Entering the World of Private Practice: What Graduate School Did Not Teach You

Abstract

Young psychologists entering the world of private practice often find themselves holding naïve concepts about this area of psychotherapy and may be ill-prepared to work for a group private practice and/or start their own practices. This may be related to various obstacles surrounding credentialling and billing, insurance operations and processes, restrictive covenants, marketing tasks, and reimbursement. Additionally, other barriers to consider include handling patients’ crisis situations individually, understanding how therapy works in a for-profit setting, and maintaining a caseload with a non-captive group of clients who are free to choose who to see and determine whether the sessions are worth their time and money. This paper takes a look at the obstacles facing young psychologists wanting to enter the private practice arena, an area graduate schools may not emphasize in their teachings.

A growing trend within the field of clinical psychology has been a focus on student training. In fact, the American Psychological Association (APA) has a student division called the American Psychological Association of Graduate Students (APAGS) and a journal, Training and Education in Professional Psychology,dedicated to student training and internship development. Countless studies regarding clinical training have been conducted on a range of topics including the ambiguous nature of clinical training (Pica, 1998), diversity in student training (Callahan et al., 2018), attitudes toward “impaired” peers in clinical psychology training programs (Oliver et al., 2004) and attitudes toward evidence-based practices (Bearman et al., 2015). One important area that has been neglected, however, relates to the obstacles young psychologists face when transitioning into private practice. Many times, they enter into this world with little idea of how it works, with the exception of trainees who have completed a practicum or internship in a private practice. Even trainees with some experience in a private practice may be limited in their knowledge about the operations and processes of this type of work.

In this paper, the author presents some of the obstacles students and young clinicians encounter when deciding to start their own practices or join an established group. As someone who has run a group practice for the last 15 years, these are just some of the issues that have presented and deserve mention as a guide for those deciding on a career in the private sector.

Insurance Considerations, Credentialling, & Restrictive Covenants

The first question often asked is, “How do I make a living as a private practice psychologist?” Whether one chooses to work individually or as part of a group, the first barrier relates to credentialling. Often, young clinicians possess little knowledge of what it means to be credentialed and the processes and timelines involved with credentialling oneself or by a group.

As simple as it sounds, a clinician must be billable to insurance companies as many clients prefer to use their insurance. What young clinicians may not realize is that credentialing with large insurance companies like Blue Cross, Cigna, Aetna, and Medicare can take several months to complete. Moreover, some companies require clinicians to be licensed for three to five years before they can even apply to be a member of their insurance panel. Many new providers are unaware of the concept of contracted rates as opposed to their billing rate and the differences between deductibles, co-pays, and co-insurance amounts. All of these concepts require an openness to learning in order to prevent payment problems at time of service and growing unpaid balances.

Group practices can employ a clinician as a W-2 employee to expedite seeing clients under the group tax ID, however, an issue may arise in the future if a clinician decides to leave the practice and is prohibited from taking their clients due to a restrictive covenant clause in the employment contract. The restrictive covenant may prohibit clinicians from taking their clients for a certain period of time after leaving the group and may prohibit working within a certain geographical radius for a period of time following termination from the group. The enforceability of restrictive covenants can vary from state to state and should be an important consideration for psychologists entering private practice settings before signing an employment contract.

Marketing and Building Referral Sources

For those hoping to start their own practice, the issue of credentialing and knowing how insurance works along with a lack of marketing and referral sources makes the prospects even more daunting. Building referral sources is important even for those deciding to work for an established practice where referrals may be bountiful. Clinicians may take this abundance for granted and may see their referrals drying up when new staff are hired. Many practices hope that those they hire will make time for building their names in the community through contacting referral sources or attending marketing events in the community. Those that do this work outside of session may find themselves busy with cases both from the practice and by direct referral and may also find a growing sense of satisfaction in growing their professional name in the community and obtaining their own referral sources.

For those desiring to start their own practices, marketing and developing referral sources is most crucial and can often take a while to generate a steady stream of referrals. This is why it is important to set realistic goals about practice volume and to start the process as early on as possible.

Case Retention

Case retention is not to be overlooked. This does not mean holding on to clients to make money. What it refers to is the ability to engage and hold clients long enough to work through their presenting problems and additional concerns that may arise during the course of treatment. That being said, clinicians new to private practice have trouble recognizing that they are no longer working with a captive set of clients in a school or hospital-based setting. Private practice clients, whether through their insurance or private pay, have a choice of who they want to see and for how long (unless treatment is court mandated). This results in these clients having more autonomy to find and work with a clinician who is a sufficient to meet their unique personal and clinical treatment needs.

Clinicians newer to the private world soon find out they may have to step out of their comfort zones and work harder and more creatively to engage their clients. They may have to step outside of the use of handouts or psychoeducation to make the sessions feel more alive in order to hook the client. This can be achieved by having the client leave each session with something psychologically tangible to hold onto or, when working with children or teens, bringing the parents into session to enliven the dynamic and demonstrate to parents the clinical work that is being done.  

