Private Practice Growth?

[finalpsychyear]

To those experienced does your private practice continue to grow every year if you allowed it to and at what point since starting your business did you feel you sort of hit your peak .... ex 3,4,5+ years into it?

As a younger person who is now in my 4th year ( attending) I always feel a bit like hmm I "hope" I will be able to have the same or better business as the previous year and I have been lucky or in the right area that it has increased year after year. Just wondered if others who have more time in the business what their trajectories were starting out.

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[dl2dp2]

Demand for some segment (high end cash for combined treatment) continues to be strong. Low fee spots get filled first, and if you need to grow faster charge lower fees than market or open more sliding fee spots. If you have the ability to target the top quintile of the income I think you'll be fine. Nevertheless, in the best case scenario in the private cash market total net income > 500k probably doesn't happen until 5-10 years in. Exceptions do occur--there are people who buy out old practices and immediate get to revenue > 1M per year in the first couple of years out, but that's very rare. Good psychotherapy skills are very useful in this segment to engage new patients and retain old patients. People prefer combined treatment if they have the means and it's easy to see why.

Other people are making more $ managing midlevels or doing niche services (TMS/ketamine, etc). I'm gonna try to do some investigations in the next year or so on that stuff. I think TMS if proven somewhat efficacious will eventually take off, which would be a good thing as psych continues to transition towards some kind of outpatient, superspecialized cush procedurally oriented specialty like derm/opthal/allergy. Not sure about the various infusion/pschedelicy stuff--I do think they represent the future of the field, but unclear if they are truly monetizable in the next 10 years or so.

Insurance based psychotherapy practices have no future. They are already done pretty much. Most of my colleagues who work for a facility do 0% psychotherapy. Few even bill for add-on codes. Often facilities negotiate with payers such that MDs cannot bill for add ons.

Running insurance based med mgmt practices can be slower (see: sushiroll's pretty awesome thread) in generating net profit, but revenue will be faster and more steady, and you can probably secure more bank loans. This is an area I'm less familiar with but is the dominant paradigm. This segment will be much more driven by the regulatory environment and regionally specific, so harder to predict in terms of growth. Ironically, IMO high end cash will be similar model whether it's a wealthy suburb of Tuscon or middle of Fifth Avenue.

 

[AD04]

My experience in group private practice taking cash and select insurances in wealthy, densely-populated area (starting with no patient base):

Forecasted income (1099) assuming pay projected out for 12 months:

- summer 2019: $100,000 / year (working 3 part-time days / week)
- winter 2019: $200,000 / year (working 4 days / week at 70% capacity)

Growth has been slower than expected. Growth was painful as I was bored not working and thinking about the opportunity cost (which was highly-lucrative from day 1). I was expecting $300,000+ deposited into my bank account by summer 2020 (after 1 year of starting) but that's not going to happen. Falling short of expectations is something I am extremely unhappy about. Lower income is due to:

- less money from insurance companies starting out (I expect renegotiated rates at the 12 month mark at the very latest)
- owner bringing on too many psychiatrist at the same time (I introduced my friend from residency to the practice, another psychiatrist joined 6 months before I did)
- marketing system not as refined as I would like (owner unwilling to listen to my suggestions for marketing, I had to develop my own marketing system to build upon what was in place which has greatly increased referrals to the group)

To get an idea what is possible with good rates and packed days, one of the group physicians who is established in the area works 35 hours a week and is expected to bring home $300,000 - $350,000 / year.

If I stay with this practice, based upon historical growth rates, I expect to reach full capacity (working 6 days / week at 100% capacity) within 2 years from starting.

You will reach full capacity when:
- you get the best rates you can (either through cash or insurance reimbursements)
- you work the amount of days you want to work
- your scheduled is as packed as you want to be
- you have a system to prevent no-shows or the financial damages of no-shows as much as possible

 

[dl2dp2]

If I stay with this practice, based upon historical growth rates, I expect to reach full capacity (working 6 days / week at 100% capacity) within 2 years from starting.

6 days a week is > full capacity, isn't it? Also, if 35 hours gets 300k, 6 days a week should net you > 300k, assuming this is your end point?

 

[whopper]

You will peak in terms of your work hours filled with patients.
Reasons why is you need to build your patient base, you kick out the unreliable patients (e.g. ones who forget to show up, the ones who don't pay their bills), but this could take a few years before it hits the plateau.

