Have you been considering moving from a solo to group practice? Do you know what this change will entail? How much more financially viable will it be for you to start a group practice?
In this ‘Five Questions for Private Practice’ series podcast episode, Joe Sanok speaks about whether you should start a group practice.
In this podcast series, episode 5, Joe Sanok talks about whether you should start a group private practice, things to consider and how to test it out gradually.
Solo To Group
Moving from a solo practice to a group practice seems like a big decision. But, you can test it out gradually. When you have developed a brand that gets referrals and you see yourself getting full, you’ll be leaving money on the table if you stay as a solo practice.
Imagine your ideal clients are couples, you’re Gottman Level 2 and you’re almost full. What will people do when you are full?
Here are some types of clinicians to consider bringing on:
- Another couple’s therapist that meets a different need. Maybe they focus on sex, are older/younger than you, different in racial background, gender, or LGBTQ.
- A therapist that can serve a couple’s kids
- A counselor who can help with co-parenting if they get divorced
But Is It Financially Worth It To Have A Group Practice?
Let’s say you have a one office suite and don’t want to rent extra offices. Monday-Thursday there could be at least 12 sessions 8:00 am until 8:00 pm if you do them on the 45 minutes even more. That’s a total of 48 sessions for that one office.
Plus Friday-Sunday you could probably do another 25 sessions.
That’s a total of 73 sessions if fully optimized.
Imagine you average 80% occupancy, that would be 58 or so sessions. That’s enough for two full-time clinicians at 20 sessions per week and leaves you with 18 sessions for yourself.
How to Make Money in a Group Private Practice
Let’s break down the numbers for a group practice:
- Of those 40 sessions, say you charge $150 per session, so the clinicians charge $135.
- 40 x $135 = $5,400 gross per week. Subtract 3% for credit card fees = $5,238. With admin costs like phones, scheduling, and other things, let’s calculate that the clinicians get 60% (great in most areas) and that admin is 10%. That leaves you with 30%, without upgrading your office.
- So if we take $5,238 x .30 = $1,571.40/week
- If they work an average of 46 weeks per year, that’s an additional $72,284.40 per year.
- But you were doing 18 hours per week x $145.50 (I took out the 3% credit card fees) x 46 weeks per year = $120,474
That means you’re making $192,758.40 working 18 hours per week +2-3 hours for Operations Time and have 6 weeks of vacation per year. Not bad!
- How Much Time Should I Spend on My Private Practice? Five Questions for Private Practice Series 1 of 5 | PoP 366
- Should I Take Insurance in My Private Practice? Five Questions for Private Practice Series 2 of 5 | PoP 367
- How do I Set My Rates In Private Practice? Five Questions for Private Practice Series 3 of 5 | PoP 368
- How Do I Get More Ideal Clients In My Private Practice? Five Questions for Private Practice Series 4 of 5 | PoP 369
- The Five Most Important Questions for Private Practice: An Authoritative Guide
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Meet Joe Sanok
Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.
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This is the Practice of the Practice podcast with Joe Sanok session number 370. I misspoke last week. I said that, well that was question number five. Boy was I wrong? That was question number four. So, today we’re actually going to be talking all about ‘Should you start a group practice?’ And I’m really excited about this one because I feel like group practices really can make a difference in your life financially in regards to your workload and a number of other ways, but there are some things that you really want to consider.
So, first I want to tell you a little bit about my backstory. So, I don’t like to assume that people know my backstory, but when I was, when we were first married 2004, we moved to Michigan’s upper peninsula, got a job at a nonprofit where I had to drive an hour and 15 minutes each way. And I didn’t have a cell phone and was just driving through rural Northern Michigan to get to this little town called Escanaba. And I had negotiated to get paid for that time in the car, which I’m really glad that I had, but I made $30,000 that year while my wife was in school.
We lived in this teeny tiny a-frame. And then eventually we moved back to Kalamazoo for her to go to grad school and hang out with friends down there. And I got a job at Community Mental Health. Now while I was down there, I was a 1099 for child and family psychological services. I’ve interviewed Larry Beer, the owner, a couple of times here on the podcast and that really got me thinking about private practice. And I remember in 2009 when my wife and I went on a six-week road trip, I quit my job at Community Mental Health. She was going to be doing her internship and, you know, we were going to be moving back to Traverse City, which is our hometown. It’s where our families are. It’s this beautiful beach town in Northern Michigan.
