Questions from an undergrad regarding PP?

[Psycho Bunny]

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Im currently an undergrad psych major about to apply to reaearch labs with psych faculty at my college. My goal at some point is to have my own Private Practice and I have alot of questions regarding the feasibility and logistics of it.



1. Is it possible to have a cash only buisness without accepting insurance right off the bat? Is it more lucrative that way? Would I need to start out accepting insurance? Are some better than others?

2. I hear often about practices in big, major coastal cities. Is it possible to open up a PP in a rural, Midwestern location? Is it at all economically viable? Or at least a smaller city.

3. How hard is it to maintain a full time PP without an assistant managing your appointments/finances? If it's not realistic to go it alone, what's the best way to navigate that?

4. How to reduce/minimize costs of overhead?

5. Is 100k net realistically possible?


Any other advice would be greatly appreciated.

 

[PsyDr]

Im currently an undergrad psych major about to apply to reaearch labs with psych faculty at my college. My goal at some point is to have my own Private Practice and I have alot of questions regarding the feasibility and logistics of it.



1. Is it possible to have a cash only buisness without accepting insurance right off the bat? Is it more lucrative that way? Would I need to start out accepting insurance? Are some better than others?

2. I hear often about practices in big, major coastal cities. Is it possible to open up a PP in a rural, Midwestern location? Is it at all economically viable? Or at least a smaller city.

3. How hard is it to maintain a full time PP without an assistant managing your appointments/finances? If it's not realistic to go it alone, what's the best way to navigate that?

4. How to reduce/minimize costs of overhead?

5. Is 100k net realistically possible?


Any other advice would be greatly appreciated.

1) no.
2) a cash only PP in a small town is not financially viable.
3) Depends on income, rent, overhead, etc. Many do their own insurance billing, and scheduling.
4) Buy a building, rent part of it out. If you do telemedicine, you’re setting yourself up to compete against the big box companies.
5) Yes. But $100k in 5-10 years will be less than most household incomes.

Advice: take a business course. At the end of the day, you’re proposing to run a small business. It might be helpful to know a few things about business. Look up the psychotherapy CPT code, then look up CMS fee schedule, multiply hours by psychotherapy code. Now look up what the legal profession thinks is a reasonable percent for billable hours. Now look up incidence of psychiatric disorder. Multiply by your small area. Ask the townsfolk about how easy it is to get an hour off per week. Ask the local pastor/minister/priest/rabbi/imman/medicine man/etc how many people they give pastoral counseling to per week to get an idea of how many people actually want psychotherapy as opposed to a pill. Look up the census for the local school. Look up the average income in your town on wiki. Call around and ask what office rent is going for.

Let’s say your village has 10k people, 2k of that are children, and 500 are unemployed with no insurance. Let’s say the incidence of psychological disorders is 30/1000. So that is 210 potential patients, .5 of whom are interested in therapy, and .5 of those whose employers will actually allow them the time off to come to therapy. That’s fine for one year, but you’re going to be praying that everyone stays sick next year. Things to think about.

And it’s “a lot” when it’s a noun and “allot” when it’s is a verb.

 

[summerbabe]

Is it possible to open up a PP in a rural, Midwestern location? Is it at all economically viable? Or at least a smaller city.

Think of a PP (especially cash pay) like a restaurant.

Each town can probably sustain a certain number of restaurants based on its demographics and customer preferences.

If somebody wants to open something new, they probably need to be much better than a current place that serves the same food, serve an unmet dining niche and/or be competitive on price.

But if you misread the market (even if the service is good), your restaurant is probably not going to last long.

So if you know where you might want to live, you can research where people already go for talk therapy (hospital system, community mental health, VA, existing PPs, betterhelp, etc) and what types of salaries are offered and how much current services cost.

If local hospital and CMH salaries are low and/or the cost to see an established PP therapist is cheap and maybe mostly through insurance, your chances of a establishing a new and thriving cash pay practice probably isn’t great in that area.

Telehealth can supplement but patients around your state/intertstate compact would need a reason to see you specifically and pay out of pocket, when they will almost certainly have cheaper options including via insurance or the option to be face to face, which they may prefer.

 

[PsyDr]

One of my earlier mistakes: I assumed that older people have money, and would want to pay for my services. Turns out that the elderly would want to commit suicide to pass on money to some grandchildren, before paying.

