Building a Private Practice...
What are Some of the Considerations? Part I

by: Mary Riemersma, Former Executive Director
     
The Therapist
(September/October 2003)

Updated in September, 2012 by Sara Kashing, J.D., Staff Attorney


This article will be the first of a series of articles that will address issues to consider when opening a private practice. While it is intended for those who are newly licensed or for persons who have been employed and are considering a change to private practice, seasoned practitioners may also find some of the information presented over the next few issues of value when seeking ways to enhance a private practice. Is Private Practice a Reasonable Consideration for You?

There are many advantages to being in private practice, but there are likewise many disadvantages. Prior to opening a private practice, you should carefully weigh the advantages and disadvantages of such a consideration in light of your personal attributes. Are the advantages so appealing that you are willing to overcome any shortcomings you may have? Are the disadvantages so great that you should reconsider? Will your personal weaknesses be escalated by the disadvantages? You will have to evaluate your own readiness to take on this challenge. Let's look at the advantages and disadvantages:

Advantages:

• You are in charge and you have the freedom to do your own thing.
• You can work in an environment and location of your choosing.
• You can work with the types of clients that you choose to work with.
• You can set your own fees.
• You can hire your own staff.
• You reap the financial, emotional, and status rewards of success.
• You have maximum flexibility of style, approach and methods to be used. You can experiment freely.
• You set the policy. You are the decision maker. The only red tape, forms, and schedules you have are yours (unless, of course, you accept insurance and come under the scrutiny of third party payers).
• You are your own motivator.
• You set your own hours, and take time off when you choose.
• As a successful private practitioner, you are a member of an elite group who engages in self-employment.

But, there may be disadvantages:
Self-employment requires cash reserves to start. At least $20,000 to $40,000 should be the minimal reserve in order to have a cushion to fall back on.

• Self-employment is often isolated and lonely.
• You ARE the enterprise. (That means, at least for the initial phase, you are the secretary, the file clerk, the receptionist, the bookkeeper, the billing clerk, etc. until you are to a place to hire assistance.)
• "Free time" may become a thing of the past, at least for a while.
• If the enterprise fails, you fail.
• You become responsible for your own insurances, taxes, malpractice coverage, etc.
• Your family, relationships, and friendships may suffer from the initial stresses of getting started.
• You are responsible for your own success or failure.
• You are subject to the income fluctuations of normal client load adjustments and general market forces.
• You will become intimately aware of the presence of the government and government regulations at all levels.

Is Private Practice For You?
Presuming the advantages outweigh the disadvantages, or that the disadvantages can be overcome, consider the following skills, attitudes, and attributes. These skills, attitudes, and attributes are generally considered important if you are to be a success as a private practitioner:

• Do you have the ability to follow-through on projects you start?
• Are you an effective planner?
• Can you keep accurate records?
• Do you have a good business sense?
• Do you take risks?
• Are you a problem solver?
• Do you cope well with uncertainty?
• Do you have adequate financial resources to weather start-up delays or a downturn?
• Can you live without a steady income?
• Do people find you reassuring and helpful?
• Can you function well without direction from others?
• Do you manage your time, money, and other resources well?
• Can you operate for long periods without professional stimulation and reinforcement from others?
• Do your professional colleagues recognize and trust your clinical skills and methods?
• Do you make friends easily and function well in social situations?
• Are you able to ask for help and advice when you need it?
• Are you willing to invest a lot of time over a long period of time?
• Do you have the support of your partner, friends, family and other significant persons in your life?
• Are you organized?
• Are you a self-starter?
• Can you cope with new and changing situations?
• Can you handle continual stress?
• Can you ask for what you want?
• Are you good at public relations and marketing?
• Do you consider yourself an entrepreneur in business to make money?
• Can you overcome obstacles to achieve success?
• Do you communicate well, both in written form and orally?
• Do you believe in yourself?
• Can you visualize yourself as successful?
• Do you have a strong sense of good ethical values?
• Do you do things right the first time (or cut corners and try to do it the easy way)?
• Are you in good health?
• Can you motivate others?
• Are people willing to pay for what you can offer? Do you feel that what you offer is valuable?
• Do you generally have good luck?
• Are you upbeat and positive?
• Do you have a niche, a specialized area of practice or an emphasis that is in demand?

The Private Practice Reality
There are many people practicing both lawfully and unlawfully, that do work similar to what you do. You will be competing against them in your chosen career. Thus, the competition is fierce as lots of mental health professionals are competing for the same mental health dollars. As you plan for your private practice, you may be forced to accentuate your uniqueness to survive. Further as you contemplate your unique strategies, consider the following:

Consumers/patients/clients-what kinds of clients do you want to attract (consider age, demographics, lifestyle, income, education, types of problems)?

Competitors-who are your direct competitors that practice in your niche or your unique area of practice?

Niche-what is your area(s) of specialty or emphasis? What do you need to do to make your niche more unique and attractive?

Satisfaction-what do you excel at that makes your clients impressed or at least satisfied with your services? What do you need to do to get them to convince others of your abilities?

Do you have good business savvy and the business acumen (and/or the desire to learn) to operate your business effectively?

Establishing the Therapy Office
What are the initial costs, necessary purchases/ leases, etc. to establish the therapy office? It is wise to create a budget and to calculate what will be your initial, as well as ongoing, costs to establish the private practice. The following template will guide you in identifying the types of expenses you can likely anticipate. The amounts expended will vary widely depending upon individual needs and tastes. Keep in mind that being too frugal will give the impression that you are not successful, while going overboard may be uncomfortable for some of your clientele. Give careful consideration as to what is professional, functional, and comfortable.

This initial article discusses things that one must consider before making the decision to form a private practice. Future articles will address such topics as, but not limited to: the location of the practice, fees, risk management, financial planning and recordkeeping, third party reimbursement, insurance fraud, and marketing. For a review of the forms of business to consider as you move toward private practice, refer to the article written by Bonnie Benitez, CAMFT General Counsel, titled, "Selecting and Forming the Right Practice Entity." The article can be found on the CAMFT website located at www.camft.org under the “Resource Center” link.
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This article appeared in the September/October 2003 issue of The Therapist, the publication of the California Association of Marriage and Family Therapists, headquartered in San Diego, California. This article is intended to provide guidelines for addressing difficult legal dilemmas. It is not intended to address every situation that could potentially arise, nor is it intended to be a substitute for independent legal advice or consultation. When using such information as a guide, be aware that laws, regulations and technical standards change over time, and thus one should verify and update any references or information contained herein.