Successful Private Therapy Practices Focus on the Numbers

I chatted with a social work colleague as we waited for our training session to start. She shared that she wanted to start a private practice. She works for a mental health agency. She said “I want to work for myself. They only think about numbers. That’s why I want to start my own practice.” I sat back in my chair and thought about what she said. “They only think about numbers.” “That’s why I want to start my own practice.”

I get it; I really do. Large mental health agencies and clinics promote volume scheduling. The more people they schedule and see, the more billing opportunities. This scheduling model limits time with patients and places a strain on the therapeutic relationship. Many clinicians worry about the quality of care under this stressful, assembly line type of service delivery.

There is, however, a “but” to this discussion. The “but” to this discussion is that successful businesses are built on analyzing the numbers. The pros and cons of business decisions are considered relative to what numbers communicate.

Private practices are businesses built on numbers. Mastering the numbers creates a rich environment for a healthy practice. A private therapy practice allows the clinician more control over the function of the business, however, questions about how money comes into the business and how it is dispensed still prevails. This is the basic question that larger agencies answer all the time.

Poor financial planning causes businesses to fail. Financial planning is all about the numbers. For the health and sustainability of your private practice, you must deal with the numbers. The numbers provide the clinician with sound financial information upon which to make informed decisions about the practice.

How much money is needed to support your practice?

Bills and office expenses get paid before you. A healthy private practice begins with a sound financial plan. In addition to knowing your expenses, you also must project business income based on payments, reimbursement rates and number of clients you plan to see. The difficulty is that reimbursement rates are not always clear. Delays in reimbursement also affect the health of your business.

How much money do you want to make and pay yourself?

Side hustle social workers with part-time private practices and social workers with full-time private practices want to pay themselves a reasonable salary for their work. You must establish a reasonable salary and a plan to meet it. Think about pay sources and reimbursement. Plan the number of clients you will need to see based on the payment type and reimbursement rate to meet your goal.

How much is your time worth?

Time is money. You are paid to dispense knowledge and care based on your training and experience in a specified amount of time. Reimbursement is made based on time. The clinician must choose the most effective modality to meet the needs of the client. You won’t get paid more because you spend more time with your client. Also clients who require substantial amounts of time prevent clinicians from using the same time frame to work with others.

How much is your expertise worth?

Knowing the worth of your expertise allows you to set fees for your services. You also need to understand the market rate in your area. The market rate provides an indication of what people are willing to pay for the same service. You may think that you provide Los Angeles California service, but the market may only pay for Cummings, Georgia level of service.

How much growth can you manage and maintain?

This number category speaks to the progression of the private practice. Having more clients does not necessarily mean that the practice will make more money. The clinician should have a firm understanding of the numbers related to growth opportunities. Growth should be calculated, measured and based on the clinician’s ability to sustain and maintain quality services.

I respect my colleagues desire to own her own business by starting a private practice. The fact remains that she will have to deal with the numbers.

Marcyline Bailey, ACSW, LCSW is the author of Five Smart Questions Social Workers Should Ask if They Want to Boost Their Social Work Income e-book Starter Guide and Planner. These free downloads contain five strategic questions to consider before taking on a side hustle.

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