From there IMHO most will likely be happy with their income. Working full time as a private practice psychiatrist does very well. You could do things to cut corners and make more money. The only method that can increase patients coming in and out that IMHO isn't cutting corners is seeing stabilized patients who only need refills as med-checks only.

I don't recommend cutting corners. Why did you even become a psychiatrist if you're willing to do bad practice? If you want to make even more money on top of this I'd recommend you use your existing disposable income for business ventures.

 

[PikminOC]

My experience in group private practice taking cash and select insurances in wealthy, densely-populated area (starting with no patient base):

Forecasted income (1099) assuming pay projected out for 12 months:

- summer 2019: $100,000 / year (working 3 part-time days / week)
- winter 2019: $200,000 / year (working 4 days / week at 70% capacity)

Growth has been slower than expected. Growth was painful as I was bored not working and thinking about the opportunity cost (which was highly-lucrative from day 1). I was expecting $300,000+ deposited into my bank account by summer 2020 (after 1 year of starting) but that's not going to happen. Falling short of expectations is something I am extremely unhappy about. Lower income is due to:

- less money from insurance companies starting out (I expect renegotiated rates at the 12 month mark at the very latest)
- owner bringing on too many psychiatrist at the same time (I introduced my friend from residency to the practice, another psychiatrist joined 6 months before I did)
- marketing system not as refined as I would like (owner unwilling to listen to my suggestions for marketing, I had to develop my own marketing system to build upon what was in place which has greatly increased referrals to the group)

To get an idea what is possible with good rates and packed days, one of the group physicians who is established in the area works 35 hours a week and is expected to bring home $300,000 - $350,000 / year.

If I stay with this practice, based upon historical growth rates, I expect to reach full capacity (working 6 days / week at 100% capacity) within 2 years from starting.

You will reach full capacity when:
- you get the best rates you can (either through cash or insurance reimbursements)
- you work the amount of days you want to work
- your scheduled is as packed as you want to be
- you have a system to prevent no-shows or the financial damages of no-shows as much as possible

What marketing did you find helpful?

 

[Sushirolls]

One thing to reflect on regarding ECT/TMS/Ketamine/Psychedlics, is that you become a consultative practice.
Time and energy for consults can be great depending on how detailed/in depth you go. It can actually slow you down (me).
It also then adds extra time for in depth record acquisition, and also insurance authorizations (more support staff demands).

However, TMS now has for one machine a 4 minute protocol that can yield remission in like 4-5 days.

 

[AD04]

6 days a week is > full capacity, isn't it? Also, if 35 hours gets 300k, 6 days a week should net you > 300k, assuming this is your end point?

My capacity for work is very high and I get bored when I'm not working. So ideally I would like to work 50 - 60 hours / week. The more I work, the more I would like to get paid as it is a way for me to keep score.

What marketing did you find helpful?

I'll share once @TexasPhysician shares how he does marketing. =)

 

[finalpsychyear]

Demand for some segment (high end cash for combined treatment) continues to be strong. Low fee spots get filled first, and if you need to grow faster charge lower fees than market or open more sliding fee spots. If you have the ability to target the top quintile of the income I think you'll be fine. Nevertheless, in the best case scenario in the private cash market total net income > 500k probably doesn't happen until 5-10 years in. Exceptions do occur--there are people who buy out old practices and immediate get to revenue > 1M per year in the first couple of years out, but that's very rare. Good psychotherapy skills are very useful in this segment to engage new patients and retain old patients. People prefer combined treatment if they have the means and it's easy to see why.

Other people are making more $ managing midlevels or doing niche services (TMS/ketamine, etc). I'm gonna try to do some investigations in the next year or so on that stuff. I think TMS if proven somewhat efficacious will eventually take off, which would be a good thing as psych continues to transition towards some kind of outpatient, superspecialized cush procedurally oriented specialty like derm/opthal/allergy. Not sure about the various infusion/pschedelicy stuff--I do think they represent the future of the field, but unclear if they are truly monetizable in the next 10 years or so.

Insurance based psychotherapy practices have no future. They are already done pretty much. Most of my colleagues who work for a facility do 0% psychotherapy. Few even bill for add-on codes. Often facilities negotiate with payers such that MDs cannot bill for add ons.

