Cash Reserve for Private Practice

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
I’ve never thought about it. Other than paying the first month’s rent and a couple thousand in advertising, I’ve never been in the hole to worry about it. I started the practice very lean, had a PT job to live off of, and finally figured out how to pay myself from the practice around month 5 or so. Ever since, I’ve paid myself quarterly because it’s simpler and ensures there is always money in the account. We live reasonably, so I don’t need a paycheck monthly to keep up.
 
A psychiatrist should have 100,000 available, regardless of employment status. $50,000 should be immediately available, and the other $50,000 should be available within a month (for example, a whole life insurance policy that can be cashed out quickly)
 
TexasPhysician said:
I’ve never thought about it. Other than paying the first month’s rent and a couple thousand in advertising, I’ve never been in the hole to worry about it. I started the practice very lean, had a PT job to live off of, and finally figured out how to pay myself from the practice around month 5 or so. Ever since, I’ve paid myself quarterly because it’s simpler and ensures there is always money in the account. We live reasonably, so I don’t need a paycheck monthly to keep up.
Click to expand...
A few thousand in advertising? How did you advertise? Obviously you're doing well so this isn't criticism but looking for advice. Other fields can send fliers or use billboards but not psych. All I've heard is send letters to therapists doctors and advertise in psychology today.
 
I've never thought of it either. I have a lean micro-practice with an overhead of ~ $1,500/month.
 
My monthly expenses are approximately $2500. I have always kept at least a $10,000 balance in my business account. I have much more liquidity but always keep $10,000 as a buffer along with a generous line of credit on my business credit card.
 
RomanticScience said:
I've never thought of it either. I have a lean micro-practice with an overhead of ~ $1,500/month.
Click to expand...
Mine's about the same. It's so small that I actually break even at best. Although I am taking a full time position out of state, I will stay and see patients two weekends a month and I either need to end it next year or broaden it to actually make it financially worthwhile. Most of my patients are therapy only or therapy med management patients. I need more med management only patients.
 
I think most everyone did a PT job with starting their PP. I know you worked inpatient for some years and then sort of did the reverse.

Some I know have an emergency fund of 6 mo worth always available for practice overhead. Perhaps you can figure out your overhead in that time frame and that would suffice. Also this seems more like an issue you might have contemplated prior to starting a PP meaning your sort of past that point to be too worried about it. I believe your at the end of year 1 and in the positive so perhaps a 3mo reserve at this point seems ok.
 
futuredo32 said:
Mine's about the same. It's so small that I actually break even at best. Although I am taking a full time position out of state, I will stay and see patients two weekends a month and I either need to end it next year or broaden it to actually make it financially worthwhile. Most of my patients are therapy only or therapy med management patients. I need more med management only patients.
Click to expand...

Why continue working at break-even? I’d dig in and make it profitable within a couple months or drop it. Life is too short to work for nothing.
 
TexasPhysician said:
Why continue working at break-even? I’d dig in and make it profitable within a couple months or drop it. Life is too short to work for nothing.
Click to expand...
Agree. I have posted elsewhere that staying in psych is really hopefully not the rest of my future, but as long as I am doing it, I would like to actually make a profit. . Do you do your own billing? And if so, did you take a complete billing course? That is one huge problem currently and for the next year as I will still have a micro practice as I decided to work a full time job elsewhere and just have a micropractice. No billers want to take such a small practice and my biller is horrible, but other than her, no one wants so little money. I would do it myself if I knew how. I am getting more med management patients as most of my patients are therapy patients which doesn't reimburse well.
 
futuredo32 said:
Agree. I have posted elsewhere that staying in psych is really hopefully not the rest of my future, but as long as I am doing it, I would like to actually make a profit. . Do you do your own billing? And if so, did you take a complete billing course? That is one huge problem currently and for the next year as I will still have a micro practice as I decided to work a full time job elsewhere and just have a micropractice. No billers want to take such a small practice and my biller is horrible, but other than her, no one wants so little money. I would do it myself if I knew how. I am getting more med management patients as most of my patients are therapy patients which doesn't reimburse well.
Click to expand...