Gramps, there is a maybach in my parking lot. We both know that you don’t care about $100, or even $1000.

 

[jdawg2017]

I would recommend not getting too pigeonholed on your ultimate career goal in the field this early in your training. I started off grad school thinking I wanted to be a professor at an R1, but it turns out I really love clinical work and will make a non-trivial 30-40k more in salary annually in some academic medical centers where I can do a blend of clinical work and research. I also like the stable salary and benefits that a traditional W2 job brings, even though I could eventually make very good money doing PP (or cash only) neuropsych work. My opinion, of course, might change with time.

My partner is a social worker and knew pretty quickly after doing her clinical placements that she wanted to go into PP, but she doesn’t have the business acumen to set up shop on her own right now, especially with us living in a midwestern town that’s new to us. She decided to join a great PP group where there’s a 50-50 fee split for what she brings in, and they take some major insurances and cash. Whatever she earns, we keep (minus taxes), as the group practice covers all overhead with the fee split, such as the office, her work phone, billing software, administrative staff, etc. I would have to double check, but I think her net income was about 65k ramping up in year one, and she’s on track to do maybe 75-80k this year.

One sort of obvious thing we didn’t clearly know about which was very stressful for us this last year is that essentially if she doesn’t work, she doesn’t get paid. This is at least the case in the contractor world, which I think is the vast majority of set ups for PP. It seems like a “duh” thing, but when you take 10 days off for vacation, that’s basically at least a thousand dollars if not more of “lost money.” Also, if insurance is being wonky with a patient claim, you don’t get that money until they pay you (which is maybe why some PPs don’t even bother with insurance). Oh, and obviously things like paid family leave don’t exist… so, long story short, plan for all of that whether you go into a PP group or go it on your own. We’ve adjusted, but it was a fun financial learning curve!

 

[Sanman]

One of my earlier mistakes: I assumed that older people have money, and would want to pay for my services. Turns out that the elderly would want to commit suicide to pass on money to some grandchildren, before paying.

Gramps, there is a maybach in my parking lot. We both know that you don’t care about $100, or even $1000.

Or that they are willing to part with it. The number of multimillionaires I treated using Medicare would astound folks. Even famous people.

 

[MCParent]

1) no.
2) a cash only PP in a small town is not financially viable.
3) Depends on income, rent, overhead, etc. Many do their own insurance billing, and scheduling.
4) Buy a building, rent part of it out. If you do telemedicine, you’re setting yourself up to compete against the big box companies.
5) Yes. But $100k in 5-10 years will be less than most household incomes.

Advice: take a business course. At the end of the day, you’re proposing to run a small business. It might be helpful to know a few things about business. Look up the psychotherapy CPT code, then look up CMS fee schedule, multiply hours by psychotherapy code. Now look up what the legal profession thinks is a reasonable percent for billable hours. Now look up incidence of psychiatric disorder. Multiply by your small area. Ask the townsfolk about how easy it is to get an hour off per week. Ask the local pastor/minister/priest/rabbi/imman/medicine man/etc how many people they give pastoral counseling to per week to get an idea of how many people actually want psychotherapy as opposed to a pill. Look up the census for the local school. Look up the average income in your town on wiki. Call around and ask what office rent is going for.

Let’s say your village has 10k people, 2k of that are children, and 500 are unemployed with no insurance. Let’s say the incidence of psychological disorders is 30/1000. So that is 210 potential patients, .5 of whom are interested in therapy, and .5 of those whose employers will actually allow them the time off to come to therapy. That’s fine for one year, but you’re going to be praying that everyone stays sick next year. Things to think about.

And it’s “a lot” when it’s a noun and “allot” when it’s is a verb.

^all right
“I’ll open a private practice” isn’t a good business plan for anyone. If you’re an undergrad no one would really expect you to have a fleshed out solid business plan of course. But just know that that alone isn’t it, so business class is good.
Some vagueness in the post too. Eg is “rural” five miles outside Bozeman, or nothing but banjos and villages of 50 people for 100 miles?

 

[deleted1129370]

Im currently an undergrad psych major about to apply to reaearch labs with psych faculty at my college. My goal at some point is to have my own Private Practice and I have alot of questions regarding the feasibility and logistics of it.