Running insurance based med mgmt practices can be slower (see: sushiroll's pretty awesome thread) in generating net profit, but revenue will be faster and more steady, and you can probably secure more bank loans. This is an area I'm less familiar with but is the dominant paradigm. This segment will be much more driven by the regulatory environment and regionally specific, so harder to predict in terms of growth. Ironically, IMO high end cash will be similar model whether it's a wealthy suburb of Tuscon or middle of Fifth Avenue.

Thanks. I believe I am holding myself back with the Telepsych part of my job. 25 hours a week but only 19 clinical+3 admin (paid lunch)+ 3 hours for driving all paid at a fixed hourly rate and they want 40 hrs so i have the ability to add anytime. For me the challenge has been eliminating those telepsych hours and replacing them with PP hours which is obviously more $ but more work. I ultimately have an endpoint of 100 PP patients a week over a 4 day work week but I am already half way there doing 15 clinical hours

 

[Sushirolls]

That was something I worried about too when starting out was the side gigs taking on a life of their own and actually hindering the growth of the primary practice.

 

[Sushirolls]

- less money from insurance companies starting out (I expect renegotiated rates at the 12 month mark at the very latest)

I would love to learn more about how the renegotiation goes. I'm just assuming the insurance companies won't budge in my area and not worth trying but simply dropping them. One company I hear from a patient that his former psychiatrist attempted, was unsuccessful so he dropped that company.

 

[whopper]

Some business ventures I was considering, outside of putting the money into mutual funds, a 401K, or Fundrise was opening a restaurant franchise, but I would never do this unless I had solid business partners. The nice thing about mutual funds (if it's a good one) is you don't have to spend 10+ hours a week researching the stocks. I used to do my own investing years ago and while I was doing it well it took A LOT OF TIME, and sometimes your stock crashes and you have a panic attack.

 

[WisNeuro]

Some business ventures I was considering, outside of putting the money into mutual funds, a 401K, or Fundrise was opening a restaurant franchise, but I would never do this unless I had solid business partners. The nice thing about mutual funds (if it's a good one) is you don't have to spend 10+ hours a week researching the stocks. I used to do my own investing years ago and while I was doing it well it took A LOT OF TIME, and sometimes your stock crashes and you have a panic attack.

Have you used Fundrise, or just thought about it? If so, any advantages to this over investing in REIT's and real estate through accredited investor only platforms?

 

[FlowRate]

niche services (TMS/ketamine, etc

In some markets, it seems like every other cash psychiatrist is offering these services. The economics of that will be interesting--too much competition and too little capital utilization could make TMS a money-loser, depending on cost of devices.

restaurant franchise

I would personally never get into food service unless I somehow managed to get hand-picked proven winners running the restaurant and was just the seed money. Maybe it's market dependent; opening a restaurant in a lot of places is a high-risk venture and that's with the savings of being an owner-manager.

 

[dl2dp2]

In some markets, it seems like every other cash psychiatrist is offering these services. The economics of that will be interesting--too much competition and too little capital utilization could make TMS a money-loser, depending on cost of devices.

Agree. I think the business model of: top tier residency —> cash combined or psychopharm predominant practice in wealthy location will still be the bread and butter for those who are getting top tier income, followed closely by savvy business owners with lots of mid levels or people who work really hard (lots of hours/moonlight) at facilities.

Let’s be honest—if you are a half way decent therapist, most of your patients get better and don’t need TMS/ketamine and other gimmicks... still this block of business deserve some investigation...

 

[TexasPhysician]

In some markets, it seems like every other cash psychiatrist is offering these services. The economics of that will be interesting--too much competition and too little capital utilization could make TMS a money-loser, depending on cost of devices.

I would personally never get into food service unless I somehow managed to get hand-picked proven winners running the restaurant and was just the seed money. Maybe it's market dependent; opening a restaurant in a lot of places is a high-risk venture and that's with the savings of being an owner-manager.

Cash psychs are using TMS? Seems like a great way to throw your money in a hole.

 

[finalpsychyear]

Cash psychs are using TMS? Seems like a great way to throw your money in a hole.

Few PP docs in area said they made a huge mistake spending nearly 100K on those neurostar machines which come with yearly 5k service packages plus charge per treatment regardless whether the practice gets paid or not.

 

[TexasPhysician]

I'll share once @TexasPhysician shares how he does marketing. =)

I could write a book on that.

