7 Factors That Affect Private Practice Income

Maintaining a successful therapy private practice takes a lot of time, effort, and skill. There are countless aspects of your business that require painstaking attention in order for things to run smoothly. It can be difficult to work so hard and still sometimes experience economic uncertainty, so it's important to analyze the causes of financial inconsistencies. Here are 7 factors that affect private practice income: 1) Client Retention Rates     

The ability to keep a client engaged in meaningful and helpful therapy is a learned skill that greatly impacts your private practice income. It doesn't get as much attention as generating new referrals, but in my experience it is equally important. While it would inappropriate to continue seeing an individual who no longer needs or desires therapy, keeping clients committed to the therapy process and attending sessions regularly not only helps them adequately work through their struggles and meet their goals, it also helps practitioners maintain their business. Conversely, clients who prematurely discontinue therapy put both themselves and their mental health professionals at a disadvantage.  

2) The Number of New Referrals   

Acquiring new clients is of course an excellent way to increase income, but it can be hard to predict the ebbs and flows of exactly when new individuals will seek your services, so it's not a guaranteed strategy. I have found that it's helpful to begin tracking the number of new referrals and then chart them so you can anticipate and prepare for business lulls in coming years.

3) Economic Climate        

The general state of the economy can greatly impact whether clients will go to sessions as often or are willing to pay out of pocket. For some individuals, therapy is considered a necessity, while others may be view it as a luxury. Your income as a practitioner is in part dependent on the current economy of your community and state.

4) Season/Time of Year     

The time of year can affect when current and/or potential clients ramp up their therapy time, as well as when they often take breaks. In my experience, the last two weeks of December is when everyone (clients and providers) take time off for the holidays. Just as with new referrals, tracking the dips in client numbers can help you save for those times when you will not be getting paid.  

5) Fee Collection

You may have a steady stream of clients, but your income can be significantly lowered if a number of them have outstanding financial balances. How much money do people owe you? Are you good at collecting your fees? If you work with insurance companies, are you able to get reimbursed in a timely manner? All of these play a major role in the financial stability of your private practice (click here for how to set high expectations and create firm financial policies).

6) Moving Office Location        

Relocation will almost certainly affect your private practice income. Depending on how far you move, it can take time to develop relationships, create a strong web presence, and acquire referral sources for therapy. Even if you are moving to another location in the same city, you may find that this may temporarily impact your client hours.

7) Leave of Absence/Taking a Vacation       

One of the biggest complaints I hear from private practitioners is that if they are sick and have to miss a few weeks, they are left without an income. Taking some time off from seeing clients means we are not getting paid; understandably, this can create financial concerns.  

These and other factors (some within your control, others not) can greatly affect how financially stable your practice will be. And as one of my goals is to help therapists experience income stability, I again strongly encourage you to pursue multiple income streams as a way of advancing professionally, serving your community, and also providing for your own needs.

Click here to access my webinar about how to develop multiple income streams.

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Extra! Extra! Using a Newsletter to Build Your Private Practice

If there is anything you've taken from reading posts on Private Practice Toolbox, it likely has to do with the importance of having a strong online presence to educate and serve your community. There's a lot to consider: social media, blogging, podcasting, SEO, etc. But there's another aspect of building your practice that we haven't quite covered yet: newsletters.

Newsletters are a tool you may consider implementing for your practice. A newsletter is a letter you send out to your clients and readers updating them on what's happening with your practice (it's a good idea to send them out monthly; you don't want to overwhelm your audience with too much from you, but you also don't want them to forget about you). They can be an effective way to connect with your readers and offer some insight on topics related to your specialty, inform them of any upcoming events or seminars, and just overall keep in touch.

Newsletter or Blog Post?

If you're continually producing fresh content, there's often a question of where to place it. Does it work better for a newsletter or for a blog post? While there will be some overlap between the two, there are significant differences between what type of content is best for what medium. Anyone can read your blog or site, but your newsletter is much more tailored and specific, and only people who have subscribed will receive it. These are local users who have shown that they have a specific interest in what you have to say. So while your blog is perhaps more for the purpose of acquiring new clients, a newsletter is best fitted for engaging with current clients.

Another thing to keep in mind is that when you have information to share that you feel would be valuable for both potential and existing clients, sometimes a slight adjustment in wording or format between mediums can make your content fit both a blog post and a newsletter.

Building Your List

Email marketing is one of the most effective ways to attract and engage with clients and is the means through which you'll facilitate your newsletter. This is where you create a list of contacts to communicate with via email. But acquiring a list takes time and effort. Some therapists choose to gather emails at speaking events and conferences. Others may ask for permission to leave a sign-up sheet at physicians' offices or other public settings. Also, providing an opt-in on your website or blog is another way to generate contacts for your list. If you are taking the time to create content for newsletters, you want enough readers to make it worth your while, and building your email list is key.