But, I quit my job and, you know, I worked the first day of May so that I could have health insurance through all of May and then we were going to pay privately for it after that. So, I’m on this six-week road trip and I read this book Guerrilla Marketing and realized we just suck it. Like if I market right, I might be able to make six figures, I might be able to someday make $100,000, and I sketched out this plan while we were driving. My wife was driving, I was reading and it was probably somewhere in the middle of Colorado or something like that of how within five years I could make six figures. Now that book got somehow in all of our moves kind of buried away and I found it years later and one of the big things was looking at having clinicians be part of a practice while I was working at a full-time job.
And so, when we moved back, I got a job as a foster care supervisor, did that for about a year and then was given an opportunity to work at a community college. And really that community college job to me was kind of the golden job of the area. We live in a very counselor-saturated area. The community college as kind of 40-hour week jobs go is the best paying for kind of a master’s level counselor that wants to do counseling.
And so, I had struck gold and thought, you know, I should just stay here. I’ll have a pension when I retire, got to stick around. But I had this little counseling practice on the side and the goal really was just to pay off student loan debt. And then when we paid off student loan debt, it was just for a little extra money to you know, buy a mattress or you know, do a little small home renovation kind of thing or you know, fix things around the house. It was just some extra income.
And then I had this supervisee, because I was a Michigan supervisor and he said that he wanted to start doing some counseling. And so, I figured out like what a 1099 contract needed to look like and what was fair compensation for that. And I started making money off of the time that I wasn’t in the office.
And then I had another supervisee that joined the practice and then I had another, and this was all out of a single office suite that I was renting as a percentage of what I brought in. And so, I remember this moment when I, we had just upgraded the office from a single office to a full office suite with a view of the water. And I left my corner office view of the bay. I had done a lunchtime appointment, from the community college, was going back to my office at the Community College and I’m walking down the stairs to my basement office with no windows.
And I realized, you know, I made more working 10 hours a week in my private practice than I do here at this community college. And it really kind of struck me that I needed to make a change. And I had started blogging with Practice of the Practice and wasn’t making a whole lot of money off of that. But you know, it was kind of building a little audience. And I thought if this is what 10 hours a week it can be like, what would 20 or 30 be?
And then when my daughter, our second daughter was born, I took the full family medical leave act and just works 20 hours a week at the college to basically pay for health insurance to test this out and then transitioned full time and we got up to 11 people in our group practice. And I realized kind of through that process that, actually running a group practice wasn’t as much of my passion as doing kind of teaching like this and consulting and that sort of thing.
But it was really good to have that experience to know the nuances of running a practice, to work now with people that are running group practices, and to help support them through that process. So, when I look back on that, there are some things that you really want to consider, you know, even before you bring somebody onto your practice because moving from a solo practice to a group practice really, it seems like a big decision, but there are ways you can test it out gradually. You don’t have to kind of develop this huge brand and be a giant group practice and then never look back. There are ways you can test it to see if you even like it. So, when you’ve developed a brand that’s getting referrals and you see yourself starting to get full, you’re really leaving money on the table by staying in a solo practice.
A couple of things though that you want to consider is you want to think through, do you enjoy, you know, making money from other people? Do you enjoy kind of having some management of other people? Do you enjoy setting a vision for it? Where are areas that you feel like you’re not really sure, and how do you get some coaching or consulting around that or how are you going to learn to overcome that? So, imagine that you are a couple’s counselor, Gottman level two, you’re almost full.
You want to think about what will people do when you’re full. I mean a couple of things that you can do is you can just refer people out, but why not bring on some part-time people that can kind of do that same level of work or kind of mirror. So, for example, some clinicians you might want to consider bringing on, if you’re a Gottman level two, level three therapists is maybe another couple’s therapist that meets a different need.
Maybe their focus is on sex or they’re older or younger than you, they have a different racial background or gender, maybe they serve the LGBTQ community. So, then that may mirror you a little bit. You also might want to maybe have a therapist that would come in that can serve the couples’ kids or a counselor that can help with co-parenting if they get divorced. So, there’s a number of things that you can think about that can be really helpful to mirror the work you’re doing.
Because if you already have people that are seeing you, that trust you, they may have friends or family members or people in, even their own immediate family that need to see someone. So, maybe you focus on men’s issues. What happens for the wives or the partners or the other men in their life? They may want therapy as well.
