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The Mentor's Corner |
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Students/Early Career Professionals |
Miguel E. Gallardo, Psy.D. & Michael Murphy, Ph.D. |
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Raja asks: How does one know when they are ready for private practice? I’m on the cusp of being licensed and have spent most of my time in community mental health clinics. While I’m intrigued by private practice, it’s also anxiety producing to know that I won’t have an agency behind me. Amanda responds: \I can certainly relate to the anxiety associated with starting a private practice, and I am in a similar situation to what you described (almost licensed and without an agency to fall back upon). I was fortunate to have some colleagues invite me to join them in starting a practice, and this has made the process so much easier. We all bring different clinical strengths into the partnership as well as practical skills (i.e., accounting, knowledge of referral sources, decorating flair), and I think that this helps to offset most of our perceived weaknesses (accounting frightens me!). We have arranged the partnership so that I can work as an employee until I become licensed, and then I will become a full partner. Have you thought about inviting anyone to join you in the process of starting a practice? If you can find the right person/people, I think that it can be a very rewarding experience and much less isolating then starting on your own. Hope this helps! Dr. Elaine Rodino replies: When I moved into my private practice I did it slowly. I was able to keep my clinic affiliation (LA Suicide Prevention Center) while building my private practice. I went slowly from full time staff to half, then quarter.... while the practice was building over a couple of years. Now that was before managed care. Now you can start up a full time practice by getting on many panels. But that’s a decision that you really need to think about. My experience is that once you get a practice so full of managed care patients it’s harder to do the practice building work for fee-for-service patients. Reason is that you have so many patients and need time to do all the billing etc. Just remember that your hourly wage with managed care isn’t going to be much more than your community mental health clinic. In a fee-for-service practice you can have a sliding scale or do pro-bono work to allow for all members of your community to have access to psychotherapy. Good Luck to your however you decide to do it. Eva asks: My question is how does one usually become a partner? How much does a practice “cost,” or what kind of investment does one make to join a practice as a partner? (This psychologist has offered to contract with me to run several offender groups and has said there would be other referrals). Any suggestions on how to bring up this issue? Steve Walfish replies: Simply ask him if he has any interest in you becoming a partner in the practice and if so, what he would have in mind as to how this could evolve. At that point in time you can decide if you like his plan or not. If he does give you a plan by all means hire a consultant (an experienced psychologist, an attorney) to review all documents. There is no set standard for developing partnerships in this field. It is all worked out on an individual basis. By the way before approaching him try and think through what you would have to offer him, i.e., why it would be advantageous, for you to be a partner, now or in the future. Can you help grow the business? Can you provide other essential services such as recruiting new therapists; supervise therapists, running a satellite office in another nearby town? Mike Murphy adds: You have asked an important question but one that is not easy to answer. I agree with the response that Steve made. I thought I would offer a few other comments. There is not a standard way to value a practice. The most straightforward and the starting point for any effort is to determine what are the values of the assets in the practice. This would include furniture, office equipment, etc. This is relatively easy for an accountant to get an estimate. The practice may also have accounts receivable and some decision has to be made about that. Current contracts are of some value as are the referral base and what is often called good will. This comes down to what value you place on the reputation of the practice. These things are obviously difficult to place a value on. Another issue is the current organization of the practice. If it is currently a sole proprietorship than an LLP, PC, or other corporation, you should anticipate a good bit of work in making the shift to a partnership or other organization. You may need to reapply to panels, redo contacts and spend endless hours changing the tax ID number. This last point brings up an important piece of advise for anyone starting a practice. You should organize at the beginning in anticipation of growth even if you plan on staying a sole proprietor in a solo practice. The cost of changing is worth the initial cost and effort. Steve’s best advise is to get consultation from a colleague who is familiar with this area. Kristen asks: I hope others who are starting out will also find this helpful. I’ve been offered a position in a private practice, with a 40/60 arrangement (includes supervision, billing, support staff, and other