1. Is it possible to have a cash only buisness without accepting insurance right off the bat? Is it more lucrative that way? Would I need to start out accepting insurance? Are some better than others?

2. I hear often about practices in big, major coastal cities. Is it possible to open up a PP in a rural, Midwestern location? Is it at all economically viable? Or at least a smaller city.

3. How hard is it to maintain a full time PP without an assistant managing your appointments/finances? If it's not realistic to go it alone, what's the best way to navigate that?

4. How to reduce/minimize costs of overhead?

5. Is 100k net realistically possible?


Any other advice would be greatly appreciated.

Speaking as someone who originally opened up a private practice (cash only) in rural central Ohio, it did not go so well seeing how I was living in a place that had 10,000 people and the mean income was $38K. Charging $150 per hour was not reasonable nor affordable. I had one patient. Then I moved back home to Texas and opened up my practice which is insurance based. I started first as a solo practice earning about $100K in my first year, and this year I am set to earn nearly $200K. Most of that is from my own work (patients I see), but some of that is attributed to the 2 contractors I hired. My first 1.5 years in private practice I did it all. It wasn't until 2 months ago where I hired a virtual assistant from Upwork. I gauged everything, I set regular goals/benchmarks I needed to attain from a financial and marketing standpoint to justify adding more expenses. I should add that my practice is completely virtual. I maximize my tax deductions and minimize tax liabilities. I have an accounting/bookkeeping company that does all that for me.

You will really want to invest in a good website. For me, I saw most of the providers around me had very typical websites, and one thing that would drive me crazy and was irritating was that no one was very clear and concise. I designed a website around those factors so that a person could go to my site, knew who the provider(s) were, know what to expect from the moment they wanted to engage in services with us, how much it would cost, what insurances we take, etc. I wanted them to be able to click just 2-3 buttons and get scheduled with me to reduce the barriers to access to care. Basically, I approached it how I would if I were a patient. I have excellent SEO and as a result of my new site I rolled out (reinvested my capital gains into a marketing company to design me a new site), I average 6-8 inquires a day. I am booked about 2 weeks out. I see 30 patients a week, so that highlights the amount of folks I am booking out. This represents a substantial change from a year ago.

 

[WisNeuro]

Necessity of a website will vary depending on specialty/niche. And whether or not you take insurance. In many areas, if you take insurance and do neuropsych, all you need to do its let people know you are taking patients and give them contact info, and you'll be full in no time. I'd say maybe 1 out of 4 neuropsychs I know here (solo to small practice) do not have websites, and we're all booking out very far in advance.

Probably a little different for therapy only stuff. Though, for doctoral level therapists who take insurance, at least around here, you'd be full simply from word of mouth.

If you're cash only, probably necessary, as you need to build that brand and marketing to keep those slots full.

 

[Sanman]

Since this person is an undergrad, just a piece of advice not highlighted. Outside of cash pay or legal work, you are limited in your ability to affect your payments. You have much more ability to manage your costs. One of the biggest costs that hinder folks from getting into PP is student loan payments. Think about that when making choices about what graduate program to attend.

 

[WisNeuro]

Since this person is an undergrad, just a piece of advice not highlighted. Outside of cash pay or legal work, you are limited in your ability to affect your payments. You have much more ability to manage you costs. One of the biggest costs that hinder folks from getting into PP is student loan payments. Think about that when making choices about what graduate program to attend.

You mean i can't self-designate my practice as a non-profit and give myself loan repayment?

 

[singasongofjoy]

I've generally felt that thinking about the particulars of the setting (to the level of PP vs other options) until you're pretty close to being there is putting the cart before the horse-- IMO, a more fruitful plan is a broad-strokes one (what kind of population and areas of focus am I most interested in at this point?) followed by continuing to take opportunities that seem the most clinically interesting as they arise. Your interests are likely to change some over time, and get gradually more honed as you gain experiences. You might find by the time you get to the other side your interests align more with working in one of the non-PP settings, so don't get too wedded to any particular idea - especially at this point in the game. Along the way you'll learn more about what you like - and DON'T like - about various populations and work settings - but at this point you don't know what you don't know. You'll figure it out along the way as you get there and be more satisfied for it than if you set off with a specified end goal before you've even really begun.