4 Ways a Private Pay Practice Model Benefits Clients

The value of using a private pay model (instead of a managed care system) for your therapy practice is clear: less stress about additional paperwork requirements, greater autonomy to provide the services you deem are in the client's best interest, and immediate payment of your full fee are some of the main advantages. But some therapists are understandably hesitant about how to make the switch because of the potential impact this choice it might have on their clients. Some common fears are “Clients might stop getting the therapy they need because they can’t afford me” or “charging a higher fee is selfish and means I care more about money than helping people.” When I was considering making the switch, I too had thoughts like these cross my mind. But I discovered that the opposite was true; breaking up with managed care and embracing the new way of structuring my practice actually benefited clients who received services. Here are 4 ways that a private pay model benefits clients:

1) No Mandatory Diagnosis

Many managed care systems require that you diagnose a client's specific mental health condition condition prior to paying you for your services. In some cases, insurance companies will only pay for certain diagnoses. Often, relationship issues are not covered. However, this can turn in to serious ethical problems.

I remember years ago I was referred an urgent client - a child who was sexually assaulted. I determined that she had no clear-cut symptoms and didn't meet a diagnosis that her insurance benefits would cover. I was in a terrible dilemma: do I give an inaccurate diagnosis to satisfy the requirements of managed care, or do I get paid for the initial? No therapist should ever have to find him/herself in this kind of a situation, and no client should be subject to this either.

One of the best parts of employing a private pay model is that there is obviously no such requirement. Diagnosis can be used as a tool, but you are not obligated to provide one. By eliminating the need to diagnosis a condition that may or may not fully exist, you can ensure that your clients receive ethical, honest, and accurate care.

2) Higher Quality of Service

Back when I used a managed care system, I was receiving approximately 40-70% of my stated fee. This meant I was in survival mode, seeing more and more clients just to try to get by and meet my own financial needs. And all the while, I still had the stressful task of running the business side of things. It’s not surprising then that I wasn’t able to give as much to my clients. As much as I tried, unfortunately the standard of care I could provide was compromised. That was unfair to me and unfair to the people who were paying me to help them.

By changing to a private pay model, I was able to see fewer clients and, which reduced my stress, which allowed me to be more present for my clients. I also no longer spending hours per week on phone calls and paperwork that came with using a managed care system, which freed up my energy to give to those I served.

3) Better Therapist/Client Match

A private pay model also lends itself to a better fit between the therapist and the client. If you have fewer clients, you can be selective about the ones you see. The opposite is also true; if someone is willing to pay more for professional therapy, it’s likely that he/ she has done his/ her research and sought you out because of your specialty and the expertise you provide. To put it simply, you want them, and they want you.

I’ve found that using this financial model attracts highly-motivated clients. Although they are required to pay more, they place high value on therapy and budget accordingly.

4) More Clients Reached

A private pay therapy model allows you to have a greater outreach and help more clients. This may initially seem counter-intuitive; how does seeing less clients serve more people? The answer is that if you have a surplus of potential clients or have people come to you with needs that are different that the expertise of your practice, you can refer them to trusted outside resources. You’re helping other therapists while simultaneously ensuring that clients receive the best care specifically for them.

The other thing I have found is that the income stability provided by a private pay model allows my colleagues and me to do more pro bono work. Paradoxically, because we earn more, we can provide more volunteer service when we choose.

All in all, switching to a private pay model was one of the best business decisions I made to benefit not only myself, not only my practice, but the clients and the community we serve. Charging a higher fee does not mean you are inconsiderate or selfish; it means you are valuing yourself and providing the best quality care to your clients.

*If you find that finances are legitimately a concern for some of your clients, you may decide to provide alternative choices, such as reduced fee sessions with Masters’ student interns. My practice Wasatch Family Therapy does this, and it works well for those looking for a more affordable option.