So, the next question often I get is, is it financially worth it to have a group practice? So, let’s walk through some actual numbers. You know I like numbers, you know I like science as well as kind of the heart and soul of therapy. But let’s actually look at some of the numbers. So, let’s say you have a one office suite, but you don’t want to rent a bigger office. You’re just like, “Okay, I have one office, I’m a solo practice, I don’t want to take on the extra risk. I don’t even know if I like a group practice.”
Okay, awesome. So, Monday through Thursday, you’re going to look at at least 12 sessions. So, from 8:00 AM to 8:00 PM. So, we want to kind of figure out the occupancy of this office. Now, we’ll talk about whether or not you could fill all those, but there are ways you can optimize that wherein the kind of hot hours, you know, especially kind of afterschool hours. If you do sessions right on the 45 minutes instead of the hour, you can squeeze in some extra sessions. So, 12 is actually a pretty conservative number from 8:00 AM to 8:00 PM, because if you do out in the 45, I mean that means that you’re doing every three hours, you’re doing four sessions and so you could really squeeze in quite a few. So, that’s a total of 48 sessions in that Monday through Thursday, 12 hours each day. Four times 12, 48.
So, then if we look at maybe a Friday through Sunday, you could probably between those three days have 25 sessions that are available. So, that’s a total of 73 sessions if you are fully optimized, which is never going to happen. It’s not a hotel. But for most counseling offices, they sit empty way more than they’re full. So, imagine you had 80% occupancy. So, that would be about 58 sessions or so. So, if we break that down, if done correctly, say you do 18 sessions, that means that you could have two people each doing 20 sessions each.
You can have two full-time people and then you as a part-timer sole person in that office. Now, you are not saying like, “I don’t want people in there that much.” That’s fine. You run your own numbers, you say, “Okay, I just want somebody in five hours a week or one evening a week, or I want to test it out in that way. That’s fine. That’s what I did. I started when we had four people that were working out of one office. We all had full-time jobs and so, I got all the lunch hours and then I also got Tuesday nights. And then someone else had Monday nights, someone else said Wednesday, someone else had Thursday.
That was just the nights that they were allowed to be there and they did, you know, four to six sessions every night. And then during the day, we didn’t have anyone that was really in there, but it more than paid the rent. It also brought in some good income.
So, let’s look at how to make money in a group practice. So, let’s break down the numbers for that group practice. So, of those 40 sessions, so, remember you’re doing 18, say you’re charging $150 per session, your private pay. You know, you kind of charge what you want, or maybe you take one insurance that you choose strategically, but you really focus on, you know, the private pay market. So, maybe your clinicians might charge 135, so a little less than you. So, that kind of put you at the top. So, if we do 40 sessions, times 135, that would be $5,400 gross per week.
Now, if we just subtract 3% for credit card fees, that brings it down to $5,238. And we’ll have all this in the show notes, we also have a blog post called the Five Most Important questions for private practice and authoritative guide. So, if you just type in Five Questions, it’s one of the top blog posts on Practice of the Practice. So, if you’re driving or running, you don’t have to worry about these numbers. We have them all for you. We actually have some videos that go along with this that’s going to help you continue to grow and scale. Also, you can just go on YouTube and go to our channel and you’ll see the videos there too.
So, after credit card fees, you’re talking $5,238 per week. So, if we have admin costs like phones, scheduling, and other things, and let’s calculate maybe the clinicians get, you know, 60% and admins 10%, that leaves you with about 30% take-home from that gross. And so, if we take that 5,238, so, that was the amount after credit card fees and we say you’re taking home 30%, that would mean your take-home, so, your net is $1,571.40 cents. That’s all before taxes, of course.
So, if these people work an average of 46 weeks a year, that’s six weeks off, for you, that’s an extra $72,284.40 cents per year. So, that’s extra 72K. That’s a lot of money. And that’s after paying the people. But if you are also doing your 18 hours per week, so, that’d be 14,550 so, I took out the credit card fees times 46 weeks of that 18 that’s going to be $120,474 a year bringing in. So, we add those two up between, and that means you’re making $192,758.40 cents working eight hours per week. I’d add in there two to three hours or so for operational time and you’re getting six weeks of vacation.