Programs for Email Newsletters:

Although some do choose to send hard copies of their newsletters, most opt to use emails (hard copies quickly get expensive, and dealing with home addresses can be very inconvenient). But in order to be more efficient and professional, you'll want to use another email program than simply Gmail or Yahoo. Some well-known systems for email lists include Mailchimp and Constant Contact. These both have free trial periods and then have varying prices depending on your number of subscribers and the volume of emails you send out. Thankfully, email marketing programs for your newsletters are not very costly investments; Mailchimp allows users to send unlimited emails to 500 subscribers for only $10 per month. Take time to experiment with the different features and automations of these programs, and they can be an invaluable part of your newsletter campaign.

Newsletters are yet another way to reach out to your community and get the word out about your private practice. Consider the time investment necessary, the potential results (acquiring new clients, having more individuals come to your events, gaining more blog readers, etc.), and the costs, and then decide whether they would be a useful tool for your therapy practice.

What are YOUR experiences with newsletters?

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Top 10 Websites for Building Your Private Practice

Top 10 Websites

Like any worthwhile endeavor, building a successful private practice takes a lot of work, time, and know-how. So why not consult the experts? Here's a list of 10 of the best websites (listed in no particular order) to help you do just that:

1) Zur Institute

Drawing from his 20+ years of experience, Dr. Ofer Zur gives insight on virtually all aspects of the field of psychotherapy and the mental health profession, including practice building and continuing education. He offers practical resources on such topics as using a newsletter for marketing and how to deal with collections agencies. Many of Dr. Zur's publications and packages have a set price, but he does give some free articles and videos.

2) Private Practice From the Inside Out

Tamara G. Suttle, M.Ed., LPC has run a private clinical practice since 1991 and wants to share her secrets to success. She includes tips on blogging, how to build your website, and marketing your practice. Her site is very interactive, as you can submit your own questions and also have the potential to contribute a guest post.

3) Practice of the Practice

Joe Sanock, MA, LLP, LPC, NCC, is committed to making counselors awesome by sharing the business and social media info that he's acquired in his years of private practice. He covers a wide variety of topics, such as how to use Wordpress and Bluehost to build your own site, finding your niche as a therapist, and how to use Google Keyword Planner to rank higher in search engines. Joe also runs a very successful podcast where he discusses even more tricks of the trade. He even discloses his monthly income report and shows exactly how he has managed to increase his earnings through his side professional activities.

4) Zynny Me

Miranda Palmer, LMFT and Kelly Higdon, LMFT are no-nonsense experts in all things private practice! Become part of their Business Bootcamp, where a community of clinicians offer their experience and support to help each other (re)examine beliefs concerning money and private ownership, create a business vision, and build a sturdy foundation to grow into a thriving psychotherapy practice!

5) Get Down to Business Consulting

Cathy Hanville, LCSW knows that being a great psychotherapist is not enough, and she offers consulting to help you take your business to the next level. By reviewing your social media campaign, helping you streamline your billing procedures to make them more efficient, and helping you get started with blogging, Cathy can guide you on how to market and manage your practice to expand your outreach and create a robust practice.

6) The Counselor Entrepreneur

When Camille McDaniel, LPC, CPCS first started out in private practice, she worked long hours without a clear vision of her own. Once she educated herself on marketing, business skills, and how to develop multiple income streams, she was able to have more creative control of her practice and find more fulfillment in her work. Her goal with "The Counselor Entrepreneur" is to help other counselors tap into their own creativity and use it to help others.

7) Be a Wealthy Therapist

Building upon the principles she gives in her book, Casey Truffo spills the beans on all things related to becoming financially well-off as a therapist. She tells how to attract full-fee clients, how to change a negative or inaccurate mindset that hurts your practice, and how to increase your income when you're already capped out with clients.

8) Perfected Practice

Samara Stone, LCSW and founder of The Stone Foundation built her own practice from the ground up. Wanting to help others replicate the success that she herself has had, Samara shares valuable information and tips about the importance of networking with other professionals in the field, how to work hard in building your practice without burning out, and best practices for selecting administrative staff.

9) Heart of Business

Founder Mark Silva understands the dilemma of wanting to make a difference in people's lives but also realistically needing to earn a living. Though not specific to the mental health profession, Heart of Business seeks to help entrepreneurs run their businesses in such a way that they can serve their clients while still meeting their own needs. You can receive small-group coaching for personalized attention and support, or you can subscribe to a free newsletter to get tips and strategies delivered to your inbox.

