Are you ready for private practice?
So you're thinking about becoming a private practitioner? If so, join the crowd. Today, over 50% of psychologists that provide patient centered health care services are private practitioners. But launching, and maintaining, a successful psychology practice isn't always as easy or enjoyable as it may seem. It requires financial resources, marketing acumen, and the ability to run a business. Earning a Psyd in psychology prepares students to become good psychologists, not how to run a business.
Below we'll explore the inside and out of launching and running a psychology practice as an independent practitioner.
How much does it cost?Launching a successful private practice in psychology can be lucrative, but it is an investment–and investments cost money. Due to the financial pressures faced by young psychologists and recent college grads as they begin their careers, launching a private practice may not be the right move. Most psychologists who launch a private practice, gain a little experience working with an agency before branching out on their own–and wait a few years until they've saved a some money. Below we'll explore the costs of launching a private practice in psychology.
It almost goes without say that the biggest cost–and requirement–of starting a private practice is education and licensing. A private practice requires a licensed psychologist. To become a licensed psychologist requires a Ph.D. degree in psychology, which isn't cheap. According to a survey published by APA's Center for Workforce Studies, as of 2009, students graduating with a PsyD in clinical psychology had a median debt of just over $120,000. Those with a clinical PhD graduated with a median debt of $68,000–and education costs are rising.
As with most startups, costs can vary greatly based on a number of factors. After education, one of the biggest costs of starting a psychology practice is real estate. If you rent a no-frills space located in an older complex your costs are going to be substantially lower than if you rent a luxury suite in classy medical offices in a prime location. Real estate costs are also going to be determined by state, city, and proximity to major population concentrations. For example, the cost of renting a 600 square foot office in Los Angeles, California may run $2,000 a month. That same space in Kansas City, Missouri will cost about $300 a month.
Other costs of setting up and running a psychology practice include liability insurance, clinical forms, a business line, a secure email account, website, practice management software, printer, computer, internet, professional associations, business cards and merchant account. Acquiring general liability and/or clinical liability insurance is highly recommended (if not required in your state). It will cost about $450 a year. Clinical forms will run $20 to $30 a month but you may be able to download all the forms for free over the internet. A business line with call forwarding and voicemail is going to run $100 a month. A secure HIPPA compliant email account will run $50 a year. You can get a website starting at $20-30 month. A more professional site will cost around $1,500. There are a number of good practice management systems (which include merchant accounts) at around $40 month. A computer will cost $250. The rest of the items you'll need will run about $300 a month. All in all, your initial investment will run about $1,600 and your monthly costs for running your fledgling practice will be about $550.
However, there are many ways to boot strap the costs associated with starting up your practice. Some offices will let you pay rent by the hour, instead of paying a fixed monthly rate. You pay only for the space you use, when you use it. Instead of costly billing software, there are cellphone apps that accept clients' credit cards for a percentage of each transaction. Instead of an expensive phone system you can start out using Google Voice to get a free line.
Last, but by no means least, is marketing. Marketing is going to be the backbone of your business, and potentially one of your biggest costs, if you're not careful. The most successful practices are not necessarily run but the best psychologists. More often than not, a good sense for business and marketing is what drives a successful (profitable) psychology practice. Unfortunately, most psychologists are trained to be psychologists, not marketers, not salesmen. When developing your practice, you'll want to create a business plan that outlines the specific steps you'll take to obtain new clients. Internet referrals is one of the most successful means these days for generating new clients. Growing your professional network is also an excellent way to generate referrals. Focusing on relationships with other psychologists and health professionals is a great way to generate more business–especially if you're a specialist. Marketing costs can run from $0 a month all the way up to many thousands a month.
Business First, Psychology SecondIn theory, running your own practice makes sense. More autonomy, more control of your time, higher earning potential, greater satisfaction. But, running a psychology practice isn't the same as working for one. You can be the best psychologist in the world but if you don't have a good sense for running a business then you may not find running your own practice all it's cracked up to be. Yes, you have the opportunity for greater reward, but there are still risks with running your own practice. You have to generate all your own business. You have to be firm with your clients on your policies and practices (like making sure they pay when they don't show up for an appointment). About 20% of your time will be spent dealing with administrative and operational tasks and about 80% on actual client work. As your practice grows, you may find that more and more of your time is eaten up by adminstrative and operational tasks. Before you jump into a psychology practice, make sure you're ready to managed the business end of things.
