[ALISON PIDGEON]
You are listening to the Grow a Group Practice podcast. Whether you were thinking about starting a group practice or in the beginning stages, or want to learn how to scale up your already existing group practice, you are in the right place. I’m Alison Pidgeon, your host, a serial entrepreneur with four businesses, one of which is a large group practice that I started in 2015. Each week, I feature a guest or topic that is relevant to group practice owners. Let’s get started.

Hi, welcome to the podcast. I’m Alison Pidgeon, your host. I am excited to be interviewing Ken Clark today. He is an LMFT and the founder and CEO of Chenal Family Therapy, which is a private practice in Arkansas, Texas. He has approximately 225 staff and his practice has been named one of Inc. Magazine’s fastest growing companies in the United States, three years in a row. I had Ken on the podcast about a year, year and a half ago, and that was actually one of our most listen to episodes so I wanted to have him come back. He just has such an interesting perspective on what’s happening in the business of mental health and so I asked him about trends that he sees happening right now in private practice and in mental health in the United States and he had a lot of really unique perspectives.

Ken is actually my business coach as well, so if you want to work with somebody who has built mega practice, if that is your goal, Ken is definitely somebody that you want to talk to. He also has a business coaching arm where he helps practice owners and is called semi-private practice. So here is my interview with Ken clerk. Hi, Ken, welcome back to the podcast.
[KEN CLARK]
Thanks for having me. I love being here. It’s a great podcast.
[ALISON]
Thank you. Yes, we had you on maybe a year or so ago, and that was actually one of our most listen to episodes, which is why I wanted to have you back. Yes, yes, yes, so I thought it’d be really interesting today to talk about trends that you’re seeing in private practice right now, but before we get started with that, can you just give folks a brief introduction of yourself in your practice?
[KEN]
Yes, sure. I’m Ken Clark. I’m a Licensed Marriage and Family Therapist based out of Arkansas. Our practice has grown from just myself and my wife as the original scheduler to we’re now about 225 staff across 20 plus offices, about 2200 to 2,500 clients a week. Inc. 5,000 Company four years in a row, won all kinds of awards locally for business growth and employment. In fact we just, the one that we’re really proud of, we just won the statewide gender equity award for all businesses in the state. So yes, that’s who we are. We do all kinds of outpatient mental health and I’m an entrepreneurial nerd at heart. I was probably an entrepreneur before I was a therapist. Definitely was an entrepreneur before I was a therapist.
[ALISON]
Congratulations. Lots of exciting things happening. When did you start your practice? What year did you start?
[KEN]
2010. We actually moved from California to Arkansas in 2008 thinking that we would start the practice then, but I chickened out of taking the licensing exam twice and then finally took it in 2010. Just started as a solo practice. I was working at a for-profit university, would see a client before work, a client at lunch and client after work until I got it up and running. Literally would run between the floors because my company I work for was on one floor and then my practice was on another floor. So about 12 years now, so it’s pretty crazy how it’s blown up.
[ALISON]
I think that’s one of the reasons why you’re the perfect person to talk to about just trends because you’ve obviously been doing this for a long time. And things constantly change, like insurance companies change and the landscape of mental health services changes. So maybe we could talk a little bit about what are you seeing in terms of the economic changes right now? In 2022, obviously there’s inflation gas prices going up. We’re still in this pandemic era. So how do you view that as affecting what we do as private practice?
[KEN]
I mean the hard part is insurance companies aren’t raising rates anyway. Consumers aren’t lining up to pay more than they’re already paying for therapy. A lot of us that have cash pay practices, we struggle with client conversion and client retention, so what we’re seeing is that there’s a squeeze occurring, inflationary squeeze where we’re not making any more money, but everybody in our world needs more money to exist properly. Employees need more money. Some of the costs of our doing business are going up, things like that. So that’s one of the big things right now, is a lot of us are facing declining revenue because, or declining per unit revenue because of the insurance companies.

