Tough Love: How to Be Firm About Finances

When you decided to go into the field of professional psychotherapy, it's likely that your reasons had little to do with money. Even as you first started, you probably didn't have dollars on the brain all the time (payments, insurance, fees, collections, etc.). Billing specialists deal with that stuff, not us, right? But those of us in private practice quickly discover how important it is to acknowledge and successfully navigate the financial aspect of our businesses. And resigning from managed care panels and switching to a fee-for-service model means that the responsibility to collect fees relies on the individual therapy practice; now, it's our job.

I certainly understand that it can be awkward. People get weird about money. I used to be uncomfortable asking clients for payment after they'd born their souls to me. But thankfully, there's a way to conquer money anxiety, serve your clients, and still meet the needs of your practice and of yourself. Here are some strategies I've discovered about how to be firm about finances and present your stated fees to clients with confidence:

(Re)Consider the Purpose of Money

Your own personal history may lead to your feeling anxiety about money. It may help to rethink the role it plays and the reason why we even have it in the first place: you are offering your time, energy, and skills to therapy, and in return, the client is offering you the resource of money. It's an energy exchange that can be emotionally neutral. It doesn't mean you are greedy or uncaring; not at all!

Value Yourself and Your Services

When I first started, I had a hard time seeing myself as a professional, which meant that I wasn't as confident or assertive about asking for money. But my supervisor helped me understand the training, skills, education, and experience I could offer. Remember what you're worth: you can provide valuable insight to those who are struggling, and you deserve to be compensated for your work. Keeping this in mind will help make it easier to accept payments and communicate about money issues.

Charge Before the Session

It works best to ask for payment at the beginning of the session before attempting to conquer tough emotional issues. This gets it out of the way right away and avoids the potentially awkward exchange at the end. There's no surprise, no uncomfortable conversation about fees owed. There's also something about being paid up front that is gratifying and enforcing for the therapist.

Use a "Money Script"

When possible, it's best to keep a separation between the therapist and the finances because it helps the client not associate his/her counselor with money. Use a planned and rehearsed script to communicate about payments. It may go something like this:

How would you like to pay for your session today?"

When potential clients ask, "Do you work with my insurance company?" I respond, "While we don't bill insurance directly, I'm happy to provide you with a receipt to submit for reimbursement from your insurance company. You may want to check with them and ask if you have out-of-network mental health benefits."

Have a Clearly Stated Payment Policy and Stick to It

Don't skimp on this. Take the time to develop and implement a carefully thought-out policy concerning payments, no-shows, cancellations, etc. By setting clear expectations, you can pave the way for an efficiently run practice with clients who attend sessions and take therapy seriously. Your actions and attitudes about finances will set the tone: if you feel anxious discussing money, your client likely will as well. But if you're professional, positive, and confident, a client will feel at ease.

My clinic policy is that if you are one session behind in payment your therapy is on hold until your account is up to date. Also, we charge full fee for no-shows and late cancellations, even on initial sessions, unless there is an emergency (read here for more about how to get paid for no-shows) . Therapist Leland Clipperton of Counseling & Mediation has a system in place where a client can actually receive a discount by pre-paying for 4 sessions in advance. Do some research, ask around, and get creative and innovative in developing a policy payment or tweaking your existing one.

You may find it helpful to have a system to notify your clients about their upcoming sessions. Making phone calls or using your EHR to send automated text messages or emails a day or two beforehand can serve as important reminders and reinforce the value of therapy. So if they're making the financial investment, we might consider making an extra effort to encourage them to be there.

In my 12 years in private practice, I've gotten extremely comfortable talking about financial issues with clients. With time, experience, and the use of these strategies, I am confident that the same can be true of you.

 How are YOU firm about finances?

What money tips and strategies that have benefitted your practice can you share?

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10 Things I Accidentally Did Right In Building My Private Practice

As I reflecting back on 10  years in private practice I did a few things right, mostly by chance.

With a business license, professional license, and big dreams, I opened a private practice ten years ago. Having never taken a business, marketing, or management course, I have learned "on the job" how to be a small business owner. Hopefully, you can learn from what I accidentally did right and intentionally apply them as you build your private practice.

1) Start small, think big

At the time I opened the doors I was a solo practitioner. Those of you in solo practice know that means I was the receptionist, the billing manager, the webmaster, the marketing specialist...Being a "one woman show" for a few years not only taught me what it takes to run a practice, but also how to teach others what I had learned as the practice grew. My vision was to grow my practice into a group with several practitioners and over time, that has happened.

2) Grow slowly

I didn't know it then, but one of the main reasons new businesses fail is because they grow too quickly. As a mother of 3 children at the time, I was fine growing slowly so I could manage the multiple demands on my time. Turns out it was good for business too. Growing slowly allowed me to build a business without loans or going into debt.

3) Charge more than you think you're worth

From my first day in private practice I have always charged a higher fee than I felt I was worth. This forced me to deal with my own money issues, and to learn to value my own services and skills more highly. I came to understand the value of the perceived value of my services as clients assumed that I must be very skilled in order to charge at the high end of the scale for my location.

