Perhaps one of the more shocking secrets in our mental health field is how little profit is in the profession. There really is not much wealth in mental health. The whole mental health business remains a low margin business model with very little opportunity for making large profit. And what little profit there is in mental health is in psychiatry, not in outpatient mental health services. Livable wages are possible but you are going to have to work hard to get there.
To make sense of this reality we need to understand who pays for mental health services. Answer? Insurance companies. Both private insurers and public, i.e. Medicare and Medicaid, pay the largest portion of fees.
And who sets the fees that insurance companies pay to providers? Of course, insurance companies do. Providers have no influence on those payments. And in my area, we have not seen fee increases in over a decade. Sure I am free to set any fee I want but the insurance company is only going to pay the “contracted rate.” I have no choice but to accept that fee. Bottomline? We providers do not control our own fees.
Meanwhile expenses are not staying the same. Rents, technology, software, and everything else goes up but the fees we can collect do not. We cannot just raise our fees as our costs go up. Instead we must work more hours to cover the increased costs.
And this situation has not improved in my nearly 40 years of practice. The system is what it is. (Some advocate only working with cash clients. Just don’t take insurance. I advise against that option and explain why in this post: Why join insurance panels.)
What hospital administrators know
As if we needed more proof, hospital behavior tells us the same thing. Mental health has low profit margins and hospital systems know it. Large hospital systems are quite adept at figuring out where the profit margins are in health care. They constantly shift services around to capitalize on the most profitable areas. The delivery of outpatient mental health services is not at the top of most hospitals’ agendas. They seem quite willing to leave the financial crumbs of outpatient mental health services for small entrepreneurs.
An interesting conversation
A couple years ago, I had a conversation with a medical director of a hospital psych unit. He was a psychiatrist with thirty years experience. In the previous two years his hospital hired fifteen psychiatrists for their staff. Zero outpatient therapists. He told me that he personally wanted some therapists around but the administrators determined that there was not enough profit in employing outpatient therapists. There it is again–limited wealth in mental health. Consequently they referred out for the outpatient psychotherapy.
No doubt he thought I was pleased to have more business come to my organization. Instead I was sad about what he was implying about outpatient psychotherapy. And yet I do think his judgments accurately summarize the current state of affairs in outpatient mental health practice.
And we are the entrepreneurs running our small businesses on a shoestring. I have yet to see anyone in our field “making a financial killing” in outpatient mental health though some ways work better than others. (See Wealth in mental health: Where are the good paying jobs?) Even those who become owners of large outpatient practices count it a good year if their business is in the black. The truth is that during the lean times many organizations keep afloat with borrowed money. They hope to pay it back in the more prosperous times. We were very glad if we were in the black. Thrilled if we saw a 2 or 3 percent profit. Those were our best years.
Knowing that there is little wealth in mental health helps us understand the context for outpatient mental health. Most of us got into these professions because of our sense of calling. So if wealth is one’s goal, then the delivery of mental health services is unlikely to get you there. . . though a livable wage is certainly possible. For that we can be grateful.