Running your own private practice comes with many practical considerations: will you be seeing clients part-time or full-time, will you provide virtual or in person sessions, or will you remain a solo practice or expand to group? One of the biggest logistical questions to ask yourself as you set up your private practice is “Do I want to be private pay only or do I want to also accept insurance?”
This is something that should be considered carefully. Being private pay only is certainly the easiest choice from a logistical standpoint, but there are many benefits that come along with taking insurance. In this blog post we will share some factors that may help you in making the best decision for your practice as well as an overview of the steps.
How do you decide?
In my experience as a business consultant, I have worked with many therapists and before we discuss the logistics, we often start with a conversation regarding the vision for their practice, their value system, the clients they want to serve, and accessibility. You may know beyond a shadow of a doubt that a private pay practice is the model for you. If you are considering taking insurance, I would weigh the pros and cons and get a clear sense of the steps involved for credentialing and billing. Private practice is not a one size fits all business and know that you can always start in one direction and make changes as you go. For example, you can start by accepting insurance and transition to private pay or start with private pay and decide to panel with insurance.
The Pros and Cons of Taking Insurance
Starting with a list of pros and cons can be a good first step for determining if taking insurance is right for you. Knowing what this decision entails and how it will impact other aspects of your business is important.
Pros:
Larger referral network
It is not hard to imagine that being listed as a provider in an insurance database would open you up to having more referrals. Clients being able to easily search for a therapist and know their insurance will cover this service is the avenue most people take when searching for a provider. This is especially true if you become credentialed with multiple insurance companies.
No shortage of long-term clients
Because insurance covers the majority of the cost of a session, you are less likely to see clients drop off after a few sessions. This means you have more available long-term clients to fill your schedule with.
Stable caseload and more financial security
It goes without saying that the previous two points will result in more financial security. With clients who would prefer to utilize their insurance benefits seeking you out, you can have more confidence that when there is an opening in your schedule you will able to fill it.
More easily build the reputation of your practice
With more clients comes more word of mouth. This means you can build your caseload quickly as well as your reputation in the community. Providing consistent, high-quality therapy for your clients will result in positive word of mouth. Combined with the ease of access to more clients, you will find that your position as a trusted, high-quality care provider in your community will become more easily known.
Cons:
The credentialing process
Let’s face it, the credentialing process can be a deterrent in large part because every insurance company has a slightly different process. Make sure to familiarize yourself with exactly what each one requires and how best to send them the required information. Also be aware that once you submit the requested information, the turn around times for approval differ as well.
Subject to their rates
This is a big limiting factor for many therapists. Once you are contracted with an insurance company, you are agreeing to the rates they set for reimbursement with no guarantee for negotiation. Once you are contracted, be sure to adjust your billable rates accordingly so that you receive the maximum amount allowed in your fee schedule.
Administrative cost
Whether this cost is coming out of your time or this is a cost you are directly paying to someone you employ, this is a factor to be considered. It takes time to complete and submit credentialing applications, verify insurance benefits, submit claims, and follow up on denials. If you do this yourself, this is time you are not getting paid for and therefore, decreases your hourly rate. If you hire someone to do this, the tasks get delegated but it will be additional cost for your business.
What are the steps involved?
We would never be able to cover all of the steps needed to taking insurance in one blog post but for starters you would need to set up your business (address, phone number, fax number, email address, and website), obtain an NPI and employer identification number, complete your CAQH profile, open a business bank account, purchase liability coverage, and set your rates.
Consider purchasing our training How to Run a Successful Insurance Based Practice to get more information or setting up a consultation with Julia in order to get some guidance on these steps.