Sometimes, a clinician may be left feeling frustrated with clients who do not engage as readily and may ask to be transferred or will simply drop out of treatment without any specified reason. A less experienced clinician may take this as a personal hit. The clinician adapting to the demands of private practice will redefine their therapeutic approach. They may also begin to understand the pace of private practice versus program models, the difference between symptom and process, how the initial treatment plan may evolve over time as the client begins to feel more comfortable addressing certain issues, and as things continue to effect the client in real time that may take the treatment in different directions.

Hospitalization and Recommendations for Most Appropriate Level of Care

At some point in private work, clinicians will likely be faced with having to hospitalize a client and, in some cases, without consultation from trusted colleagues. There may also be times when clinicians may have to determine the most appropriate level of care for a client in crisis, such as partial hospitalization or intensive outpatient services, all of which increase the clinician’s liability if not addressed correctly. The best way to accomplish such scenarios is for young clinicians to familiarize themselves with the hospital and hospital-based programs available in the community and even reach out to contact program directors and tour the facilities.

Clinical recommendations come best when they are delivered with confidence and knowledge. It is most helpful to facilitate a hospitalization or transfer to a higher level of care when one knows the program and processes for admission. Conveying an understanding of the process builds trust and only enhances the quality of the therapeutic relationship when the client is discharged and returned to treatment.

Supervision After Licensure

In the first year of adjusting to private practice work, clinicians in private practice should consider clinical supervision, even for those who are licensed. To ensure success, it is a time to put ego aside. Those who transition the best are open to feedback and consultation regarding the clinical operations of the practice and the clinical idiosyncrasies that may arise, such as crisis management, ethical concerns, and dealing with high conflict individuals and divorce.

One particular issue relates to treatment goals and termination, which can continue to evolve in the private world. Goals may change and new concerns may arise in the client’s life that may require a shift in treatment focus, goals, and plans. Knowing when to bring up termination and how to structure that conversation needs to be made with careful thought and negotiation between client and therapist. A client does not want to feel rushed out of treatment, or like one is being abandoned and no longer wanted to be seen in treatment. A skilled therapist is able to track the process from the initial referral and recognize when the primary reasons for treatment have been addressed. This allows the therapist to remain prepared to shift the course of treatment when indicated, such as increasing the time between sessions or shifting the focus of sessions to a different treatment goal, all of which should be clearly explained to clients at the onset of treatment.

Time of Service Collections

An additional consideration relates to payment collection. Practices may differ in how payment is collected from clients. In an individual private practice, there is no other option but for the clinician to collect payment, as most individual clinicians do not employ office staff. This is not something typically discussed or explored in graduate school training programs. This may be easier for some clinicians while others struggle with the idea of collecting money. Clinicians may also fail to track payment information, which can result in large bills being owed and can potentially create increased stress when attempting to address this with the client which may also effect the therapeutic relationship. Payment plans and promises from the client do not always work, so it is critical to learn how to be comfortable collecting money at time of service just as any other medical professional does. Just because we are psychologists does not mean payment should not be received for our services.

Compensation from the Group Practice

One last point relates to compensation in the group practice setting. Many practices pay clinicians a percentage of revenue collected as an independent contractor or as an agreed upon rate as a W-2 employee. The safest route is to be employed as a W-2 employee as it ensures clinicians can see clients under the group tax identification that is credentialed with the various insurance companies. In this way, clinicians need not be individually credentialed and it can protect the group and individual clinicians from fraud within the practice. Another benefit of working as a W-2 employee is that the group, depending on the state, may pay for half of Social Security and Medicare taxes.

Those who sign on as non-W-2 independent contractors should consult with an accountant to ensure any tax estimates are being paid through the year and whether they should make themselves a corporation. They should prioritize credentialing as soon as possible in order to be billable to the practice as they are not W-2 employees of the practice. They should also make sure they are not being involved in anything that might be construed as fee-splitting, which essentially describes a situation in which a referral source is being paid for sharing referrals. Individual state laws on what constitutes fee splitting should be thoroughly explored so as to avoid a potential legal or ethical dilemma.

Summary and Conclusion

This brief paper touched upon some of the aspects young clinicians should consider when looking to start their own practice or work for a group practice, which are often not addressed in graduate training programs. Setting oneself up for success as a private practice clinician requires an understanding of how the business and clinical systems work. Plenty of time and consideration needs to be given to things such as credentialing, understanding how insurance works, how one is being paid by the group, what a restrictive covenant is, collecting payment from clients, marketing/building a referral system, adjusting to more independent clinical work and the impact of that on the course of treatment, and how to navigate crisis situations.