Practice Committee Office Hours Update: Is Group Practice Income Actually Passive?

We invite you to join us for our next Office Hour discussions:

• 11/17/26 12pm-1pm EST:
  • Myth: Insurance or bust to be successful in private practice and private pay is the only surefire way to go in private practice
  • Reality: There are so many ways to set-up payment structure to be successful
  • https://nova.zoom.us/j/6986910134

For many psychotherapists and mental health professionals, group practice is presented as the natural next step after building a successful practice. And it’s the pinnacle of practice, right? You’ll get to retire, sit back and relax, maybe even reduce your caseload and let others do the direct clinical work while you bring in passive income. 

The only issue with this is that running a group practice is anything but passive. 

Although group practice can create opportunities to expand access to services, develop a community of clinicians, diversify revenue, and shift a practice owner’s role away from providing therapy hour after hour, those opportunities also come alongside myriad other tasks. Hiring and retaining clinicians, managing personnel, overseeing billing and operations, maintaining clinical and ethical standards, creating systems, responding to the unexpected, and developing a sustainable organizational culture to maintain clinicians…the list feels truly endless. Furthermore, there is no single model of a “group practice.” Practices vary in size, structure, employment models, financial arrangements, leadership, and the degree to which owners remain involved in clinical work. The more useful question, then, may not be whether group practice offers a path to passive income, but rather, is group practice ownership worthwhile in a given case?

This was the focus of the September installment of Office Hours with the Professional Practice Committee, a series hosted by the Society for the Advancement of Psychotherapy’s Professional Practice Committee that takes on common myths about private practice. This session tackled the myth that “group practice is the way to build passive income,” exploring instead the multiple ways group practices can be built and sustained, and all the work it takes to do so successfully.

About the Panelist

Jake Jackson-Wolf, LCPC: I’m a licensed clinical professional counselor in Towson, MD. I am the owner of B’well Counseling Services, a group private practice employing a variety of mental health professionals including professional counselors, clinical social workers, a clinical psychologist, and a clinical art therapist. We see clients across MD and FL virtually and in person at our office in Towson, MD. We have a variety of specialties including couples therapy, sexual health concerns, eating disorders and body image, trauma, and general mental health issues like anxiety, depression, and life transitions. I have been in practice for nine years and on the professional practice committee since I joined as the student member in 2016. 

How did you get your start in running a group practice?

I joined the group practice that I now own and operate about 6 and a half years ago. I like to tell people a bit of the origin story as I think it’s a bit of a novel story. My spouse and I are originally from Baltimore so when we moved back here I was looking for something really part-time to finish out my hours to get licensed. PSYPACT is a little bit more organized than some of the other professions, so moving between states meant a sort of restart in collecting hours, getting the provisional license, doing all this stuff required in order to practice. I was looking for a way to accelerate that. I reached out after finding a lovely website of this practice called B’ Well Counseling and cold emailed the owner, a woman I’d never met and said, “hey, I’m looking for an opportunity to work. You’re around the corner from where I live. Are you open to chatting?” We got a cup of coffee—and for context, this was December 2019/ January 2020, so by the time we got everything sorted, my first client session was March 12th, 2020, which is the day of the state of emergency going into effect. Pretty rapidly this “side project” (I was working at a nonprofit full-time) turned into rapid growth where I was out earning myself on the side. Anyone who was practicing at that time remembers the balloon of people needing mental health support being at home with the confluence of disposable income and mental health concerns and a lot of therapy sessions from closets, cars, and other odd places.

So that was 2020. I went full time in the practice by that fall and remember just keeping my head down and working. Fast forward to fall 2022. My wife, who is also a psychotherapist, and I were expecting our first child. I approached the owner of the practice at the time with the intention of essentially asking for a raise and probably an increase in responsibilities. I said that I need to figure out something that’s a little bit more sustainable for us, and I’m not sure what that looks like, but I’m curious what opportunities there might be here. I actually said to her, “I don’t want to go solo. I don’t want to start my own competing group practice. I really like what we’ve been doing here.” And her response, which was very unexpected, was, “would you like the practice?”

