increasing therapist pay

How to increase therapist pay in private practice

Posted in Financial aspects of a growing practice
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In private practice, your first goal is to fill your schedule with clients. Once accomplished, the process to increase therapist pay is less readily apparent. Let’s begin by looking at the many moving parts and how they interconnect.

The financial formula for understanding all of mental health finances

Elsewhere I have outlined how the finances work in private practice:

In those posts, I explain many ways to increase therapist pay. Some key factors are expressed in this formula:

(Avg fee collected) x (# of Sessions) = (Gross income) – (Expenses) = (Net income)

This formula starts us toward understanding how we might increase our income. For example, we might:

  • Increase the amount we collect for each appointment or
  • Increase the number of sessions we provide or
  • Reduce our expenses

1. Increasing the collection rates for each appointment

Many therapists complain that we do not set our fee schedule. Insurance companies do. This is true. (I have spoken of this in my post on Wealth in mental health: Why isn’t there more.) And yet, there are fee-related things that we do control.

First of all, the better our processes for dealing with collections, the higher our collection rate. (I cover much of this in the post: Daily business demand #3: Billing and then in Weekly business demand #4: Collections.)

Secondly, the more timely the collection process, the better. Collecting in each session will keep clients current on their financial obligation. Furthermore, the more consistently we send our insurance claims, the better. The existing practice software is excellent at facilitating the daily submission of claims. (See Selecting a practice management system.)

Finally, collecting everything we are owed usually takes teamwork. For example, the therapist sets the tone for handling discussions about money. Can money be a topic of conversation? Can we address any money issues face-to-face?

Typically at that point, the collection process gets handed off to staff. The whole staff has some part of the responsibility for collecting fees.

2. Increasing the number of sessions we provide

Ultimately the goal is to provide a consistent, high-quality experience for every client. The better you can do that, the fuller your schedule will remain.

3. Becoming a “highly desired therapist”

It is generally true that the more celebrated a clinician is, the higher the collection rate. There are good reasons to aspire to become a “highly desired therapist.” Consider these factors:

  • Clients will wait for an opening in the schedule of a highly desired therapist. The highly desired therapist rarely has holes in the schedule.
  • Clients will take less desirable appointment times in the highly desired therapist’s schedule.
  • Clients are willing to pay out-of-pocket for that highly desired therapist.
  • Lastly, clients are more likely to follow suggestions of “experts.” Therefore your therapy will be more effective if you are seen as an expert.

Similarly, I have outlined how increased demand for your services results from developing expertise while creating a visible and clear message (see Creating demand by marketing.)

Of course, there is no quick way to become highly desired. It takes consistent efforts. The good news is that there is a tipping point where the momentum can carry you along without tons of ongoing effort. That is exactly where we want to get to.

4. Reducing expenses

Everyone knows that “a penny saved is a penny earned.” (You may enjoy an intriguing rabbit hole. See here for the tangled history of this phrase.) One way for increasing therapist pay is by looking at every expense. Finding efficiencies is, of course, a balancing act of competing interests. A couple of principles may be of help here.

Firstly, technology is ultimately less expensive than hiring an employee. And fortunately, many technology tools exist to help increase the speed of accomplishing routine and repetitive tasks. Purchase them and use them. You will not regret the choice.

Secondly, support staff costs are ultimately less expensive than costs for clinical staff. Adding support staff increases clinical staff efficiency. Consequently, the more we can ease the load on clinical staff, the more energy they have to do the parts that only they can do. Only clinicians can see clients, connect with referral people, and become good teammates. And furthermore, these are the central components of success. Hiring support staff to do the rest only makes sense.

Summing up: Increasing private practice therapist pay

To summarize, doing the following will increase one’s salary in private practice.

  1. Develop consistent, timely collections processes throughout your team
  2. Add appointment slots for clients to schedule, especially evening and weekend appointment slots
  3. Reduce your “no shows” and “late cancels” by how you manage your schedule
  4. Improve your retention rates
  5. Hire help to answer the phone while you are busy or in session
  6. Become a “highly desired therapist” by creating demand for your work
  7. Manage your expenses wisely

Doing all these will increase your income and pay.

Wealth in mental health–Where are the good-paying jobs

Wealth in mental health–Why isn’t there more?

Enjoying this article? Share your thoughts.

  1. George Anderson says:

    If you goal is income from your private practice, you must first demonstrate exceptional competence in a niche that is needed and wanted by persons who have the ability to pay. Second, you must locate your practice in an upscale community with an office in a medical or professional building that hints success.
    You can not accept insurance reimbursement and expect to be successful.
    Managed Healthcare determines the number or sessions, the fee that they will pay and when payments will be sent.
    Your profile should demonstrate your training and experience.

    I have earned in excess of $200,000 per year from my private practice since 1976.

    1. Mary A Simpson says:

      so true. I live in a low socio-economic community and relied primarily on Medicaid. I’m looking to open a clinic in a nearby city for the exact reasons that you have stated!

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