We’re facing great therapists who want to make more money because they need to make more money and lot of practices are feeling that margin that was there maybe when they were smaller, when they were 3, 4, 5 employees. It’s feeling pretty squeezed as we get into 10, 15, 20 employees. So yes, that’s the big thing we’re seeing and we think it’ll settle down. It’s not a forever thing. All the indicators economically look like inflation is easing the just raised rates, which will slow down inflation but the cows out of the barn and gas is $4 a gallon in Arkansas. So what do you do?
[ALISON]
Yes. What where I’ve noticed it is the admin staff that we have expects to be paid a lot more than they used to.
[KEN]
Yes. And part of that inflation is driven by the availability of money. So when it’s easy to get stimulus money, when it’s easy to borrow money or whatever, like people bid up the cost of things. Right now in this tight labor market, everybody’s bidding up the cost of labor. So you can go get a job at the Amazon place near us and make $5,000 more a year than you do in our practices in admin. So that’s got everybody demanding that stuff. Again, they also need it. Costs have gone up on them, but it’s causing inflation for all of us on the labor front.
[ALISON]
So when these types of things happen economically, and I’m sure you can certainly think of a time where maybe the opposite of inflation was happening too, how do you think about that as a private practice owner because I think it’s really easy to get wrapped up in the, oh my gosh, this guy is falling mentality. How do you manage that for yourself?
[KEN]
First and foremost, I maintain an effing plan. You can figure out what the F stands for, but, I have to continually remind myself that if this thing burns to the ground in an effort to pay people best in market and provide great service and all that stuff, at some point we decide it’s unsustainable, that may just be the way it goes. Like that happens. Very few businesses last a hundred years, 200 years. So my business, your business they’ll end at some point. It’s just a question of how and where. So reminding myself that I could set up shop again all by myself and make a great living or I could go be a bartender in The Bahamas and just say, screw it all, come try and get my student loans out of me, that’s how I keep myself sane in the middle of these scary things that I can’t control.

From a business owner point of view we constantly have to keep an eye on the horizon, but the horizon will paralyze you if you’re not careful. So having an attitude of doing the next right thing, like what can I control today, what do I need to work on, what’s actually within my power, practically I think most people in our industry are going to have to figure out how to control labor costs. I don’t know the answer to that therapists and admin staff are needing and wanting more, but those that can figure out how to hack their labor costs, the cost of providing services, that’s where the bulk of our expenses go in our industry. So if you can even shave 2, 3, 4, 5% off that you’re going to win.
[ALISON]
Yes. So what would you tell other practice owners who are maybe worried about the state of the economy right now?
[KEN]
One, I would tell them to go back and Google like economic cycles or how often is there a recession? The reality is the economy runs in cycles. Every five to 10 years, we go from trough the bottom to growth and expansion to peak. It’s part of the deal, like go back to 2008, go back to 2000, I mean every eight to 10 years. So biggest thing is that if you can survive, it you’ll survive it. You just have to plan accordingly. What I would tell practically practice owners right now and there’s some other things out there on the economic horizon that are worth looking at is you want to be careful about not overextending. You want to be careful about not leasing the 15-office space when you only have three therapists, but you think you’re going to be able to fill it up.

On top of all the economic stuff, it’s also just really hard to find therapists right now, and really easy for therapists to leave and start their own private practice. So you want to make sure that you don’t overextend, don’t confuse a amazing market for mental health, for being the most brilliant entrepreneur ever. We all look smart right now. I look smart right now in ways that we don’t deserve because we’re in the middle of the greatest expansion of mental health ever, so there’s some natural momentum. So keep your eyes on the horizon, do the next right thing, make sure you don’t overextend, don’t over commit. It’s better to need to find the ability to expand than try and figure out how to contract once you’re in leases and things like that.
[ALISON]
Yes, I agree. You said there’s other things besides inflation happening too, that you’re paying attention to. What are those things?
[KEN]
So there’s a couple economic think tanks that I follow, one of which is called ITR Economics. They’ve got like a 98.6% accuracy rate on predicting GDP, one of the biggest measures of the economic health of our country over the last 15 years or so, like monthly GDP. They are calling for a possible recession, somewhere around 25, 26, like two years out, three years out, somewhere in there. It’ll start things, will need to just cool off. They’re also predicting the possibility of something that rivals the great depression outward of 2030. So their big running joke is sell your business to somebody you hate in 2029 because 2030 is going to suck.

