Last week, I blogged about the benefits of joining a private practice group. Today, I'll discuss the downside of being in business with other practitioners. I briefly worked in a group practice where all therapists owned equal parts of an LLC (Limited Liability Company). At first it sounded like a good idea. After a while, I could see that it wouldn't work long-term for me and for my practice.
The Drawbacks of Joining a Group Practice
1) Liability concerns
After several months in a group practice, I realized that the drawbacks far outweighed the benefits. One of the biggest drawbacks was sharing liability for other mental health provider's actions and decisions, of which I ultimately had no control. Therapist Melissa J Templeton, MA, LPC, LMFT agrees, “It's really important to be aware of the legal entanglements of being in practice with another mental health provider, as it exposes you to all kinds of liability. Being in the same building even without a formal partnership agreement could open you up to being sued by someone who was injured on the property or who accuses your co-leaser of a criminal or civil action.”
Psychologist Wes Crenshaw PhD, ABPP of Family Psychological Services, LLC strongly cautions other therapists against creating legal partnerships in group therapy practice.
The best advice I ever received was to avoid creating a partnerships, and I ignored it. When one is say, a 25% owner of something, one is an owner of nothing. The only groups that work well this way are those with a clear 51% managing partner. Unfortunately, psychotherapy practices are not traditional businesses in the sense that they produce a profit above payroll sufficient to take distributions. They are instead a conduit by which money flows from the client/insurance company pockets into the provider. Without the attributes of a normal business (e.g. a profit margin above salary) there is no good reason to form a fiduciary obligation with other providers.
2) Loss of autonomy
When I joined a group I realized that the decision making process, even for minimal office expenses, was extremely inefficient. It was frustrating and even painful for me. I like see things change and move forward quickly. Since everyone owned equal shares no one was really "in charge" and able to make quick decisions, or to create a cohesive vision, or to take the lead of the group.
Arizona psychologist Christina G. Hibbert, Psy.D. was employed by a group practice but now is in solo private practice. Of her group experience Hibbert says, "Sure it’s great to have less responsibility but that also usually means having less input into decisions regarding everything from office décor to how things run." Illinois counselor Melanie Dillon, LCPC, at Center For Wellness, Inc also notes that a drawback of a group practice is the loss of say "over who I counseled and what my hours would be.”
3) Less control over income
Like Dr. Crenshaw warned, when you're legally partnered with others they have a say in business decisions that affect your income. When you're part of a group, others may have already dictate the cost of joining the partnership, or the amount you'll be paid when employed by a group practice. “I had put off joining a group practice because of the dramatic decrease in hourly income," Dillon adds.
When I was in a practice group with five other therapist I was contributing 1/5 of the overhead even though I was practicing part-time. I quickly realized that, although I enjoyed working with other therapists, I could run a solo practice for a lot less that I was paying to be a part of the group. I decided to venture out on my own and started Wasatch Family Therapy.
Since then, I have built my solo private practice into a private clinic with a dozen employees. I am the sole owner and can make decisions quickly. In upcoming articles I'll walk through the pros and cons of going into solo private practice.
Based on your experience, what are the drawbacks of being in a group private practice?
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