After graduate school, internship and postdoc, it is time to make the decision whether to enter the world of private practice or go into research or academics. This can be a difficult decision. You need to consider earning potential, plans to join insurance panels or not, pros and cons to working for yourself and ability to run your own business full-time while conducting therapy for all your clients.

Pros for private practice You can set your own fee, you determine what types of client populations you want to work with, you set your own schedule and hours, you set up practice based on your own preferences and interests in particular topics or what you like spending your time doing. You can take off when you want, you are your own boss and don’t answer to others. And best of all you are helping to improve the lives of others and this is rewarding and fulfilling because you are making a real impact in your clients lives.

Cons for private practice There can be lots of paperwork (client session notes, reports/intakes, disability paperwork). There are insurance claim forms to fill out for every client for every session if you choose to take insurance. If business is down and referrals are low you do not make much money. Income is not steady especially when you first start or when the economy is in bad shape. It is easy to feel isolated because you don’t get to interact much with colleagues as you spend most of your time in your office and with clients. You don’t have training on the job or anyone to ask about certain questions so you have to be able figure out things on your own. You sort of teach yourself as you go. Running a business is challenging and stressful at time on top of dealing with multiple client crises.

First you need to decide if you want to pursue a practice and if so then you need to determine what kind of practice you want.

Cash practice – where you receive payment for services by the client at the time of service without involvement of third party. Some psychologists will sign insurance forms for clients to then send in for reimbursement, but they do not join the insurance panels and they receive full payment from the client for the session at the time of the session. This is the easiest and most convenient way to collect money. However, many clients can not afford to see a therapist without insurance so you have to decide what your preference is when you are building your business.

Benefits of Cash practice – protects confidentiality for clients by not issuing information from sessions to insurance. Insurance requires diagnostic labels for payment. The psychologist is able to maintain control of treatment (type and duration of treatment). These days insurance companies restrict number of sessions and some dictate what type of treatment or intervention they will provide payment for. A cash practice saves time and eliminates hassles from extra work that insurance companies require. Income will be more stable and predictable if client pays for service at time of service. You don’t have to waste time with billing and collecting from third party. It is thought that the client is more invested in treatment if they pay for it themselves because they will work harder for it and some say clinicians give better quality of work when not hassled by insurance.

Cons for insurance panels If you decide to join a panel, you have to sign a contract saying that you agree to their limited rate which may be like $40 to $60 for an hour session and you have to agree not to charge the client the rest. So they are setting your fee for you. Client may have copay of $10-20. Most insurance companies require 2 years experience after licensure so you are not able to join right after internship.

Working with insurance is a challenge. They may limit number of sessions, deny payment (often they look for errors in the paperwork), require phone reviews, paperwork takes time, waiting on payment for a month or longer. It causes stress and could lead to early career burnout. It can take the control away from the therapist and can negatively impact the quality of care. On the other hand, it helps cut the cost for the client so you have to make that decision for yourself. And it is a referral itself so it could bring you more business. Most insurance companies provide a list of providers to their members and clients then call based on that information.

If you want to join panels ask around and see which ones are the easiest to work with (highest compensation and lowest paperwork or phone reviews) and start by joining one or two of those to see if it is a good fit for you. See which panels the major employers in your area use and that may be a good starting place.

Having your own private practice is a business. Many psychologists do not have experience or training in business. This is often considered the hardest part of setting up and maintaining your practice. You have expenses that need to be covered every month (rent, utilities, supplies, furniture, marketing, employees, malpractice insurance, licensing fees, etc.) You have to decide if you will assume these responsibilities yourself or if you want or can afford an office manager to tend to these tasks daily. Taxes have to be paid yearly and need to be accounted for as you earn income.

Since this is not taught in psychology graduate programs you have to learn the business aspect of private practice on your own as you go (i.e., taxes, budgeting, setting fees, collecting money from clients, collection agencies, etc).

One of the most important aspects of owning your own business or having your own psychological practice is getting the word out about you and the services you provide. Once again, this is not taught in graduate school and it is often uncomfortable to have to market yourself but it is necessary. If clients and referral sources do not know that you are there or what services you offer you will have no clients calling.

Marketing can also be expensive so you have to be creative to come up with unique and inexpensive ways to promote yourself when you are first building up your practice. You can create online newsletters detailing your services and the populations that you work with. You can establish relationships with other professionals to drive referrals. Networking with other psychologists, psychiatrists, medical doctors, nurse practitioners and other related professionals can help circulate your name within your community. Once relationships are built you can maintain them by scheduling lunches to catch up with them and share new services you are offering. The main goal is to keep your name on their mind so that they think about you as soon as they need a referral for one of their clients.

Word of mouth marketing seems to be the best kind of marketing out there and it is free. If you provide quality care to your clients then they will talk about you to their family and friends and this generates business. If you produce quality work then your referral sources will be pleased and will continue to send business your way.

When you first start a practice sending out mailings which consist of letters and postcards with your contact information and services is the best way to start generating buzz about you.

Create a website with all of your services, information about you, an archive of your newsletters, a blog, pictures of your office, and any thing else that draws people to your site. Promote your website so that others spend time checking out everything that you offer to the community. If you create monthly newsletters post those to your site and have people subscrice to that link so that keeps them coming to your site at least monthly. This keeps you on their minds often. For examples of several newsletters visit my website for newsletter archives http://doctor.heatherhardison.com/newsletter-archives

In a private practice you have to build up your name and build up credibility as a quality provider. This takes time and effort. You have to network. You have to be active instead of passive. Join the chamber of commerce, attend groups or committees to get your name out to community, always follow up with people you meet or that you hear about or that show interest in you. This will build new relationships with new referral sources. Write articles about topics that you are interested in or knowledgeable about in order to get your name out there. Be willing to be interviewed by the paper on certain topics. Give talks at groups, businesses, other practices or schools.