So I’m watching that also keeping our eyes on what are the market forces on payers and things like that. Additionally, I think, especially if you’re an insurance-based practice, you’re going to see a crackdown on not necessarily the rates, but the number of sessions that you can get away with without review and more and more, you’ll see I think limits, eight sessions, 12 sessions, and then you got to get authorization or whatever. So I think that’s going to force some therapists to need to diversify, make sure more clients are coming in from more pair sources.
[ALISON]
Yes, that’s interesting because I feel like at least here in Pennsylvania, that’s how it was when I started working in outpatient, as you had to get authorization for so many sessions at a time and then it seemed like they all did away with that and it’s like the pendulum swung in the other direction now. Yes, just because they’re trying to control their costs.
[KEN]
That’s exactly right.
[ALISON]
So how is that okay with mental health parody, like I’m sure they found a way.
[KEN]
I think like getting an elective kidney transplant. There’s certain costs that they just say that you need preauthorization or they’re more subject to review or whatever I think there’s been lacks enforcement on a lot of us as far as what’s in the notes that stuff. It’s also a very nebulous field, like what do you need to have in your notes and all that. So one of my big predictions is within the next three to five years, you’ll see, basically every note you write going to most insurance companies automatically. There’s the open notes act or open notes provision that came out of the 21st century cares act, which says clients are supposed to have instant access now electronically or at the end of the year through an app to all their records, including what we do. So I think that’ll open it up to insurance companies and I think that’ll get fed into AI as good as AI is getting (artificial intelligence). I think your notes, every note will get reviewed automatically and that’s where they’ll start flagging a lot of the stuff before they even pay the claim and, “It won’t be on, we don’t cover this stuff, it’ll be on you didn’t document properly et cetera.”
[ALISON]
Do you think it’ll come down to them wanting to see therapists are only using evidence-based interventions too?
[KEN]
Yes. I think in the end you’re already seeing this with Medicare and stuff where there’s like the MIPS program, which basically monitors some patient outcomes. I think value-based care, which is probably the better term for how evidence-based practices meet insurance is value based care; are we giving good value for the money? I think that’s, I mean, that’s already rolling out in some markets. It’s definitely there in some forms and some of the federal stuff. I think that’s where it’s going, is you’re going to get performance bonuses based on outcome measures that you’ll now have to report.

