The Business of Private Practice
The Professional Practice Committee of Division 29 recently had the opportunity to ask entrepreneur and psychotherapist John Clarke about his thoughts on setting your out-of-network fees and “no show” policies in private practice. In this video, he shares his perspective on how to balance the humanistic and business side of building a private practice at the same time, so you can launch a vibrant practice that serves your community.
Thinking About Your Money Values in Private Practice
We provided a few discussion questions after the video to facilitate your reflection on these ideas and see what works best for you and your practice.
Talking about money is tough. It brings up a lot of feelings about our worth, our value and possible discomfort as members of a helping profession charging for our services.
That’s part of why there are so many ways of running a practice! Some therapists take only insurance, some work with a mix of in-network and out-of-network clients, and some do not take insurance at all and only work with private pay.
- What are your thoughts and feelings about these different ways of running a practice? Do you notice yourself gravitating toward one or the other, and if so, why?
- What would it be like to set your private pay fees in the way that John is suggesting?
- What reactions/feelings/objections do you notice to his ideas around money?
- What feelings and beliefs do you notice yourself having around money and, specifically, charging your fee?
- What is your reaction to having a 24 hour cancellation policy versus a 48 hour cancellation policy?
- How do you balance having clear no show policies with being responsive to your client’s
needs? For example, would you charge a no show fee to a client who is socio-economically stressed when they had a family emergency?
If you feel that having a mix of private pay clients and clients who use insurance is what is best for your practice, we’ve provided a modified version of John’s exercise below:
1. What you would like your annual income goal to be for your practice Add 30%-35% to account for taxes and expenses.
For the sake of argument, let’s say you want to make $100,000 net. Your gross income would need to aim around $130,000.
2. Think about the ideal size you want for your caseload. Is it 20, 25, 30, 35 clients a week?
For the purpose of giving you an example, let’s say you want to see 25 clients a week.
3. Consider what local insurances in your area reimburse for the cost of psychotherapy. Depending on the insurance, some range between $50, $80 to over $100.
Let’s say you decide to enter into an agreement with insurance A, who reimburses $80 per therapy session.
4. Decide what percentage of your caseload you want to allot for insurance vs private pay.
Let’s say you decide you want 60%, or 15 clients out of 25, to be clients who use insurance.
5. Multiply the insurance’s reimbursement by 48 sessions a year (takes into account holidays, vacation), and then the number of clients who use insurance you want to see. This will give you the amount you will earn annually from insurance reimbursement.
For our example, $80 x 48 x 15 = $57,600
6. Subtract that amount from your target annual income. That is the total amount you need to earn from private pay clients.
For our example, $130,000 - $57,600 = $72,400.
7. Now divide that amount by 48 sessions a year. This is the amount you would need to make weekly from private pay sessions.
For our example, 72,400/48 = $1,508
8. Finally, divide that amount by the number of private pay clients you’d like to see. This is your private pay fee.
For our example, if you want to see 10 private pay clients, that would be $1508/10 = around $150. This would be your private pay fee.
Private Pay or Out-of-Network
Refers to what you charge clients, assuming you do not take their insurance.
Typically refers to clients who pay for sessions with their insurance, assuming you accept and are enrolled as a provider within that insurance.
Electronic Health Record (EHR)
“EHR” is an acronym for Electronic Health Record. This is the program or service you use to write notes in your practice. They often allow you to conduct your billing electronically as well.
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Cite This Article
Clarke, J. (2019, September). How to set up your private pay fees and no show policies with John: Special guest video. [Web article]. Retrieved from http://www.societyforpsychotherapy.org/how-to-set-up-your-private-pay-fees-and-no-show-policies-with-john-clarke