That was a Friday. Our baby was born the following Tuesday! We used the last quarter of that year to plan to partner in the practice and grow it until it was her time to leave. We had originally agreed on a three-year plan, and she left after about two and a half when she said, You’ve got this. You don’t need me anymore.” There was a sort of passing of the torch that happened over this time frame and I’ve been operating as the sole owner since June of 2025. 

I like to tell people that up front, that I didn’t start this thing. I’ll take some responsibility and credit for where it’s gotten to today. We’re a practice of 10 therapists. We represent a pretty broad professional background: clinical social workers, a clinical psychologist, an art therapist, and licensed clinical professional counselors. We have folks both who are independently licensed and some who are under supervision. 

It’s a marketing nightmare because we have folks in the group who have all different specialties and areas of interest. So I call it our overlapping Venn diagrams, there’s usually a chain where there’s overlap among us, but no two clinicians have the same area of interest. It’s why the practice will never be called Jake Jackson Wolf and Associates because many folks are not doing the work that I do clinically and vice versa. I like to think about it more as an integrative and collaborative practice because one picks up where the other leaves off.

How is your business structured?

We’re a W2 model, so all the therapists in our group are employees. The IRS is pretty clear that a lot of folks who are operating 1099 models are out of compliance. And from the business owner perspective, you should be concerned about that. For the contractors, for the most part, they don’t have a lot to be personally worried about–it’s you the business owner who will be getting heavy fines and back taxes. But that’s certainly something that is a big question for people thinking about starting their own group practice – how to structure it in a way that’s most sustainable. Consult a business attorney familiar with mental health practices when deciding on your model. If your attorney tells you that independent contractors are fine—ask them to justify using the six factor test. 

What is the incentive for employees to take on more clients if they receive a salary? 

The first part to that is let’s not confuse being a W-2 employee with getting a salary. The folks at my practice do not get a salary. They are all commission-based. Obviously, I’m not a tax expert and this can vary state-to-state. But for me and my practice, employees need to get paid for all of the time that they work. In my compensation model, folks are getting a percentage of the fee that they collected which is time billed for the service they provided and the ancillary work associated. With an employee model, you have to pay for time worked, even if you the business do not collect the funds.  That includes required meetings and anything else that is required to do the job has to be paid. I have a commission plus admin time structure, which means that I approve the number of expected hours that people are going to work and they get paid their commission rate plus those additional hours. Though, different places structure this different ways. Some people will do it as a percentage model, other folks do a fee schedule where there is a flat rate paid. Others will try hourly pay or salary. 

How do you incentivize employees to stay in your practice?

No matter what business you are in, there is can be an inherent mistrust that shows up between employer and employee. I think it’s born out of a lack of appreciation for each party’s role. For me, I like to think about it as partnering with people to figure out what they need and how I can help them get to their desired income goal. I sit down with my employees and ask them: what is you income going to look like week-to-week, month-to-month? And then my goal is to help them reach that by figuring out the number of clients or other projects they need to take on. 

Beyond addressing their income needs, I’ve also tried to create a practice that is a place, not just the people in it. There’s an ice cream shop that just opened down the road from me. I don’t even remember the name of it, but it’s a bright pink building with string lights, tables, and people are always outside with their dogs eating ice cream. It’s a place that the community thinks of. A lot of therapy practices are in a long, dimly lit hallway in an office building. But I wanted ours to be more rooted in place. So I moved us from a 1970s office building with thin carpet and 

the rubber strip around the bottom walls into an early 1900s Victorian home right in the center of a really cool neighborhood of historic homes converted into businesses. It has a real neighborhood feel.

And to capitalize on that, we do a monthly Coffee on the Porch, where we invite other therapists, prescribers, and really anyone in the Baltimore area to hang out on our porch and build connections in the community. This also gives my team more face time to build their networks and referral sources.

Finally, some folks want to work in a group practice because they don’t want to run a business but they do want agency and autonomy. For that reason,  I don’t think about it as my job to just fill my employees’ calendars or caseloads, but rather, I really want them to have some ownership, control, and independence to build the type of work that they want to be doing. My employees will never find a random intake plugged into their calendar. This is one of the ways that I’m continuing to build a model that works for employees and employers alike. 