10) Private Practice Toolbox

This list would be incomplete without the very website you are reading right now! I love the opportunity to share with my tribe the lessons that I have learned since founding my own practice in 2002, but I think the real strength of Private Practice Toolbox is that it's all about you! We crowd-source through social media to generate inquiries, ideas, and input about all things related to private practice. We also highlight and celebrate those who've found success, who then share their secrets with the rest of us.

What blogs/ sites have helped YOU

learn and grow your practice?

(Click herefor a list of top 10 book resources!)

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Learn about my private practice consulting

Join my Private Practice Toolbox Facebook group and connect with 3000 therapists around the globe in 2 simple steps: 1) Click request to join the group and 2) Fill out this brief questionnaire before you’ll be added to the group.

How Media Exposure Can Grow Your Practice: Podcast Interview

I thought you'd you enjoy this lively interview with Joe Sanok of Practice of the Practice Podcast about my private practice journey from a solo practitioner to a clinic with 3 locations and 20 employees. We cover a lot of ground during this podcast!  In addition to tips about gaining media exposure you'll also find: Tips to land high profile media interviews.

The biggest lesson I learned when resigning from managed care.

The book that helped transform my practice.

Tips for finding blog topics to write about.

How to find quality therapist to expand your practice.

How to encourage to see my colleagues when you don't have openings.

The role of social media and building an online presence.

How I became a private practice consultant.

Listen to the podcast interview here

..and here's a fun graphic specifically about how to add top-notch clinicians...

Find out more about the MostAwesomeConference.com with fellow PsychCentral Bloggers Kelly Higdon, Miranda Palmer, and Joe Sanok.

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Learn about my Private Practice Consulting

Join the Private Practice Toolbox Facebook group and connect with 3000 therapists around the globe in 2 simple steps:

1) Click request to join the group and 2) Fill out this brief questionnaire before you'll be added to the group.

4 Steps to Breaking Up with Managed Care

Breaking Up is Hard to Do

We've talked a lot recently about the benefits of switching from using a managed care system to a private pay model. It benefits your clients, it benefits you, and overall it just benefits your practice (click here for a post detailing the math and financial advantage of a self-pay model)! But how exactly do you do it? It's quite a change, so it can be difficult to know where to start. Here are 4 strategies to help you make the transition:

 1) Resign in Waves       

Instead of trying to go cold turkey by leaving your panels at once, pick one or two to begin. I suggest choosing the companies that cause you the most headaches, give you unreasonable hoops to jump through, are infamous for not paying on time, and have the lowest reimbursement rates (most therapists I've consulted have no problem identifying which ones these are). Make the transition by weaning off of managed care panels one at a time.

While you are doing this, you need to be ramping up your REST "marketing" process. This will help you attract full-fee clients. Do them simultaneously to secure future business for your practice.

2) Review Your Contract   

Carefully and meticulously read the details of your contract with the insurance companies. What is the length of time required before resignation? You don't want to get hit with fees or have your transition timeline thrown off because you didn't quite understand your contractual obligations, so do your research and give yourself plenty of time.

3) Write An Official Resignation Letter    

After you've determined the timetable you have, sit down and write your letter to officially resign from the insurance panel(s) you've chosen. Be clear, concise, and professional. No need to go into detail about your reasons for ending your business with a certain company. Firmly express your decision to resign. Also, it's a good idea to follow up to ensure that your letter was received.  

4) Prepare Your Clients

And finally, perhaps the most important step to take in making the transition to a private pay model is to let your clients know. Give them plenty of notice (three months minimum), and present them with a considerate and professional letter that clearly states the upcoming changes. Also, offer them options. If they are close to completing treatment, work with them to finish their sessions before you resign from that particular panel. If your clients desire to stay with you and will be transitioning to paying out of pocket, begin to decrease the length or frequency of their sessions if needs be. It's amazing how some people can turn on the motivation when they have to! You also can educate your clients and encourage them to explore out-of-network benefits. Or you might prepare to transfer clients to a trusted colleague.

When I made the change, my clients were exceptionally understanding. I believe part of this was that I informed them in a confident and considerate way, and I was open to feedback and helping clients process their emotions about it. I was also able to use this experience as a way to model self-care and making difficult decisions. Overall, this was remarkably successful, and the majority of my clients stayed with me!

Click here for access to the full webinar of all the ins and outs of Breaking Up With Managed Care.

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Join my Private Practice Toolbox Facebook group and connect with 2800 therapists around the globe in 2 simple steps: 1) Click request to join the group and 2) Fill out this brief questionnaire before you'll be added to the group.