Therapists who take the leap into private practice value flexibility in their work schedule to better balance work and family life, and to pursue other interests.  Dr. Mary Sidhwani, a psychotherapist in private practice since 2000 in Ellicott City, Maryland opened her practice so she could have the flexibility to care for her two young children. "I wanted to be able to balance both my professional and family life; to be able to spend as much time with my children as possible while they were young."  Social worker Diane Spear, LCSW-R of New York City said, "I had worked at an agency with wonderful colleagues, but private practice gave me the opportunity to set my own hours and fees."

Of his decision to open his own practice psychologist Dr. John Duffy says, "I wanted to go into private practice as I wanted control over my career: my schedule, niche, fees, client base, whether I accepted insurance, and so on. I also wanted to be able to write, consult, speak, and expand my practice, or take fewer clients, as I went along."

2) Freedom

Freedom to select a particular client population to work with and choose your own approach to treatment has drawn many therapists to open a practice. After agency work left her overworked, underpaid and burned out, Esther Kane, MSW of British Columbia chose to open a private practice because it allowed her to focus on her passion - women's issues. Kane says she loves the "autonomy and flexibility of not having to answer to anyone."

Spear says she appreciated being able to choose who she worked with and how she approached treatment. "I wanted to choose level of pathology I want to treat, choose the theoretical orientation and supervisor I'm most comfortable with, and set the environment as I prefer. In short, autonomy, autonomy, autonomy!"

3) Financial Opportunity

It's a risk to open your own practice, but when it grows, you are the one who benefits most from the financial growth. Private practitioners have the opportunity to grow their income in ways that are unlikely to happen when you work for someone else. New York City therapist Emma K. Viglucci, CFT, LMFT, CIT experienced the growth potential first-hand. Since opening Metropolitan Marriage & Family Therapy, PLLC she says, "I've grown the practice to the point where I had 10 clinicians working with me as part of our clinical team. My practice has become an Internship Placement Site for MFTs in training."

Financial need helped Lisa Gomez MA, PLC of Surprise, AZ transition from part-time to full-time private practice. After being laid off from a full-time staff position due to budget cuts Gomez says it was "the perfect opportunity to take the step of faith into full-time private practice. I love private practice because I can be as successful as I want or as flexible as I want."

What motivated you to start your private practice?

If you're thinking about venturing into private practice, what do you hope to gain?

photo credit: Leo Reynolds