Aren’t all employees just waiting until they can branch off into their own practice?

I am passionate about providing high-quality psychotherapy—aren’t we all? But I also have a strong interest in providing high-quality jobs for therapists. I don’t want to offer a job where the expectations on workload are outrageous, where people don’t feel they have a say in building what they want to build out, or see the clients they want to see, even working the hours they want to work. The priority needs to be paying people as much as possible as the objective.

There are two different models of group practice, in my opinion. One of them is what I call the Amazon model where when you hire an employee in that group practice, it’s assumed that you have about 18-24 months of “life” out of that employee. The objective is to extract as much work as humanly possible from that employee until you resent each other enough that they go. But what’s the value of that? It exploits early career therapists, those who need supervision, those who are trying to build up their practices. 

Instead, my objective is to provide a place that people want to stay because they’re getting paid enough, the hours work for them, they get to do the work that they care about, and they’re not having to do the administrative lift that comes with solo private practice or being a business owner. They get the best of both worlds.

There’s a myth in psychotherapy that working in your own solo private practice or being a business owner of some kind is the pathway for everyone. There are many psychotherapists who want to provide direct care and get bogged down in the business operations side of things. Our training as psychotherapists is severely lacking in the business operations side of things. I would venture to say that even if training in business was more robust for psychotherapists, there would still be a number of us completely uninterested in being business owners!

What are the differences between a model where multiple therapists come together and share expenses vs. the model you’ve been talking about where there’s an employer-employee?

With the first model, there’s therapists that come together to pool resources around expenses like marketing, rent, hiring a biller, and maybe building a brand that is larger than the individual practitioners. This could involve psychotherapists, but also other practitioners like prescribers. Typically, the expectation is that the profits are equitably shared or that each party is operating their own practice/business. There’s also the employer-employee model I have been talking about. 

I think there’s two different types of people who want to work in those two different models. For the first model, that person is more business savvy or at least more interested in learning the business side of things. They’re saying, “I want to have control over my own practice. I will have my own accounting, where I’m cataloging expenses, understanding what it takes for myself to run the business. I’m paying my own quarterly taxes, etc.” For those that work in my type of practice, I think they show up because they want to do the work with clients, and not get so bogged down with the administrative, marketing, and other business-side of things. You need to ask yourself: “how much business am I really interested in doing?” and beyond that, “what skillset do I have to have to learn it?”

I often share this story of my colleague as a great example of discerning the motivation for being in business for yourself versus working in another business. This colleague had worked with me for about 4 years at that time and was in the middle of preparing her exit from the practice to go into solo practice. My business partner and I hadn’t yet shared with the team the plans for her to leave. So, in the middle of the meeting where my colleague was submitting her resignation, I stopped her and asked if she was interested in moving into a leadership role in the practice. The conversations that ensued were really about determining if her motivation was to go build a business, in which case I didn’t have a compelling offer for her, or if she was looking to make more money and have more leadership responsibilities. This exercise of understanding what one is hoping to gain from business ownership or working in leadership is a valuable thought exercise to go through when making these decisions. 

As a group practice owner, how do you evaluate what products or services to bring in to your practice? Specifically, how do you think about the many AI products being pitched?

Every morning, my email inbox is full of offers for products and services, many of which are AI tools. I think about it in two different buckets. Many of our EHRs roll out a new AI feature with each update, but every time mine updates, I turn off those features! Although they promise it’s secure, we just don’t know enough yet, so I’m a bit behind the curve when it comes to the promise of new technologies, particularly because of the sensitivity of the work that we do, and the real repercussions of getting it wrong. 

On the non-clinical side of things though, I’m open to integrating new technology when it has real value. For example, our long-time practice manager recently had to leave the practice. I’ve been able to absorb some of her previous tasks with AI and other systems—things like calendar events, agendas, reminding clinicians to change their passwords, auditing things in our records that are not clinically related or PHI. I think it’s okay that we allow the tools that can help us and are not questionable in terms of ethics or client care, especially if it makes our lives easier to run the business side. 

