If you are considering opening up a private practice, there are some financial aspects you have to get sorted out before you start. Keeping track of everything can feel overwhelming but it is important to consider the following to ensure you are prepared.

Start Up Costs

Consider space (including furniture and utilities), equipment, technology, marketing, and liability insurance. These can be the biggest expenses up front. You will also have to select which platforms you will be using for communicating with clients as well as an Electronic Health Record. We recommend Simple Practice for an all-in-one EHR and you can use this link for a discount. We recommend Ring Rx for a HIPAA compliant communications platform. Use the code CLIMB for 15% off for life. We recommend Husmail for encrypted email. Use this link for 10% off.

Operating Costs

If you are a solo practice, this includes rent and utilities, office supplies, and administrative costs. If you expand to group this would also include wages and benefits. If you plan to build a large group practice, you may also consider leadership positions such as a Director of Operations, Clinical Director, or Supervisors. If you have decided to hire administrative support such as an assistant or biller, those will be additional overhead costs that you want to ensure are affordable.

Cash Flow Management

Billing, invoicing, and collections are important things you need to think about when putting together your financial plan. If you will be accepting insurance you will need to consider credentialing, claim submission, and follow up. What platform will you be using and is this something you will be doing yourself or hiring someone to do for you? How will you go about collecting payments from clients? How will you be paying your therapists? These are all things you need to think about before even opening your business!

Profit Margins

Ensure marketing efforts are producing desired referral numbers and clinicians are meeting productivity expectations to guarantee profit. How are you going to determine and track this? How do you plan to address when clinicians are not meeting expectations? The more thought you put into this, the more prepared you will be once you start operating. We sell a Clinician Cost Spreadsheet to assist with determining required session numbers and sustainable compensation before hiring clinicians. We also sell a Clinician Dashboard to ensure clinicians are in compliance with agreed up on session numbers and documentation completion.

Taxes and Compliance

Do not forget compliance with federal and state laws, licensing boards, and HIPAA! Being familiar with these requirements, especially before you start, will not only save money but potential headaches in the future. Not keeping on top of these can result in heavy fines, litigation, and potentially needing to close down your business. The more knowledgeable you are about this, the better off you will be in the long run. 

Consider Us

The consultants at Compassionate Consulting Company are licensed independent clinical social workers located in Massachusetts who have been running successful counseling practices for years. Here are testimonials from clients that have worked with us. We enjoy working with entrepreneurs that are starting their business, expanding and hiring team members, as well as those who are considering diversifying and adding different income streams. We are able to assist with everything described above and would love the opportunity to assist you in expanding successfully. Schedule a free consult so we can learn more about your business goals and share how we can help. We recommend doing these 6 things if you want to expand.