I’m cash only, so billing is easy.
 
medium rare said:
My monthly expenses are approximately $2500. I have always kept at least a $10,000 balance in my business account. I have much more liquidity but always keep $10,000 as a buffer along with a generous line of credit on my business credit card.
Click to expand...

it says your a psychologist and psych np, you have both a PhD and nursing degree?
 
futuredo32 said:
A few thousand in advertising? How did you advertise? Obviously you're doing well so this isn't criticism but looking for advice. Other fields can send fliers or use billboards but not psych. All I've heard is send letters to therapists doctors and advertise in psychology today.
Click to expand...
Why can't psych use billboards? There's several mental health practices in my area that advertise billboards
 
futuredo32 said:
A few thousand in advertising? How did you advertise? Obviously you're doing well so this isn't criticism but looking for advice. Other fields can send fliers or use billboards but not psych. All I've heard is send letters to therapists doctors and advertise in psychology today.
Click to expand...


PP isn't for everyone. You also lack high interest in the field which is a double wammy. Hope it all works out with the addictions job but i feel like it will be tough from the way your schedule sounds. Make sure you have a contingency back up if you find after 3 months you hate it given the location and travel back and forth. Good luck.
 
finalpsychyear said:
PP isn't for everyone. You also lack high interest in the field which is a double wammy. Hope it all works out with the addictions job but i feel like it will be tough from the way your schedule sounds. Make sure you have a contingency back up if you find after 3 months you hate it given the location and travel back and forth. Good luck.
Click to expand...
I need to just commit to the 12 months and can't give myself an out. I definitely don't have a passion for it but I've had my patients stay with me since day one. Lots of psychiatrists don't like it but they make money.
 
Mad Jack said:
Why can't psych use billboards? There's several mental health practices in my area that advertise billboards
Click to expand...
I've seen billboards promoting getting help but never for a practice. In residency we were taught that's not done. Maybe it's regional.
 
It will depend on one’s overheads, but I like to have between 10-20k in my business account. My main monthly expense is room rental, but this single fee also includes staffing costs, advertising and invoicing which simplifies things. Other annual fees include professional registrations and medical indemnity insurance, the latter being the largest single expense outside of quarterly tax payments.

When I started I had a fair bit of additional liquid funds if I needed, but I don't tend to worry about it too much these days, as my daily billings are transferred within the next business day so it's been easy to estimate expected cashflows.
 
futuredo32 said:
I've seen billboards promoting getting help but never for a practice. In residency we were taught that's not done. Maybe it's regional.
Click to expand...
All the big mental health practices (usually under the name of one doctor) around here run billboards (Dr. Psychiatrist's Center for Mental Wellness, Let us help you live a happier, healthier life- plaster a smiling female face of about the age 40 with a wooded backdrop, that's pretty much what they're like).
 
Mad Jack said:
All the big mental health practices (usually under the name of one doctor) around here run billboards (Dr. Psychiatrist's Center for Mental Wellness, Let us help you live a happier, healthier life- plaster a smiling female face of about the age 40 with a wooded backdrop, that's pretty much what they're like).
Click to expand...
We have nothing like that for mental health in Metro Detroit. They have them for dentists, cosmetic surgeons, hospitals, pediatrics, cardio, etc but I have never seen any particular psychiatrist, psych hospital or clinic have a billboard or ad in a newspaper. It's just not done here. The only billboards are general, don't be afraid to get help kind of signs or suicide hotlines.
 
Thanks for replies everyone. I'm thinking a future target of 3 months worth of overhead should suffice.

Instead going with 11K to cover monthly overhead of ~7K.
 
Last edited:
You must log in or register to reply here.

Similar threads

S
California cash pay private practice - how to deal with patients who have medi-cal (medicaid)?
Replies
5
Views
788
clozareal
clozareal
Auvelity
Forensic Private Practice
Replies
6
Views
2K
squeakyclean
S
wolfvgang22
Private Practice position
Replies
31
Views
2K
wolfvgang22
wolfvgang22
minimooshie
Private practice advice needed
Replies
15
Views
3K
minimooshie
minimooshie
A
Private practice question
Replies
15
Views
2K
rjs2131
R
Top