I think a lot of smaller practices are going to feel like they’re drowning by the way, like I’ve got to send in statistics on my folks to get paid. And I think that the good faith estimate thing, the no surprises act also setting this up for this because in the subsequent roles out of the act, we’re going to have to supposedly provide good faith estimates to insurance companies on their clients, like here’s what I think it’s going to cost to treat this person. So I think bottom line, Alison, I think there’s going to be a lot of review and qualitative control and they’re going to use that to control costs and they’re still going to claim that it’s parody that we just want you actually doing what you’re saying you’re doing.
[ALISON]
So when you think about all of that, do you feel like, okay, this is just the direction it’s going and I’m just going to roll with it or does it make you feel like pessimistic or?
[KEN]
I think probably like all owners I have my moments of I just want off the merry-go-round and somebody would just hand me something with some commas in it, a checklist, some commas in it. I’d happily turn this over, like we all probably feel that a week, a year or a week, a quarter. So I think like a lot of people, I have my moments of panic. At the same time, I know the need in our industry’s so great. Mental health is not going away as a priority. It’s gaining greater acceptance, so there’s always going to be a demand. Though I get fearful of times I get energized by, wow, somebody’s going to have to navigate this market, there’s going to have to be companies that figure this out, it may take some hard conversations. It may take retooling our model at some point. But I think there’s opportunities there for the entrepreneurs that are creative and feisty and don’t want to give up
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[ALISON PIDGEON]
Yes, I think there’s going to be, I mean, there always has been times when we’ve had to change, just because the payers dictate how we do things or whatever. So I think if you’re able to just be flexible and pivot you’ll probably figure it out.
[KEN]
Yes, absolutely.
[ALISON]
I know you do a fair amount of business consulting for other practice owners. So I’m curious, what are you hearing from them right now about maybe what their struggles are, maybe what’s alternatively going well for them?
[KEN]
I think the biggest thing everybody’s facing right now is this recruiting retention double whammy, which is, it’s really hard to find therapists right now to hire especially therapists that we want to hire. Not everybody’s a good fit and it’s becoming increasingly hard to keep those therapists because the ability to start your own private practice is as easy as it’s ever been or start a competing little group practice or whatever. So that’s the big thing that I hear people bemoaning is that they have, that’s what I mentioned earlier with not getting ahead of yourself on expenses. They’ve created these really cool practices but they require, those practices require a certain amount of therapists and a certain amount of revenue to run. All of a sudden you lose two or three therapists like that you didn’t think you were going to lose, and now you’re actually making less money than you were making when you were working by yourself.

So I think there’s a lot of practice owners that are in that. On the recruiting side the big thing that we’re seeing and knowing is that Indeed and things like that don’t really work like they used to. They may work in some markets or whatever but it’s a broken model. You’re counting on the ideal candidate to be looking for your job at the moment that you need to hire them. That’s like three stars lining up. So pushing a lot of the people that we coach and we do consulting with to really build networking models, where they’re constantly meeting and farming relationships and cultivating relationships with therapists that aren’t looking for jobs right now, so that when they do look for a job they come looking for them.

On the retention side, we are, I mean, over and over and over again, people are leaving places that they like and that they claim to love, but they are going to start their own practice still, or join a more ambitious group practice. I would say on that end, for practice owners that are battling retention, of the best things you can do is stop talking about compensation and start talking about the use of their time, the return of investment on time. What we know is that most people can go make more hard dollars running their own private practice, probably 10 to 15% more than you can make in a group practice but you’re going to work another five to 15 hours unpaid a week to do it. So when you talk about another 250 to 500 hours a year, 750 hours a year that you don’t get paid on, that really lowers your effective rate of compensation running your own practice.

