May 15, 2012 in Starting Your Practice
Starting a private practice as a psychologist, social worker, counselor or other mental health professional is no easy task. Trying to figure out where to start and what steps to take can seem absolutely overwhelming.
To help get you on your way, I’ve put together a basic checklist for starting private practice. This list is by no means comprehensive, but it will give you a basic framework from which to start.
Determine your start-up budget
First and foremost, it’s important to know that it costs money to begin a private practice, and you will have many expenditures before you ever see your first patient. Therapists entering into private practice must make concrete plans regarding these initial start-up costs. It’s also important to know that you will continue to have expenses as you are building your practice over time, and you must have a means to cover these costs until your practice really begins making money.
Give some thought as to how you will cover your start-up expenses and ongoing expenses until you begin seeing real profits:
Insurance Panel Participation
If you are planning to accept insurance as part of your practice, I strongly encourage you to make signing up for your local insurance panels one of your very first, if not THE FIRST, steps you take as part of your checklist. Ah, “But wait!” you say, “I don’t know where my office is going to be yet, how can I fill out all those credentialing forms without an office address?”
If you haven’t secured your office space yet, and push comes to shove, use your home address temporarily. It will be a pain in the you-know-what to update your address with the insurance companies later, but right now, you’re operating out of a home office to complete your paperwork. It can take months and months and months to work through the process of enrolling with some insurance companies. If you wait until you have found the perfect office space to start the enrollment process you will have lost valuable time. You may find yourself sitting in your lovely new office all alone because you aren’t able to accept insurance yet.
You do not want so much as the big toe of a patient to cross the threshhold of your office without your professional malpractice insurance being in full force. If you are currently working for a large institution or an agency, this coverage may be provided for you by your employer. In your own practice, you will need to provide your own insurance.
Most professional associations offer malpractice insurance to their members at special rates, and policies are available on the open market as well. Insurance companies will require information about your malpractice insurance coverage when you are completing your credentialing paperwork, so you will need to secure your insurance fairly early in the process of setting up your practice.
Secure Tax and Legal Advisors
When you’re starting out in private practice and money is tight, hiring an accountant or attorney can seem like a real luxury. If you make a mistake on your taxes or in choosing the type of legal entity you will use for your private practice, the costs can be incredibly high. I encourage therapists to consider working with accountants and attorneys in establishing their private practice to be a long-term investment.
Ask other therapists who are already in private practice who they work with, you may be surprised that you can find quality advice and representation for much less than you think, and it can help you avoid costly mistakes. As questions arise during your start-up process, these professionals can prove an invaluable resource to guide you in the right direction, and help you steer clear of potential legal and tax pitfalls.
Business Entity Formation (Such as a PLC or LLC)
Many practitioners opt to add another layer of protection for themselves when they start their private practice by forming a special business entity called a PLC or an LLC, or sometimes even a corporation (although this is highly unusual). Professional Limited Liability Companies or Limited Liability Companies allow therapists some limited protections for their personal assets when bad things happen within their private practices.
A PLC or an LLC can be formed at any time, but forming one at the start of your private practice allows you these protections from the very beginning and streamlines paperwork, naming your business, etc. For more information about PLCs and LLCs, read my blog post Start an LLC for Your Private Practice. Again, your attorney and tax advisor will be invaluable resources for explaning the potential advantages and disadvantages of forming a special business entity for your new practice.
Obtain an EIN
In this day and age, identity theft is all too common. For that reason, I recommend that all therapists obtain an EIN, or Employer Identification Number, from the IRS. Don’t be thrown by the word “Employer,” it’s also called a TIN or Tax ID number sometimes, and you don’t need to employ anyone to obtain one. You will use this number in place of your social security number in your practice.
So, for example, if you are filling out credentialing forms with an insurance company, and they ask for your tax ID number, this is the number you’ll give them. If a patient needs a statement for their insurance company, you’ll use the EIN instead of your social. Unless you have formed a corporation for your practice, you should be able to file your taxes normally using your social security number, and the EIN won’t come in to play.* For more information about EINs and SSNs, read my blog post: Do You Need an EIN or an SSN?