Get Some ExperienceAs appealing as it may seem, we don't recommend trying to set up your own practice right out of grad school. Before trying your hand at running your own business, make sure you get the "being a psychologist" part of the equation squared away and start earning a paycheck. Find a secure job in a group practice setting where you can learn the ropes of being a psychologist, while at the same time gaining some insight into what is required to run a practice. After a few years on the job, you may just decide becoming an independent practitioner isn't for you.
Find a SpecialtyIf you're determined to start your own practice and become an independent practitioner, then finding a niche or specialized area of practice is what most successful psychologists recommend. Just getting started, you'll likely need to take on any work you can get, but once established, specializing will produce the best marketing opportunities and income potential. Popular areas of specialization ideal for private practice include addiction, marriage and family therapy, child counseling, vocational counseling, and geriatric counseling, to name a few.
Learn How to Sell YourselfBeing the best practitioner doesn't mean you'll have a successful practice. The unfortunate reality is that a successful practice–regardless of type–is based being able to market yourself. Be prepared to offer free seminars at community centers and talks at schools to get your name out there and start building your own personal brand. You'll also want to network, network, network. Networking with other health care professionals, including doctors, nurses, administrators and other allied health professionals can be instrumental in creating a strong clientele base. You'll also want to develop a professional website that reflects your dedication to excellence and effectively communicates your value propositions as a therapist, counselor or psychologist.
Focus on ValueMany psychology graduates feel that their value is based on the quality of service they offer their patients. While this is true, the value of a psychology practice is based on both quality of service as well as the underlying operational efficiency and profitability of the business itself. If you know your a good psychologist, that provides a valuable service, then make sure your pricing and billing policies reflect that value. Aligning your pricing and billing policies with the high quality of service you provide will ensure that your practice is generating the revenues to should to stay afloat and grow. When determining what rate to charge your clients, it's helpful to check out what other psychologists and related professionals are charging theirs. If you're a specialist, you may consider charging higher rates than those charged by general practitioners. Making sure you charge what you're worth will help you do your best work and provide your clients the incentive to take your service seriously.
Develop Business PlanA good business plan is a key element of a successful psychology practice. Your business plan should include a mission statement that outlines the core purpose of your practice and its focus. Before finalizing your business plan talk with as many private practitioners as you can who work in your field of psychology. Don't just base your business plan on input from one highly successful person, or one person that failed in the business. The more private practitioners you speak with in the beginning, the more insight you'll gain for preparing an accurate and useful business plan to grow your future practice. As you put together your business plan, you'll want to consult with experts in taxes, accounting and mental health law.
Stay Current and Up to DateAs an independent practitioner you'll want to stay up to date on what's happening in your industry and keep your skills current. If you don't, your practice could experience difficulty down the road. Let's say your specialty is psychological testing to assess personality structure but the demand for this service is slowly drying up. If you don't stay current on market trends your entire market could disappear before you know it. In this type of a situation, you'll want to know how quickly you need to start transitioning into a new specialty. The independent practitioners who experience long-term success are those who are ready and able to adapt when change occurs.
A successful psychology practice also requires that skills are updated and new talents are developed. We're not only talking about about content area skills for your psychology specialization. Business skills must also be kept honed and sharpened.
Get InvolvedWe already mentioned the importance of networking and building relationships with other professionals as a strategy to building a psychology practice. We also recommend taking advantage of any opportunity to get involved in local community organizations and professional associations. Conduct workshops for local teachers and educators on how to address developmental, emotional and behavioral issues with children. Don't just join professional associations, get involved. Attend association luncheons and get togethers. Contribute to the association and participate in making the association beneficial to other members–not just yourself. Getting involved and contributing to your community and to professional associations will go a long way to establishing you as real play in your space and growing your practice.
Are You Really Ready?So are you ready to start a private practice? The following are few signs that you're really ready to start your own psychology practice.
- You're completely burned out on working for an agency
- You're ready to become a business owner
- You're not only ready, you're prepared to become a business owner
- You're commited to the success of your clients
- You understand exactly why you want to have a private practice
- You've acquired several years of practice experience
- You're a self starter and don't required constant affirmation
- You're willing to work long hours at odd times
- You're constanting learning new skills and developing talents
- You've saved some money to invest in your practice
- You have a well thoughout business plan
- You're willing to take risks and are commited
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