Private group practice and % of income to overhead costs etc...

If one were to join a small group practice doing assessment work, what would be a "fair" percentage of income to deduct for overhead (i.e. use of clinic, assessment instruments, referral base etc.)?

If you were to pay for the assessment protocols, but were "borrowing" the actual assessment tests, using the assessment space, and the reputation of the clinic (for the referrals), what would be a "fair" percentage of your income to compensate for these privilages?

50%, 70%, 80% ???

😕

I'd just like to get an idea of what might be "common practice" out there.

Neuro-Dr said:

If they are providing the equipment, space, support, materials and the referral, count on 50-60% to you. If they also provide the tech, then no higher than 50%.

If you provided your own referrals, some might go to 65%.

Click to expand...

Hmm...

I'm contemplating doing some assessment work for a reputable psychologist/clinic whose current scope of practice is primarily therapy. In this situation, I wouldn't have an office per/se, as I would have to schedule my assessments to fit the availability of a "common space." In this scenario, I would also be providing the equipment and protocols.

Come to think of it, the only thing that I would be "using" from the site, is it's therapy reputation and the referrals that this could potentially bring in for assessment work. Not that I am minimizing the importance of this aspect, but I don't feel it should be worth 50-60% of my pay. 😱 I'm all about contributing to overhead/operating costs... but in this situation my use of resources would be next to zero.

The more I investigate private practice, the more dismal the outcome looks. It seems like nearly all of the referrals out there are "locked-down" and contracted out to different individuals/clinics that were lucky enough to "get there first." If you are new to private practice and want referrals, you need to work for peanuts while someone else gets a cut of your pay just because they guard the gates to the referrals. Even when you work for a few years, it seems to me like you'd be building the reputation of your psychologist employer more so than yourself.

How does one pay off grad school debt with this sort of set-up?😕

Neuro-Dr said:

I'm not sure I understand the concern. It takes about 25-30% of collections to cover overhead in a psych office. This includes rent, equipement, staff, phones, billing, charts and the like. Most people take an additional 10% for passive income, so that comes out to 35-40% for them and 65-60% for you.

Click to expand...

Thanks for responding. I understand your points, my concern is that if I am contributing toward rent, then I should have an office (not 'work around' when other people don't work); phones, then I should have my own phone; equipment, then I shouldn't have to provide my own... etc. In this situation, I feel like a large proportion of my income would go toward the "passive income" you are talking about (much more than 10%). I don't mind taking only 60% of the pie if I actually had some of the things you are talking about above.

My other concern is that I would like to eventually have my own practice. How does one do this when mental health services in the public sector and EAP referrals etc. are contracted out? How does one build a referral base when the referrals are all tied up in these pre-existing contracts with other providers/clinics? How do you build a name for yourself when you are only known as an employee of Dr. XYZ?

Great feedback Neuro-Dr... I'm glad you are on these forums 🙂