overhead). And they’ll help me get on managed care panels. Once I become “full time” (e.g., 30 client hours a week), the arrangement moves to 60/40. I’ve read on the listserv before to have an attorney look over the contract, and I may do that. However, it seems fairly straightforward. There are no clauses about where I can set up a future practice and it has a 30-day escape clause. I’m just wondering if there’s anything I’m missing that I should ask about before signing. To me, it seems like a pretty good deal, especially since it’s my postdoc. But any potential loopholes or questions to ask would be appreciated. Marlena Jones replies: I was also offered a deal similar to this for my postdoc at first. Most of my supervisors at the time looked at me like I was crazy for accepting that because of the 40%, because that clinic would be making more than I was off of my work. Here’s something I learned the hard way: Are they going to give you your referrals or are you expected to get them all yourself. If you have to do marketing, 40% is way too low. If they say that they are going to give you your referrals, ask how many they can guarantee. I was told I would have all the referrals given to me and I was given one in a month. Not a quick way to get those post-doc hours. Personally, I decided to find a salaried post-doc and am very happy where I am now (hired on by my internship). I do not think that I could have survived on what I was being paid at that first job. I guess I ended up working for free. Steve Walfish contributes: Let me agree with Mitch. 60/40 sounds amazing disproportionately in favor of the practice you will be joining. Let me also agree with him cautioning you against using the term clinical psychologist, if you are in private practice. It is my understanding that if you are employed there are certain instances where you can use that title (e.g., state institutions, academia). I am about to start a venture consulting to early career mental health professionals on practice development. As I begin this I am willing to review the contract gratis for you to see what types of questions you might be missing. Of course this would not be a substitute for an attorney reviewing the contract, but will also give you an idea of the types of questions you should be asking. For example, when they say they will help you get on managed care panels, does this mean that you will be billing independently or through the group practice ID Number? The reason I ask is because if you aren’t licensed I can’t imagine any managed care company, HMO or PPO, allowing you to see their patients. In addition, the 60/40 split, once you become licensed, may sound like a good deal right now, but what happens if you become a successful psychologist, collecting say $ 10,000 a month. This would mean that you would be paying $ 48,000 a year in overhead. Do you want to do that? Mike Murphy adds: I find that I am less astonished than others who have responded about the 40/60 initial split that moves to a 60/40. That range captures the typical patterns. One point that is not clear: Is the % based on billed or collected? Typically the % is based on collected, which may explain why people do not get paid for services provided. You seem to be getting a reasonable set of support services, supervision, and referrals. You may benefit from the reputation of the group and you should be sensitive to how the group is seen in the community. It is also true that access to managed care panels can be facilitated but not guaranteed by group membership. The group is assuming the overhead, which for a group is typically 30-40% of the gross. Overhead for a new person in some respects is fixed (space, equipment, clerical, payroll, billing) but the percentage goes down as the caseload grows and collections increase. The group must also contribute to social security, unemployment, and workers compensation which depending on location can be around 8% of your earnings. Another way of looking at it is what you would earn, if you worked in an agency. A general figure, and again this may vary by location, is between the mid to upper 30s to the lower 40s. If you are able to see and collect on 25 patients you would probably be making the same but you are not getting the same benefits. However, I believe your earning potential is at least double and depends on referrals, the number of patients you can/want to see each week (this differs among clinicians), and reimbursement rate. Survey data indicate that the mean weekly contacts for a person in a group practice are 38 and the range is quite large. I would suggest that you also explore with the group the longer-term possibilities for becoming a partner and how that might work. Finally, I believe that independent practice is not for everyone. Agencies offer less pay, more benefits, lower clinical load, less autonomy, more security, and less opportunity. It is simply a matter of what suits the clinician. Bob Karmen concludes: The arrangement you have been offered may or may not be good business for you. I suggest you evaluate how difficult it would be for you to get up to 30 clients in the same time frame your prospective colleagues predict under their 40/60 arrangement. Do not underestimate their expertise relative to your inexperience. On the other hand, how soon will your split be the same as others in the practice is the $64 question. |
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