I also receive a lot of requests from people wanting to buy my practice despite not knowing anything about my business. I don’t respond because I’m not on board with large conglomerations buying up practices. You dig and you find out that this place is owned by X company, which is owned by Y company, which is really owned by Z company. I feel like there can be a lot of pressure on a small practice to try and survive the barrage of venture capital-backed business, but it’s important to me to maintain the small practices and provide people with those options. 

Can starting a group practice be a way to avoid burnout from direct client care?

This is the fundamental question of any business, which is that there’s two levers: income and expenses. We can do things to limit expenses. You can do things to increase income. And those things will have an effect on profitability. Here’s an example. We were previously paneled with two insurance companies, but when we did the math, we found that the reimbursement rates for Master’s-level clinicians had not meaningfully increased for five years and it just was not sustainable for us giving rising administrative costs and cost of living. We made the decision to end the contracts, which necessitated clear and purposeful communication with clients. Ultimately we took about eight months to transition out in order to engage in solid treatment planning with clients. At the time, we also adjusted the commission rate and capped it at 50%, instead of the previous 60%. An employee called me and was upset. I explained it this way: would you like 60% of a grape, or 50% of a watermelon? And don’t you know, they weren’t upset anymore. The point being, in a model where everyone is fighting for scraps, resentment builds. When you move to a model where there’s more equity, it feels like if you do better, I do better. Increasing the per session revenue meant that therapists received about a $20/hour raise and the practice was able to recoup about the same. 

As a practice owner there can certainly be a model where you see fewer or no clients, depending on how you scale your group practice. For me, I have seen between 10-18 clients in 60 and 90-minute sessions in a given week as the practice owner. I know some who see less than 5 clients per week.You’ll need to decide the right number for your own work and life balance. Ultimately, it becomes a math problem. Thinking about paying people as much as you possibly can, fostering an environment people want to stay in, etc. all costs money. So you have to figure out where your break-even is of having employees who are generating enough revenue to free you up to see fewer or no clients. But that time can also then be eaten up by administrative work or business development. You’re the person that gets called when a client doesn’t pay, or when the EHR isn’t working, or those micro things that really push against this idea of passive income. 

You have to be prepared that you’re swapping clinical work for administrative work. It’s not necessarily less work, or passive work, it’s that it’s different work. Being a business owner comes with increased liability – you’re responsible for the people you employ and the clients that are being cared for by those clinicians. This may be a welcomed swap–I know it has been for me, but it’s just worth naming this change. 

Is a group practice that is entirely self-pay even feasible?

I think there’s a lot of misconceptions around cash pay practices, namely that you’ll lose any semblance of client diversity and income diversity. Since going out of network with insurance, we are certainly seeing more clients who are in a higher tax bracket, so to speak. And, at the same time, we are still able to remain accessible through reduced fees, partnerships with other agencies, trainee services, and helping clients navigate their out of network benefits. In fact, when we did take insurance, it was like we were already taking a reduced fee, but we had no wiggle room. Ultimately, we don’t need to be at odds with each other about whether to accept insurance or not; but we do all need to be at odds with the insurance companies and the low reimbursement rates they offer at every professional level. They’re abysmally and offensively low. 

I’ll share that when we went out of network, our volume of services went down by about 40%.

That is to say that we lost about 40% of our clients. However, our revenue was flat year over year in the first year. That meant that everybody on my team on average made the same amount of money in the first year after leaving insurance, but there was breathing room on the day-to-day seeing clients. We’ve since grown and surpassed any prior years of taking insurance. Volume has rebuilt to about 85% within 2 years with revenue up 30%. 

I hear this pushback all the time when I consult with people on their practices where they will say, “my community can’t support out of network.” I encourage folks to investigate the inherent claim in this–”there is one pathway to accessibility and it is through insurance reimbursement.”. Insurance does not equal accessibility. The insurance landscape continues to change and it comes with its own set of issues that may prevent us from getting paid – audits, value based care, static reimbursement rates, claim denials. And this is exactly what we plan to discuss in our next Office Hour on 11/17.