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Webinar: How to 'Break Up' With Managed Care and Build a Fee-For-Service Practice

New webinar this Wednesday on building a fee-for-service private practice

I've written previously about my decisions to 'break up' with managed care and build a fee-for-service only practice. This topic comes up often in my Private Practice Toolbox Facebook Group. Group members often ask questions like:

• Is it really possible for private practitioners to build a cash-pay practice in our current economy?
• How do you find clients who are willing to pay your full fee at each session?
• How do I overcome the fear of losing all of my clientele if I resign from insurance panels?
• How do you address the needs of those in your community who can't afford your services if you don't work with insurance?

If you've ever wondered these questions, you may be interested in my upcoming webinar this Wednesday.

Date: Wed. Oct 10, 2014*

Time: 11:00 a.m. (PT)/Noon (MT)/1:00 p.m. (CT)/2:00 pm (ET)

Length: 90-minutes

*If you can't make the live webinar at that date & time, no problem! You'll receive a link to watch the replay video at your convenience, but you do need to register.

Reserve your seat here

Here's why I resigned from managed care:

• Excessive paperwork: I was spending almost as much time performing unpaid work (paperwork, phone calls, tracking authorizations, and billing) as I was spending seeing clients. I went into this field to do therapy, not paperwork.
• Reduced income: I resented writing off 40-60% of my fee upfront just to be placed on a list with dozens and dozens of other therapists. The managed care companies weren’t doing anything to market my practice, and yet I was being asked to take a huge pay cut to work with their clients.
• Mandatory diagnosing: I grew tired of having to diagnose every client who walked into my office in order to get paid. When I met with a client who didn’t have clearly diagnosable symptoms, I was faced with a dilemma. Do I stretch a diagnosis just so I can get paid, or do I do free therapy because insurance won’t reimburse without a diagnosis?
• Denied or delayed payments: Being denied reimbursement for a variety of reasons and receiving payment weeks or months after I had performed the service was extremely frustrating.

Here's what has happened since 'breaking up' with managed care:

• Exponential growth: My private practice grew from a solo practice to a clinic of 20 providers and 3 locations in a fee-for-service model during an economic downturn.
• Immediate payments: We get paid our full fee at each session (including late cancellations and no shows)
• Streamlined paperwork: We do assessment, case notes, and discharge summary.
• Motivated clientele: We work with clients who value our time and expertise because they are more financially invested in the therapy process.
• Diagnosis has become a tool, not a requirement for payment: We don't have to diagnose anyone.

In this webinar, I'll show you how to:

• Identify and attract your ideal clients.
• Demonstrate the value of your services to your community through building a strong online and media presence so clients will be willing to pay your full fee at each session.
• Wean off of managed care contracts and smooth this transition for your current clients by offering many options.
• Talk confidently about your services, your fees, and financial policies.
• Provide options for potential clients who can not afford your full fee or who want to use their insurance benefits.

The decision to resign from manage care panels and build a fee-for-service practice is not the right path for every practitioner. However, there are some private practitioners who want to go this direction but lack the knowledge, skills, or confidence to implement their desired changes. If you fall into this second group, this webinar is designed for you.

I hope to see you on Wednesday!

Here's the link to reserve your spot for the webinar and access to the replay video

Oh, and if you have any specific questions you'd like me to address in this upcoming webinar, contact me here with "Managed care webinar Q" in the subject line.

5 Steps To Resigning From Insurance Panels

One of the most common questions that private practice therapists ask me is "How do I get off of insurance panels?" This question just came up today in my Private Practice Toolbox Facebook Group so I thought it would be a great topic for a blog post. In previous posts I've written about why I broke up with managed care (part 1) & (part 2), but this post will focus on how to do it.

The thought of letting go of the comfort of being on insurance panels can create a lot of anxiety for private practice therapists. After all, if we don't have clients, we don't get paid. Find comfort in knowing this equation. You only need about half the number of clients in a self-pay practice to make the same income (or more) than you made in an insurance based practice. Once I realized this fact, I felt a lot more comfortable resigning from insurance panels. Let's do the math...

