Therapists in private practice are mostly driven by two commitments. First, to help clients find relief from their traumas, emotional pain, and relationship problems. Second, to help their own families achieve a prosperous future. My commitment when coaching therapists is to help them realize that even when the two commitments appear to conflict, you can reframe them so not only are they not in conflict but are actually intimately aligned, like the pronghorns in the photo.

Using Commitment to Family as Emotional Ballast in Deciding How to Run Your Practice

A while back I spoke with a new coaching client, a therapist in private practice. She had a fairly heavy case load, but many of her clients were from Medicaid, with a very low reimbursement. They also required that she hire someone to handle billing, increasing her expenses.

When I suggested that she may want to leave that segment of the market, she had a really hard time. In response, I asked her if she was ok with taking money from her kid’s college fund and giving it to these clients. She obviously said "No." That was the tipping point. She was finally open to considering a private-pay practice, with a set number of discounted slots.

Your decisions to accept insurance or Medicaid or not, and/or raise your session fees or keep them low, don’t take place in a vacuum. Those decisions have direct and immediate impacts on how well you can take care of your commitment to your family’s well-being, now and in the future. 

Even if your kids are grown and successfully launched, they can be impacted by your making the wrong decision here. If you don’t make enough now to take care of your financial obligations while also setting aside enough for retirement, you may end up becoming a burden on your kids if you’re forced to stop working before you have enough set aside. In fact, many people who plan to continue working beyond full retirement age end up being forced to retire early due to health problems.

As I describe below, making the right decisions for you benefits your clients too, even if you don't see it at first glance.

Your Options on Building a 6-Figure Practice

Let’s say your business expenses are $60,000/year ($5000/month), and you decide that your income needs are $100,000/year (yup, a six-figure income). You have four options.

1. Transition to a group practice. In this scenario, your costs will increase significantly, so you’ll need to market effectively enough to fill your associates’ calendars, not just your own. You’ll also need to set up your practice model in a way that avoids potential legal pitfalls and treats your associates well so they want to stick with you.
2. Set your rates low enough that you’re comfortable with them (or accept insurance and/or Medicaid clients with low reimbursement rates). If that’s $100/session for example, you’ll need to provide 1600 sessions/year, or an average of 32 sessions/week if you take two weeks off each year. Accounting for slow weeks, you probably have to bump that up to 35 sessions or more in as many weeks as possible.
3. Set your rates high enough that you can reduce your case load to an acceptable level. For example, if you want to deliver 16 sessions per week 50 weeks a year, you’d have to charge $200/session.
4. Give up on making a six-figure income from your practice.

How Running a Full-Fee Private-Pay Practice with Higher Rates Serves Your Clients

Clearly, if you only accept full-fee private-pay clients and set your rates high enough (i.e., based on your financial needs, which is most likely much higher than you’re currently comfortable doing), this will improve your profitability and help both you and your family. But what about your clients? It turns out that they too will benefit from such a change.

While option 1 can be a good direction, and is in fact the direction my wife took with her practice, it requires you to think through carefully what it would mean in terms of marketing, recruiting and keeping great associates, finding a large enough space, etc. I’ll cover this option in more depth in a future article, since I want to focus on solo practices here.

In option 2, you’d see an average of seven clients a day, five days a week, most weeks of the year. Worse, since some days you’d only have three or four clients, you’d have other days when you see 10 or 11 clients! Clearly in this scenario many of your clients would not be seeing you at your best, and you’d be shortchanging their therapeutic results. Even worse, you’re probably looking at burnout in the near-term future, since seeing 10 or more clients per day several times a week is more pain than even a great therapist can long survive.

In option 3, you’d be able to do what one of my coaching clients did – make more money while reducing your case load to the point that you have one weekday with no clients and an average of four clients per day on other weekdays. This avoids burnout, lets you be at your best in all sessions, and frees up time. This is time you can put to good use strategically developing your practice; developing additional income streams not based on fee-for-service therapy; learning new skills and models to improve how well you help your clients; and even spending quality time with your significant other and/or kid(s), which recharges you so you can be at your best each session for every client. As a bonus, clients who pay more for their therapy sessions are more likely to put the effort in that’s needed to achieve good outcomes. While paying more is no guarantee of great results, they will be more motivated.

In option 4, you risk burning out in the somewhat longer term, because no matter what you do it’ll seem like you can never get ahead, let alone set enough aside to fund your retirement. Even before that eventual burnout, you run the risk of resenting your clients, who may be driving nicer cars than you drive, living in nicer homes, taking nicer vacations, etc., yet only pay a pittance for your help. I think it’s safe to say that resentment is not the best frame of mind from which to try and help your clients.

Setting aside option 1 as going beyond the scope of this article, it’s clear that option 3 is the one that allows your solo practice to provide the best results for your clients. This is the only one that doesn’t lead to burnout either in the short or long term, and that has your best therapist self in the chair helping each of your clients every session. Once you realize and accept this, you’ll see how a full-fee private-pay practice charging sufficiently high fees is best not only for your wallet and family, but also for your clients.

The Bottom Line on Full-Fee Private-Pay Practices Charging High Enough Fees

As I tell many clinicians, even if you were able to work pro-bono full time, there aren’t enough days in the year nor time in the day for you to help everyone who needs your help. In addition, if you charge any fee higher than $0, there will be those clients who can afford your services and those who cannot. This means that you have to give up on the notion of setting your fees low enough that everyone who needs your help can get it. It simply can’t be done. Once you accept that reality, you have to ask yourself the real question, which is this: “How can I optimize my practice so that it best serves both my clients and my family?” If you read the above, I’m confident you’ll agree that a full-fee private-pay practice charging high enough fees is the best answer.

Please let me know in the comment section below what you think, whether you agree or disagree with me, or if you have any questions. I promise to answer in a response comment.

If you want to explore if I'd be a good fit to help you in optimizing your practice, just drop me a line to info@opherganel.com. I promise to respond by the next business day.