Yes, you can make more but if you just saw 15 more clients a week in my practice you’d make even more. So that’s where you really focus. That’s where we’re seeing people get some traction on retention is this is the easiest place to do what you want to do. This is an optimized existence. For your time, this is the best paid gig. So we’re really focusing people that we coach on communicating that stuff, as opposed to trying to trap people or trying to convince people with pay that you should never go anywhere else.
[ALISON]
I’m really glad that you described it that way because I’ve encountered lots of therapists in the interviewing process who had no idea what the difference was between a contractor job they were interviewing for and my job, which is a W2 position. Also they sort of see the dollar signs of like, oh, I could go start my own practice, but they have no idea how much extra work it is to run your own business. So yes, I think some education about that is really important
[KEN]
For sure. I think that’s probably the big things that we’re seeing. Now having said that, culture is still really matters, so whatever practice you’re building focusing on the sense of work family, what your shared values are, all that stuff, super important. People are reluctant to leave a place that feels like home, where they feel cared for and valued and all that kind stuff and enjoyed. So if you want to keep your team together, you need to be pouring time into enjoying, doing life with them, all that stuff. It’s not just a conflict-free work environment. They need to have a family they don’t want to leave.
[ALISON]
I hardly believe that I think the culture is one of the reasons why we do retain staff because we don’t pay at the top end of the range. I mean it’s pretty close, but there are other places they can go, bigger health systems where they can make more money and they don’t want to because they want a flexible schedule and they like the culture and all of those things. So I’m curious since we’re talking about trends, I’ve actually gotten some questions from my own consulting client about these newer companies that are popping up and it seems like as soon as one pops up it folds and then something else comes in its place. There are these companies, and of course, I can’t think of the names off the top of their head, but it’s almost like in a way it’s almost like they’re unionizing therapists. They’re providing the billing support and all of that stuff and in return they’re paying the therapists quite a lot. I don’t know if you’re familiar with the model that I’m talking about.
[KEN]
You’re talking about essentially something like Talkspace or some of these other things or something different?
[ALISON]
No. I think one is called Grow Therapy or one is called Headway. So it’s interesting because some of the practice owners I talk to are getting a little freaked out that they might end up taking some of their therapists because they do pay better and it allows them to be in private practice and not have all of those headaches of credentialing and billing and all of that stuff.
[KEN]
Yes, it is. I think a lot of those things are funded by some private investment that makes it possible to pay the therapist as much as they’re paying them, which is brutal, because most of us are not willing to pay that. I also don’t think it’s going to last for the therapist at those places. I feel like what’s going on there is this play to build something big, that’s sellable, not necessarily profitable, but’s got a lot of revenue, whether it’s an Amazon or a Google or Apple or somebody who wants to get into the mental health space will snap up that network of providers and then figure out how to lower costs. But yes, I think it’ll be two to three years and we won’t see a lot of those places around anymore. I think they’ll have made their exit. They’ll make their play to sell to a larger company and do what we call a roll up. But it’s frustrating because I think a lot of, I mean, practice owners feel like, what do you do? How do you compete with somebody who’s paying 90% or a hundred percent of what comes in?
[ALISON]
That’s what the one practice owner was talking to me about and I thought the same as you, there’s no way that can be sustainable because we all know what insurance reimbursements are. They were accepting insurance and I was like, well we know insurance only pays a hundred dollars and they’re paying them a hundred dollars so they’re not making any money.
[KEN]
Yes, it’s not viable
[ALISON]
So yes, I agree. I don’t think it’s sustainable and I think they’re not going to be able to continue paying therapists that much over the long term, like we would in our own practices.
[KEN]
No, I think it’s a short term play. I think what’ll be interesting to see is I think you’ll have just in the same way that we’ve seen a bunch of therapists leave the market as employees you’ll see them come back in just as fast when these places go to, they cut pay 25% or something and and the quality starts dropping or whatever. It won’t take, the therapists that leave just as easy as they did now will leave those places just as easy. Live by a sword die by that sword thing.
[ALISON]
So what do you think of Talkspace and Better Health?
[KEN]
I think altruistically, I think they’re great. However, the public gets access to mental health I think we need to be fans of. I think we are fearful in the private practice space. It’s interesting because there’s a lot of pushbacks within the private practice space, private practice owner space, but it’s really because it’s impinging on our economic interest, not because it’s not good care. I see people try and explain it as not good care, but I think overall that it’s better care than no care and it’s care that works for some people. So I think when I talk to people at agencies and work in other settings that aren’t practice owners, they like these programs, they see them as a way to supplement their income, they see them as a way for the public gain access. So I think they’re here to stay in one format or another. I think that COVID let the telehealth cat out of the bag and there’s a lot of people and some providers that never want to go back now that they’ve experienced it this way. I think you’ll see some consolidation. Just like a lot of, back in the day, there’s all kinds of mobile phone companies and now there’s three or four, you’ll see a lot of these larger places consolidate over time.