Insurance:

Say you are seeing 20 managed care clients per week and you are reimbursed an average of $70 per client.

20 clients x $70 session = $1,400

20 clients x $70 session x 4 weeks = $5,600 per month

(then subtract your time or money spent in billing and paperwork)

Fee-for-service:

2o clients x $125 = $2500/wk

20 clients x $125 session x 4 weeks = $10,000 per month

10 clients x $125 session x 4 weeks = $5,000 per month

(with NO extra paperwork, NO delay in payment, NO denied claims, NO required diagnosis...)

So often we focus on number of clients instead of the quality of clients and the amount collected per client.

5 Steps To Resigning From Health Insurance Panels

1) Rank the insurance companies

Make a list of insurance panels and rank them from your most favorite to least favorite based on:

• reimbursement rates
• paper work requirements
• how quickly you're paid
• number of clients you see from each panel
• the type of clients generally referred
• your general feeling working with each panel

2) Resign in waves starting with your least favorite

Generally, I recommend to my consulting clients to resign in waves over the course of a year. Resign first from the panels with the lowest ranking - the ones that pay the least and are the most difficult to work with.

3) Check your contract for resignation requirements

Review your contract to check on the resignation process that you agreed to. Look at the time frame required. Do you need to give them 30, 60, or 90 days notice? Do you need to send in a written letter?

4) Beef up your web presence

As part of your plan to resign from insurance panels, it critical to invest in creating other referral sources. The most important being your web presence. Google is my #1 referral source. The majority of our clients who come to my clinic Wasatch Family Therapy find us online. The benefit of clients finding you online is that they've already read about you, your services, and your philosophy on your website and have chosen to contact you. This increases the likelihood that they will be willing to pay your full fee.

• Website - If you don't have a website, make that a top priority. If you have a website, make sure it's effective. Here are some common website mistakes and how to fix them.
• Blog - If you don't have a blog on your site, add one and start blogging weekly.
• Therapist finder sites - join PsychologyToday.com, GoodTherapy.org, and your professional organization's "find a therapist" site to help potential clients find you.

5) Know the benefits of self-pay and be prepared to educate clients

There are benefits to the client for paying out of pocket, instead of going through their insurance company, that they may not be aware of. As you make the transition away from managed care to a fee-for-service practice it's important to familiarize yourself with these benefits so you can educate your clients. A few of those benefits are: control over which provider you choose to work with, the course of treatment decided on by client and therapist instead of insurance company, and no diagnosis requirement.

Here's an example of how a provider educates her patients on the benefits of self-pay. Utah Psychiatrist Kelli Hyland, MD my colleague and consultation client, shares her philosophy in this blog post "Why Self-pay?"

(c) Can Stock Photo

2 Good Reasons To Hire Office Support

Hiring an office employee, especially if it's the first time you've done so, can feel scary, overwhelming and stressful. Where do you find trustworthy employees? How do I know they're doing the billing correctly? Isn't it less personal if clients have to talk to someone other than the therapist?

Many therapists in private practice are reluctant to hire office support for a variety of reasons. The two most common reasons that I hear in my consulting practice are: 1) cost - "I don't want to pay out more money" and 2) control - "I don't want to give up control."

I had to overcome these two common barriers before I hired my first office manager.

It's Cheaper Than Doing It Yourself

When it comes to hiring office support staff, I find that it helps to think more like a business person and less like a therapist. Before I hired my first office employee I was concerned about increasing my overhead. Why should I pay someone to do something that I can do for free? Then, I realized that my time is money.

When I first started considering hiring an office manager I was billing $100 per clinical hour and seeing approximately 15-20 clients per week. If I spent those 10 administrative hours a week doing therapy instead of office administration, I could bring in an additional $1000/week to my practice. The cost of paying an office employee 10 hours per week, even at the high-end of the pay scale for my location, would only be $200 per week.