4) Think like a business owner

My family of origin tends to have an entrepreneurial mindset where self-employment, flexibility, and freedom are highly valued. This framework helped me to be able to think like a business owner and a therapist and to find an emotional place where those two roles weren't mutually exclusive. Although they are occasionally in conflict, I've found that that is a rare occasion. Thinking like a small business owner has helped me to set better therapeutic boundaries with clients as well.

5) Trust your gut

In all areas of practice, from office location, to logo design, to who to hire, to which practice software to purchase, after researching the best options I ultimately followed my intuition in making key decisions for my private practice. While the path hasn't been perfect, I can't think of one decision where I trusted my gut and regretted it.

6) Hire qualified people that you trust with your reputation

One of the scariest things in growing from a solo practitioner to a larger practice is hiring people who have the power to impact  your professional and business reputation. In addition to hiring very qualified staff, also hire people that you'd trust and train them how to present themselves in a way that builds your credibility.

7) Set strong boundaries with money

Whether it's following through with your office policies regarding collections, or saving for those dips in client numbers, I have tried to be consistent with money policies. This also applies when hiring employees. My tendency was to give away a little too much at first, because of my inexperience. I soon learned that there is a cost, emotionally and financially, to having employees, and that I deserve to get paid for management time and for holding all of the liability in the practice setting.

8) Create a home away from home

Creating a comfortable yet professional office space has helped me, and my clients, to feel welcomed and safe. I've found self-expression in my private office environment and decor helps foster a sense of safety and nurturing and creates a space where I feel at ease.

9) Integrate your passions into your practice

I have always integrated current interests and passions into my private practice. If there's a film that I really like, I'll use that with clients. More recently I've become a tech geek, so I've integrated technology into my private practice by launching an online therapy division, moving to electronic records, and building a social media following.

10) Take good care of you

Personal self care has always been high on my priority list. I've known that if my own needs were going to get met it was my job to make it happen. Whether it's scheduling exercise, bringing healthy food to work, making time for social events, or attending my own therapy, I am fiercely committed to making sure I am taking care of me. I think those habits have allowed me to energetically continue investing in my clients, my practice, and my employees without feeling burned out.

What things have you accidentally done right in building your practice? Please share so we can learn from each other!

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

How To Get Paid For No Shows

photo credit: Marcin Wichary

Are you going to work and not getting paid?

Therapists in my consulting practice frequently complain of a high no-show rate, especially with new clients. They often feel powerless to enforce their policies fearing if they're too strict, clients will drop out of treatment.

I used to have this problem, too, and ended up feeling resentful when I had rushed to get to my scheduled session only to have a client no-show. There were also those days when a handful of clients who didn't show up or cancelled at the last minute. Since I was paying for child care there were times when I actually lost money by going to work. I knew something had to change.

While some clients would pay for the no-show or late cancellations at their next appointment, others would drop out of therapy, not return phone calls, and not respond to bills I sent to them. Additionally, many of the managed care panels I participated on at the time didn't reimburse for no-shows, and our contract didn't allow me to charge the client for sessions not attended. This was another reason I resigned from all managed care panels.

May I have your credit card number?

A few years ago, I started requiring new clients to provide a credit card number before they could schedule an initial appointment with me or any of the therapists at my clinic. New clients were informed that they would not be charged until the time of service, but that our policy is to charge the therapist's full-fee for no shows and cancellations made within 24 hours of the schedule appointment time.

If hotels, massage therapists, and hair salons can require a credit card to hold your room or appointment, why can't therapists require clients to make a financial investment in their treatment the actual sessions? Surprisingly, we've had no resistance from new clients when my office manager tells them about our policy and ask for their credit card number. Not surprisingly, my practice has very few no shows or late cancellations and the few that we do have, we charge for.

For my clinic of 13 therapists our percentage of no-show or late cancellation sessions that we don't collect our full-fee is less than 1% of our total number of sessions.

Suggested script for taking credit card number

I have an amazing office manager who screens all new client inquiries, informs them of how to access new client paperwork, takes down the credit card number and explains our financial policies Here's an example of what she says.

Yes, Julie has an opening next Wed. at 3:00PM. In order to confirm that appointment with Julie we require a credit card number on hold. You will not be charged until the time of service and you're free to use another form of payment at your session. What type of card would you like to use?

If for any reason you are unable to make your scheduled appointment time please give us at least 24 hours notice of cancellation or we will charge your credit card for the full session amount. Do you have any questions?

Tightening up our no-show policy has:

1. Weeded out the clients who aren't ready to commit fully to the therapeutic process.
2. Motivated our clients to be in charge of their appointment times and give us ample notice if they can't attend a scheduled session.
3. Allowed my therapists to get paid for sessions whether the client shows up or not.
4. Saved administrative costs and collection fees.
5. Trained clients to value and respect our time and services.

Is it time to tighten-up, modify, or enforce your no-show or late cancellation policies?

What challenges do you face in enforcing your policies?