[ALISON]
Okay. So that doesn’t worry you at all, as a private practice owner?
[KEN]
It doesn’t worry me in the sense that, even post COVID, we’ve seen, there’s so many people that want to be back in office. It’s something that we have to navigate. It’s going to take some of the opportunity off the table, but it doesn’t mean that private practice isn’t viable. It just means like so many times before and so many times going forward, you’re going to have to pivot. The core values in our company that we have written in our cultural document is expect the death of your current model, which means, however, you think you’re doing it, no matter how good you think it’s working, it’s probably going to end at some point. That’s something to keep in mind whether it’s Talkspace or Elon Musk doing implantables in your brain for depression, which you’re talking about, then it’s going to happen. So don’t be afraid of it. Figure out how to lean into it, how to take advantage of it.
[ALISON]
So what’s your prediction in terms of what’s happening with side pack and now the counseling compact of there being like a national licensure?
[KEN]
I think it’s going to happen. I think it’s probably inevitable. It happens in part because for a lot of states it’s just licensing revenue. So the ability to have people licenses is easier or whatever. I think the states like it. They feel like it’s more choice for the consumer. I think in the end, it’s going to be great for consumers and bad for some practices, but the fact that you could be in rural Arkansas and find an eating disorder specialist based out of Oregon that means you get better care versus having to do therapy with the one person in town who says they do everything? So I think it’s going to open up up, especially specialist type providers to rural markets.
[ALISON]
So how far away do you think we are from that actually happening?
[KEN]
Three to five years.
[ALISON]
Oh, really? That’s that soon.
[KEN]
Yes, I could see that soon. Again, it’s going to be a revenue play, I think for the states that do this. So stuff moves through state legislatures pretty quick when it puts money in the coffers? So, I think you’ll see it. I think you’ll see states like Texas, which already charge you. No income tax states will be the ones that consider this the fastest, because it’s a new source of revenue, so taxes in Tennessee, a lot of those places I think are going to be some of the first to adopt and embrace this because they want the revenue.
[ALISON]
Ah, interesting. Before we wrap up today, can you tell us a little bit about semi-private practice and what you’re doing?
[KEN]
Semiprivate practices, at the front end of COVID I was speaking at something and somebody asked me where they could buy coaching and my classes. I was like, I don’t have coaching in classes. I just talk about this stuff. So we launched semi-private practice. It is a bunch of tools for small practice owners, all the way up to huge practice owners. We’ve got a bunch of fairly priced workshops on there, on everything from how to build things correctly to how to avoid insurance audits. Then a we offer coaching on there. We’ve got a cultural coach, a compliance coach, some different stuff, billing coach. But we do a Weekly Coffee with Ken that everybody’s welcome at. It’s priced at $20 a month, four weeks free. We do it on Thursdays. We do one around lunchtime for group practice owners and one around dinner time for solar practice owners, but great places to show up and hear topical discussions, lot of Q&A, lot of crowd sourcing. So we would love to have any of you listening at that. If you just go to semi-private practice and go to the store, you’ll see those options and everything else.
[ALISON]
I know sometimes you do Q&As, and sometimes you present on different topics, but I just find it super helpful because once you ascend to a certain level, there’s not that many people who can talk about what it’s like to manage a multimillion-dollar practice. So we appreciate your expertise.
[KEN]
Always. I’ve been where every one of you probably listening has been, so it’s really fun to just get to share and commiserate and brainstorm. It’s a small community of us that do what we do. A lot of us don’t feel understood outside of that community so it’s really important that we stick together, not have a scarcity mindset, but prop each other up.
[ALISON]
Yes, absolutely. Well, Ken, thank you so much for coming today. I really appreciate your time and all your wisdom
[KEN]
Love being here. Love being included.
[ALISON]
I wanted to say thank you one more time to Heard who is our sponsor for this podcast episode. They can help you with bookkeeping and tax filing and all of those things we as therapists don’t really like doing. If you’re interested in learning more about their plans and how they can help you go to www.joinheard.com.

Thanks so much for listening to the podcast today. I hope you enjoyed hearing about those mental health trends from Ken. If you are interested in hanging out with other group practice owners who are going through similar things that you’re going through, consider joining our Group Practice Boss membership community. You can find more information at practiceofthepractice.com/grouppracticeboss. I’ll talk to y’all next time.

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This podcast is designed to provide accurate and authoritative information in regards to the subject matter covered. This is given with the understanding that neither the host, Practice of the Practice, or the guests are providing legal, mental health, or other professional information. If you need a professional, you should find one.