The #1 Financial Mistake in Private Practice
January 9, 2023
By, Dr. Carrie Singer
Licensed Psychologist and Private Practice owner
Are you considering starting your own private practice? Understandably, you may feel overwhelmed by the work ahead. Luckily, digital tools that streamline practice operations are being created and refined every year. Below I will speak candidly about the importance of client experience, taking risks, and my experience creating a thriving private therapy practice. What do I see as the #1 financial mistake new private practitioners make? Being afraid to invest in their business.
Don't be afraid to invest in your practice
I’ve been running a private practice for 13 years. I am a Licensed Psychologist who owns a group practice in the DC suburbs with 40 employed therapists. The number one mistake I see new practice owners make is being afraid to invest in their business.
New practice owners are typically nervous about running a business for the first time, which makes sense because our training does nothing to prepare us for entrepreneurship. In my experience, therapists often have to learn everything they know about business for themselves. Especially in the world of private practice, therapists are often left to self-teach and learn business skills from friends and colleagues in the industry. Many take courses during their free time and some even get business degrees of their own.
Overcoming the instinct to preserve resources in the category of systems is vital to building a scalable private practice. Although no mental health professional is expected to have an expert understanding of web design, insurance platforms, or booking software, therapists who prioritize creating a positive user experience are more likely to reap the rewards in number of sessions booked and client satisfaction.
Make a business plan
I have been running my own private practice for 13 years and have managed 40 therapists. Over these years I have seen many therapists succeed and many therapists fail. Something that sets therapists apart is how they are able to manage the business side of their practice. Start by creating a business plan. If you’ve never created one before, try thinking about your business plan like it’s a client’s treatment plan:
1) What are the goals here?
2) What are some potential obstacles to meeting those goals?
3) What are my personal strengths and limitations in meeting these goals?
4) How will I deal with any of my interfering behaviors that may pop up to thwart my success?
Once you have identified these traits about yourself and your practice, it’s vital to make a plan to play to your strengths and protect yourself from your weaknesses. Like all other start-ups, expect some upfront costs and some ongoing overhead. Some owners are afraid to spend on a website or adopt an electronic medical record system (EHR). They may avoid online listings or decline to accept credit cards. These businesses are certainly going to scale slower than comparable businesses.
The return on investment of setting your business up properly will pay for itself in a short time. But this begs the question - how can you create a positive user experience for clients without breaking the bank?
Invest in tools that automate your systems and save you time
How much is your time worth? Consider this - you charge clients $150 per clinical hour but you are willing to spend an extra three hours per week on manual tasks like filing claims, generating superbills, or helping your client find out if they have insurance coverage for therapy, all to save a couple hundred dollars on practice development tools per month. If this is where your time and skills are being spent, are you really getting ahead?
Tools that make it easier to find you, pay you, and book future appointments will generate revenue and free up your valuable time. For example, electronic medical record systems (EHR) like TherapyNotes or SimplePractice keep processes like sending intake paperwork, booking appointments, and making credit card payments all in one place. Similarly, products like Nirvana’s Insurance Calculator automate insurance coverage checks so that therapists can charge their full fees, have informed conversations about sliding scale fees, all while helping clients prepare for and afford therapy.
Invest in tools that keep your clients happy - and do it early on
Automation frees you up to spend your time where it does the most good and clients favor it. The better you understand your customer’s experience, the more your practice will thrive! Imagine thoughts that clients might have as they begin their therapeutic journey. How do I book my first appointment? Will my insurance cover this therapist? Can I even afford therapy? If helpful, compare the below experiences:
User experience #1: Brad doesn’t have a website or online presence. He gets most referrals from word of mouth. He spends about 90 minutes each day on admin tasks, progress notes, emailing back and forth with clients about scheduling, preparing weekly superbills, and making deposits at the bank since he only accepts cash or checks. Brad gets about two new client referrals per month and his monthly overhead is only about $200 because he has a home office.
User experience #2: Mary has a website that performs well in search results. Clients can book appointments online and she gets about 8 new referrals per month. Her EHR has easy progress note templates and processes credit card payments with a few clicks. She uses Nirvana Health’s Concierge platform to help clients access their out-of-network mental health benefits and file electronic claims leading to a much higher client retention rate. Mary spends about 60 minutes per day on admin tasks, pays about $500 a month in overhead expenses, but makes $15,000 more a year than Brad due to better marketing, better affordability of services (leading to less patient turnover), and easier payment collections.
If you remember one key piece of advice from this article, let it be this: don’t have a scarcity mindset. When you invest in your own business, you are betting on yourself. Here’s to your success!