The Five Most Important Questions for Private Practice: An Authoritative Guide

The Five Most Important Questions for Private Practice: An Authoritative Guide

How much time should I spend on my private practice?

Should I take insurance in my private practice?

How do I set my rates in private practice?

How do I get more ideal clients in my private practice?

Should I start a group private practice?

If you can answer these five questions, everything else will be easier in your private practice. Imagine having a practice, where tasks feel under control, clients are predictably scheduling, and you are an amazing resource to the community.

A stressed out practice usually fails, but a well organized practice thrives. Taking the time to sort through each of these questions, will help you to have a practice that gives you financial freedom, helps your clients achieve their goals, and impact the greater community.

Let’s start with how you should spend time on your practice.

How much time should I spend on my private practice?

How much time should you spend working on your private practice? We might call this time “operational hours.” These are hours like networking, building systems, planning marketing, or training virtual assistants.

It sort of depends on your goals. Maybe you want to build supplemental income outside of your full-time job, then you’re going to look at the minimum amount of time. Focus on getting a website set up, finding an office, and keeping the systems rolling. You probably don’t want to take insurance, because it’s just for some side money and the hourly is better with private pay (and the paperwork).

Whereas if your goals are to have a supper mega group private practice, you may want to spend some time on systems on the front end.

In general here are some numbers for when you are in the start and growth phase (under $100k):

  • 5-10 clinical hours = 2 operational hours per week
  • 11-20 clinician hours = 3 operational hours per week
  • 20+ = 3.5 operational hours per week

When you first start, you need to work the number of hours you eventually want to work. If you want to see 15 clients, but you only have one, that means you should be spending 14 hours per week networking, doing social media, and building connections. If you want to see five clients in the evenings, but only have two, don’t go home early, work on the practice!

As you start seeing more clients, you’ll want to focus your time on building systems outside of yourself. If you’re wearing multiple hats like: website, accounting, answering phones, scheduling, SEO, and social media marking, these are things you should take off your plate.

Initially, your time should be spent on starting and growing the practice, but then it needs to switch to having technology, systems, and people building it more.

Should I take insurance in my private practice?

The big “taking insurance” question. What drives this question? It’s really, will I make enough money in my private practice? No one wants to fail in practice. We don’t start a practice, only to feel stressed and like we’re letting down our community.

We start a practice to make an impact.

I want to give you a mindset regarding insurance.

Taking insurance isn’t bad, you just have to know when and why you want to do it. First, it’s about where you spend time. Would you rather spend time networking and marketing yourself or working on systems and billing?

Private Pay Benefits:

  • You typically make more per hour
  • You see fewer people
  • Paperwork is easier
  • Immediate payment
  • Clients are often more dedicated and follow-through on treatment

Private Pay Cons:

  • You have to niche down more
  • Marketing is key
  • You need to understand how to articulate your value

When you have a private pay practice, more of your time is spent on networking with other people that may refer to you. Also, you’ll probably spend about twice as much time on your marketing, website, and branding. If you’re artistic, enjoy the visual side of growing a practice, and enjoy learning about new ways to get the word out, private pay might be for you. Also, you can see fewer clients at a higher rate.

Insurance Benefits:

  • You have a built-in referral network
  • People expect to use insurance
  • Doctors refer more often

Insurance Cons:

  • You don’t get paid right away
  • You need an EHR, and probably a biller (Here’s who I recommend)
  • If your systems are off, you sometimes will lose money and not get paid

An insurance-based practice might be for you if you want to set up systems for automation. Maybe that’s internal systems or finding billers to help your grow your practice. You’ll have to navigate getting paneled with an insurance company, setting up an EHR, and getting paid well after you see someone. Also, overall, you’ll see more people at a lower rate, but if you scale into a group practice, it can be very lucrative.

There are pros and cons to each decision. How will you decide what you’ll do with your practice?

Here are some tips to help:

  1. Ask other clinicians what they have done.
  2. Interview billers before you decide.
  3. Meet with some local massage therapists, doctors, and yoga teachers to learn how and when they refer.
  4. Come to one of my free live events and ask me 🙂

How do I set my rates in private practice?

You won’t be paneled for everyone’s insurance, so either way, you need to set your rates for your private practice. First, look at any insurances you are on. Your rate needs to be above your highest paying insurance. If you’re 100% private pay, set whatever price you want (I’ll guide you through how to do that).

Also, look at what the typical private pay practice is charging and go 20% above that. Why 20%, do you know which wines sell the most? It’s not the cheapest or the most expensive, it’s those in the middle. If you’re at a restaurant, you may have self confidence or wine knowledge to buy the cheapest glass, but most people will get the 2nd or 3rd cheapest glass.

Potential clients will think, “They must be worth that little extra.”