 

[AD04]

I would love to learn more about how the renegotiation goes. I'm just assuming the insurance companies won't budge in my area and not worth trying but simply dropping them. One company I hear from a patient that his former psychiatrist attempted, was unsuccessful so he dropped that company.

It would be 100% successful. I know what the other doctors in the group are getting and I only signed on at a lower rate so I can start building the patient base. It would make no sense for doctors in the same group to be paid at different rates after 1 year. Also with group practices, there is more leverage when negotiating with insurance companies.

But with group practices, the psychiatrist won't get as much control compared to a solo practice.

 

[whopper]

Haven't used Fundrise yet.

 

[Sushirolls]

What's the percent of overhead some of you guys have? I've seen numbers tossed around from 20-40%. Curious to see what the percentage is for insurance based versus cash practices.

 

[TexasPhysician]

What's the percent of overhead some of you guys have? I've seen numbers tossed around from 20-40%. Curious to see what the percentage is for insurance based versus cash practices.

5-40% is accurate.

Ive seen niche telepsychiatry only practices in which the psychiatrist schedules everything and appointments are all online. That keeps overhead very low, but they aren’t very full.

Insurance practices are much higher. Outside billers regularly charge 6% of gross. Add in about 3% for their cc processor and you are at 9% overhead just to collect. Insurance practices require higher volume to be as profitable which means more office staff. Add in rent, utilities, insurance, etc.

Then depending on location, volume, etc. you have everything in between.

 

[ArdorAyurveda]

What resources would be recommending for learning about telepsychiatry in a private practice model? Seems like telepsychiatry would be a good way to be location-independent.

 

[Sushirolls]

It can be.

I've noticed though that patients needs are not location independent. So you'll need to know who the local therapists are for referrals, who the specialists are you might refer to, what the state commitment laws are, where the labs, where the inpatient units are, where the Eating Disorder clinics are, where the IOP/PHP units are. It takes some time to learn one area, now multiply by all the areas all the Telepsych patients will herald from.

I have a fixed office that has been present for a year, and Google still preferences on searches the other practices that have been around far longer.

Why will your telepsych start up practice be found and more appealing to people searching "Psychiatrist near me" or "depression treatment near me"?

So that means you are either the telecommuting worker for a hospital, or large health system, or community mental health agency... Which isn't completely telepsychiatry in a private practice model.

Chances are you'll need to have a brick and mortar practice first, that eventually offers this additional service, and slowly morphs into being a telepsych practice.

 

[sighchiatry]

What resources would be recommending for learning about telepsychiatry in a private practice model? Seems like telepsychiatry would be a good way to be location-independent.

It does make you more location independent within state. But you will still need a medical license and malpractice for each state the patient is located in. Will also need a DEA for each state you Rx controlled meds in. Also, currently the DEA does not allow you to prescribe any controlled meds without physically seeing the patient, although this may change soon.
Agree with suhirolls that it helps your telepsychiatry practice to have a physical presence somewhere.

 

[TexasPhysician]

What resources would be recommending for learning about telepsychiatry in a private practice model? Seems like telepsychiatry would be a good way to be location-independent.

Marketing is quite hard without a physical location. People search for physicians by proximity to them. You also limit yourself medication-wise as controlled meds are off limits.

Trump did set a deadline for the DEA to create an application process to resolve the controlled med issue with telepsych. The DEA has ignored him and missed the deadline. Even if they eventually create an application, there is no guarantee that they will actually approve anyone.

 

[finalpsychyear]

Marketing is quite hard without a physical location. People search for physicians by proximity to them. You also limit yourself medication-wise as controlled meds are off limits.

Trump did set a deadline for the DEA to create an application process to resolve the controlled med issue with telepsych. The DEA has ignored him and missed the deadline. Even if they eventually create an application, there is no guarantee that they will actually approve anyone.

would love to convert my brick and mortar to tele in 10 years living in FL tax free .. would be legendary.

 

[TexasPhysician]

would love to convert my brick and mortar to tele in 10 years living in FL tax free .. would be legendary.

Go for it. I’ve had the same thoughts.

 

[Sushirolls]

A concern though is you practice in Beta State, your face-to-face encounters, DEA, license, etc are all in Beta State. Presumably its not one of the 5 income tax free states like FL is. Most of those states that have income tax require you to still pay income tax for work you do in the state. I fear your glorious dream to move to Alpha State (florida) will still have you paying income taxes for Beta State.