Hello? If you think like a business person, that's a no-brainer. I hired an office manager.

They'll Do A Better Job Than You

I struggled with the issue of control before hiring an office manager. I knew everything about every client account: what their co-pay was, how they prefer to pay, what their diagnosis is, how often they come to therapy, their balance and more. I had developed my personal style of answering new client phone calls and had finessed my techniques over a few years.

I knew how to describe my therapy style better than anyone else could. How could I trust them to answer the phone, handle the billing, or other office tasks the way I would?

Once I really looked at that issue, I realized that I could be OK if someone didn't do things exactly like I did. There are people who were trained in office administration, billing and office management, and they might know how to do things better than I was doing them. After all, I had no office management experience other than running my practice.

While there was a learning curve for me and for my first office employee, it turned out to be the beginning of significant growth in my practice. Having office support has allowed me to let go of the day-to-day tasks and focus on the bigger picture: my practice mission statement, community outreach, web marketing, training other therapists, business planning, and of course, providing therapy.

photo credit: Jerry Bunkers

Why I 'Broke Up' With Managed Care

At times, working with managed care insurance panels in private practice felt like dating a bad boyfriend. I was constantly investing more time and attention than "he" was in the "relationship" and it started to wear me down. I got up the nerve to break it off for good. I've never looked back. I understand that building a practice free of managed care isn't for every therapist. I am grateful for excellent colleagues who participate on insurance panel because and there is a great need for their services and I frequently refer clients to them. However, if you're a private practitioner considering building a practice outside of managed care, I share my experience of resigning from managed care to give you the courage to take the leap, and the faith to know that it can work. So here's my story...

After I received my clinical license I started applying to any health insurance panel. I just assumed that's how you're "supposed" to get clients in a private practice because every therapist I'd known had followed this path to get referrals. I was accepted to many panels and my practice started to grow. I was ecstatic.

However, as time went on I started to resent many aspects of working with managed care panels and it began to effect how I felt about my work in general. I felt overworked and drained and knew that something needed to shift if I was to be in private practice for the long haul. Here's what I started noticing about my relationship with managed care.

• Excessive paperwork: I was spending almost as much time performing unpaid work (paperwork, phone calls, tracking authorizations, and billing) as I was spending seeing clients. I went into this field to do therapy, not paperwork.
• Reduced income: I resented writing off 40-60% of my fee upfront just to be placed on a list with dozens and dozens of other therapists. The managed care companies weren't doing anything to market my practice and yet I was being asked to take a huge pay cut to work with their clients.
• Mandatory diagnosing: I grew tired of having to diagnose every client who walked into my office in order to get paid. When I met with a client who didn't have clearly diagnosable symptoms I was faced with a dilemma. Do I stretch a diagnosis just so I can get paid, or do I do free therapy because insurance won't reimburse without a diagnosis?
• Denied or delayed payments: Being denied reimbursement for a variety of reasons and receiving payment weeks or months after I had performed the service grew frustrating.

My uneasiness led me to critically look at the financial numbers and I was astounded by the amount of money I was writing off just to participate on managed care panels. I decided that there had to be a better way to for me to run my practice. I realized that if I resigned from managed care panels and transitioned to a fee for service practice, I could see half the number of clients weekly and make the same income. Or, I could see the same number of clients and double my income. To top it off, I could eliminate most of my unpaid paperwork hours. Work less and make more? It was a dream come true for a private practitioner and mother of young children.

I resigned from all managed care panels in 2007 and raised my fee by 10%. Since then, my private practice, Wasatch Family Therapy, has grown from a solo practice of one to a thriving clinic employing several therapists. We are adding a second office location later this month. It has taken some relentless marketing, consistent networking, and social media skills to keep a practice growing without managed care or any outside contracts, but it has worked. If I can do it, you can too.