Next, you’ll want to have your intake price and regular session price be different. This is because:

  1. More work goes into the first session
  2. First sessions have a higher no show/cancellation rate
  3. It helps you test new prices

Say you start at $125 for an intake and $100 per session, you’re on BCBS, they pay $112 for an intake and $98.45 per session. The last factor in rates is your case load. For you, what is busy?

If you want to see 15 clients, raise your rates when you are 60-70% full. You’ll raise your rates not with current clients, but instead with new clients. Say you’re at 10 clients and want to be at 15, raise your rates to $150 intake and $125 for sessions. Try that for a month or two. You’’ll be shocked at how many people are fine with the rates (if they know that you are good).

Let’s look at the math of raising rates in private practice:

  • 15 clients x $100/session = $1,500/week x 48 weeks per year = $72,000
  • 12 clients x $125/session = $1,500/week x 48 weeks per year = $72,000
  • 15 clients x $125/session = $1,875/week x 38.4 weeks per year = $72,000
  • 15 clients x $125/session = $1,875/week x 48 weeks per year = $90,000

More Vacation or Money?:

By raising rates from $100 to $125 you could:

  • Work three fewer hours per week
  • Have an extra 9.6 weeks of vacation
  • Have an extra $18,000 per year

Next, when you start to fill up, raise your rates again. Especially when you are close to your max, you don’t want to have a waiting list, just make sure that the rate makes it worth going beyond your max.

Lastly, every year you want to raise your rates for everyone.

How to raise rates in private practice. Here’s the schedule:

  1. In October, email or send a letter to everyone explaining the current rates and that you will be raising rates on Jan 1.
  2. Decide if you are aligning everyone to the same rate or whether people will slowly be raised. For example, if someone started at $100 last year and you’re currently charging $225, that might be too large of a jump.
  3. Jan 1 raise rates.

How do I get more ideal clients in my private practice?

Why should you focus on getting your ideal clients, instead of just seeing everyone?

  1. When you have an ideal client, specialty, or niche you can charge more.
  2. Specialists can always been seen as a generalist, but not the other way around.
  3. Your ideal client will recommend other ideal clients.
  4. The brand of your practice will be easier to understand when you have a focus.

First, why should you focus on an ideal client instead of everyone? Think about every domain in your life:

  • Want to go out to a restaurant tonight? Sure, what are you thinking? No one says, let’s just go to a restaurant, they say, “Im in the mood for…” That’s a specialty.
  • Want a new pair of shoes? Well, are they running shoes, dress shoes, slippers? That’s a specialty.
  • Want to go to the doctor? You get the point.

All of our life is made up of specialties. People have said, “I do plumbing for houses. I make dress shoes. I make great Indian food.” Maybe not all at once, could you image a plumber who is also a shoe maker chef?

Knowing who you want to attract is essential to growing a business quickly.

Business Avatar

First, create a “business avatar.” A “business avatar” is a fictional, but accurate ideal client. Give this person:

  1. A name
  2. Age
  3. List of issues
  4. Who they are connected with
  5. Who is in their family
  6. Hobbies

Go a step further and find a picture online of what you picture them to look like.

Pain and Solution

Next, figure out what they have as a pain and what they want as a solution.

Here are some phrases that might help you with your focus:

  1. We help [insert pain here] to have a better [insert outcome here]. For example, “We help couples who stopped having sex after the kids were born, to have a better connection with one another to find intimacy again.
  2. If you are [pain] then we’ll help you create a plan for [outcome.] For example: If you are sick of getting calls from your son’s principal, we’ll help you create a plan for better behavior at school and home.
  3. We’ve been helping clients who [pain] to [outcome] since [est. date]. For example: We’ve been helping clients who have trouble sleeping to rest soundly and have more energy since 2009.

When you’re focused on who you want to attract, you can charge more and see the exact client you want to see.

Should I start a group private practice?

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 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, an 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!

Private Practice Conclusions

When we start with the questions, it gives us some clear answers and goals for rocking out private practice.

  1. How much time should I spend on my private practice? It depends, but 3-4 hours per week for an established practice, focus on the hours you want to eventually work and work those when you start.
  2. Should I take insurance in my private practice? If you want to do less marketing, take insurance. If you want higher rates and to network/market go private pay.
  3. How do I set my rates in private practice? Start above insurance, increase through the year, and raise everyone’s rates each year.
  4. How do I get more ideal clients in my private practice? Specialize and create a business avatar, have a clear pain/outcome statement.
  5. Should I start a group private practice? Only if you want to make a lot more money.

If you are ready to get your practice going, sign up for one of our FREE MasterClasses coming up soon, register here.

Joe Sanok is a #1 podcaster, TEDx speaker, private practice consultant, and all around fun guy. Interested in working with him? Apply here.

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