So, let me just summarize those numbers again. So, if you had someone in your office, two people each doing 20 hours per week, charging around 135 and say they get 60% and then the admin and all those costs are 10% that leaves you with 30%. 30% of what they bring in working 46 weeks per year is an extra $72,000 or so. And then if you’re doing 18 sessions per week at around 150 a session after credit card fees, you’re looking at a total between the tune of 192k. Now that’s crazy. I mean when we think about grad school and you look at, you know, the occupational job outlook handbook, there was one thing I looked at a lot. You know, the Bureau of Labor and Statistics puts out this thing where they say, you know, how much is the average counselor getting paid, the average psychologist, the average doctor, dentist, all of the things?
That’s so far beyond what they say we should be making, and it’s so far beyond what most grad schools are teaching. And if you are teaching grad school courses, I would love to Skype in and inspire your students because honestly this message needs to be out there and it’s not my message. This is a message that the world needs to hear that we don’t have to live in poverty and we can do good work and we’re now serving, I mean by hiring someone that’s two more families that have a quality income and two more therapists that are in the community that are going to sustain, that are each serving 40 people a week. We have a mental health crisis in America and it’s important that we have mental health clinicians that don’t burn out. What do you think about burnout when you’re making 192k a year versus, you know, kind of scraping by as I did in the nonprofit, $30,000 a year. Like that’s just not sustainable for someone to stay in that and have a family.
So, here are a couple of kinds of conclusions around this because we want to really think through how do you structure it. So, first in your state, you want to look at do you want a 1099 which is like an independent contractor model or a W2 employee model? It’s really important to know your employment law and especially in California, New York, Utah and there’s a handful of other states. 1099s are near impossible to do. So, it’s really important to talk to your accountant and your lawyer in your state. Also, look at your own code of ethics and your own licensing in your state in regards to that. Because there are some states that, for example, someone that’s pre-licensed or intern or limited license, they have to be a W2 because you’re supervising them.
There are other states that you can have them have a different supervisor or you can have a supervision contract and then hire them as a 1099. So, you want to make sure you know those nuances so you don’t get yourself in trouble. Because if the IRS comes back and says, you are treating this 1099 as an employee, they can come back for a bunch of taxes and you don’t want to pay a bunch of years of back taxes. That’s going to sink your ship. So, do you want to make more money? Do you want to do it in an ethical way? Do you want to expand mental health treatment? Do you want to work fewer hours? If you answered yes to those things, I’d say a group practice is probably worth testing out.
So, how would you test that out? Well, I would say start with just bringing on one person. Find someone that mirrors your services, bring them on, go through it, see how long it takes to get them going, start to have them see some clients and you know, maybe start with five sessions a week. See if you like it. And then when they’re 10 and you start realizing, “Wow, I’m at home with my kids and so-and-so is at the office until nine tonight making money for themselves and for the practice. It’s a pretty magnificent feeling.
So, would love to continue to help you more in this area with a group practice. We have lots and lots of services around helping you start a group practice including consulting, mastermind groups, and ecourses. Head on over to practiceofthepractice.com/apply if you want to check any of that out. It’s amazing to see just how quickly people can scale and grow their practice when they start to structure it correctly.
And if you’re looking to really grow and expand, I’m telling you this week together at Slow Down School is one of the best uses of your time. Actually, in the next podcast, I’m going to be doing just a podcast all about Slow Down School. So, if you’re interested, I would love for you to tune into that to hear what it’s about, to take you through a lot of the details of what we do in Slow Down School. To see people’s transition and transformation in that week is pretty darn amazing. And I’ll be sharing a little bit more about that with you next time.
So, thanks so much for letting me into your ears and into your brain. If you’re interested in Slow Down School, head on over to slowdownschool.com and we can schedule a time for you and me to jump on a phone call. We want to make sure that you’re a good fit and that it really is the best use of your money. Because if it’s not, we’ll just tell you, we’ll say, “Hey, you know, it’s not a good fit. It’s not a good time for you to come for a whole week and spend all this time and money to come.”
We want to make sure that you’re really going to get a good ROI on your time there. So, looking forward to chatting with you. Head on over to slowdownschool.com to connect and we’ll go from there. See you.
Special thanks to the band Silence is Sexy for the intro music and this podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. It’s given with the understanding that neither the host, the publisher or the guests are rendering legal, accounting, clinical, or other professional information. If you need a professional, you should find one.