Do you have a work around for this dilemma?

 

[Mass Effect]

Question for those of you doing telepsych -- do you prescribe antipsychotics? And if so, how do you do the AIMS?

Also is the DEA rule that you can't prescribe controlled substances if you have never seen them in person or that every visit requiring a controlled substance script needs to be done in person? In other words, say you do an in-person intake. Can you prescribe at that visit and then renew on subsequent telepsych visits?

 

[Mass Effect]

A concern though is you practice in Beta State, your face-to-face encounters, DEA, license, etc are all in Beta State. Presumably its not one of the 5 income tax free states like FL is. Most of those states that have income tax require you to still pay income tax for work you do in the state. I fear your glorious dream to move to Alpha State (florida) will still have you paying income taxes for Beta State.

Do you have a work around for this dilemma?

I mean, I'm pretty sure the state of Florida can provide you enough business for a full-time telepsych gig.

 

[sighchiatry]

Question for those of you doing telepsych -- do you prescribe antipsychotics? And if so, how do you do the AIMS?

Also is the DEA rule that you can't prescribe controlled substances if you have never seen them in person or that every visit requiring a controlled substance script needs to be done in person? In other words, say you do an in-person intake. Can you prescribe at that visit and then renew on subsequent telepsych visits?

In person the first time and PRN thereafter. Doesn't have to be in person for every refill.

 

[FlowRate]

A concern though is you practice in Beta State, your face-to-face encounters, DEA, license, etc are all in Beta State. Presumably its not one of the 5 income tax free states like FL is. Most of those states that have income tax require you to still pay income tax for work you do in the state. I fear your glorious dream to move to Alpha State (florida) will still have you paying income taxes for Beta State.

Do you have a work around for this dilemma?

I always assumed that telepsych work counted as the state that you're in for tax purposes, not the state the patient is in (which is what the medical boards/DEA count about.) Is that not correct?

 

[Sushirolls]

Disclaimer, I don't know...

My thoughts are similar to online orders, Amazon/Ebay/random online retailer have to pay the sales tax for the states people purchase from.

Insurance companies pay/bill based upon location of service. For instance if a BC/BS patient comes form a different state, and I see them in my state, I get the rates paid for my local area and contract, not the rates customary for the patient in their home state. Their home state might be notorious for paying very low rates.

Usually, taxes, and government rules seldom work in our favor, I tend to default to the thought process that most likely twists us over.

 

[FlowRate]

Disclaimer, I don't know...

My thoughts are similar to online orders, Amazon/Ebay/random online retailer have to pay the sales tax for the states people purchase from.

Insurance companies pay/bill based upon location of service. For instance if a BC/BS patient comes form a different state, and I see them in my state, I get the rates paid for my local area and contract, not the rates customary for the patient in their home state. Their home state might be notorious for paying very low rates.

Usually, taxes, and government rules seldom work in our favor, I tend to default to the thought process that most likely twists us over.

I bet you're right that it works that way if you're doing your own telepsych. I think I had the impression because most people seem to do telepsych through an intermediary company which would consolidate your income source.

 

[NickNaylor]

I always assumed that telepsych work counted as the state that you're in for tax purposes, not the state the patient is in (which is what the medical boards/DEA count about.) Is that not correct?

I would assume that you're responsible for paying taxes in the state that you're physically located in rather than the state that the patient is in. This is how things work with nearly every other kind of transaction and I have no idea why telemedicine would be different (and if it were, I would assume we would have heard about it).

 

[finalpsychyear]

I would assume that you're responsible for paying taxes in the state that you're physically located in rather than the state that the patient is in. This is how things work with nearly every other kind of transaction and I have no idea why telemedicine would be different (and if it were, I would assume we would have heard about it).

what happens if you have a private practice in a taxable state like an office where the patients go and you are physically in a tax free state where your doing telepsych?

The only way it may work if you have a private practice is to connect directly to the patients computer at home or maybe you have another office in the tax free state which is your main business address.

 

[NickNaylor]

what happens if you have a private practice in a taxable state like an office where the patients go and you are physically in a tax free state where your doing telepsych?

The only way it may work if you have a private practice is to connect directly to the patients computer at home or maybe you have another office in the tax free state which is your main business address.

No idea - I'm sure in situations like that it would probably be worth talking to an accountant about for clarification.