Determine Your Practice Focus
This is a tough one for a lot of therapists. The notion is, you went to school, you have a license to provide therapy or maybe even testing services, so, voilà– you have a private practice and it should welcome any and all patients! The idea of welcoming any type of patient is also comforting to those new to private practice because it gives the illusion that more patients are likely to come through the door. Unfortunately, in the real world of private practice, it doesn’t actually work that way.
Approaching your practice from this “generic” viewpoint will make everything else on this checklist more difficult. It has been my observation that not having a practice specialty is often the hallmark of a practice that will not survive its first 18 to 36 months, so give this some serious thought.
So what exactly do I mean by practice focus? I mean that it’s important that you nail down the kind of therapy (and perhaps testing) you plan to do in your practice. A one-size-fits-all practice approach makes marketing, advertising, and focusing your therapeutic energy very, very difficult. Identifying the kinds of patients you wish to serve and the ways in which you wish to serve them, allows you to design and build your practice in a more thorough and focused manner when you are starting private practice and after you have established your practice.
In order to determine your focus, begin by asking yourself these questions:
Pick a Name for Your Practice
Picking a name for your practice is actually trickier than it sounds. The name that you choose has implications for the marketing of your practice, it can have impacts as your practice grows, and it can even have legal consequences if you don’t do your homework. You’ll want to put more thought into naming your new practice than just throwing out a name and quickly running to the printers to have your new business cards run off. You can read more about naming a practice on my blog post: Pick Your Practice Name Carefully.
Secure Your Practice Location
Now that you know the types of patients you want to serve, you should have some idea of where to begin looking for office space. For instance, if you have determined that you wish to focus your practice on the treatment of children, it doesn’t make much sense to rent office space far from schools and other places that would make your practice easily accessible for parents.
Check with Your State and Local Government About Business Licenses and Fees
Some, but not all, state and local governments require that you register and pay a fee for a business license in order to provide services within a specific geographic area. If you fail to do so, there may be financial penalties or other legal consequences for your practice. Before you begin seeing patients, check with your local, county and state government to see if a business license or other requirement might affect your practice. (This is an area in which having an accountant and/or attorney available can be helpful.)
Start Building Your Practice Website
Whether you choose to do it yourself or to hire a professional to do it for you, it’s time to start thinking about creating a professional website for your private practice. Most patients search for their health service providers online, and having an easy-to-find, professional-looking website is very important to the sucess of your private practice. For more information on practice websites, check out my blog post: How to Get a Website for Your Practice.
Begin Pulling Your Practice Forms Together
You will need a basic set of provider forms to present to your patients as part of your new practice. The forms you’ll need will vary somewhat depending on the requirements of your state licensing board, so be sure to check with the body that governs your profession in the state in which you practice. They will also vary depending upon the type of patients you see and the services you provide. Generally though, you’ll need:
These are just a few of the basics and you will want to tailor your forms to your particular practice. Check with your professional societies’ website for up-to-date suggestions on form designs and templates you can customize.
Business Cards and Letterhead
You’ll want to start spreading the word to colleagues and potential referral sources about your new practice. It’s nice to leave those folks with a few business cards they can pass along to potential referrals.
Hopefully, as you have worked on determining your practice focus and on your practice website, you’ve gotten a vision for how you’d like to present yourself visually. You’ll want to translate this into a logo on your new business cards. There are many excellent low-cost vendors who can help you design a sharp-looking business card that includes an attractive logo. You can choose to use a local vendor with whom you are familar, or use an online source such as VistaPrint. These services often feature packages that include matching letterhead, envelopes, and other items you will need to get your office started at a fairly reasonable price.
Acquire Basic Office Equipment and Furnishings
Whether or not you will be filing insurance, all practitioners need at least a few basic pieces of office equipment in order to run a professional solo practice. If the space you have rented is unfurnished, you’ll also need to invest in some professional-looking office furniture and fixtures as well.
Here are some of the basic items you’ll need to get your practice off the ground as you are starting your private practice:
I know this list looks long, and you’ll be tempted to scratch a lot of these items off the list immediately. Scrimping and skimping here and there is one of the hallmarks of starting up a new private practice, but I really try to encourage therapists to delay starting their private practice rather than skimping too much. It’s better to wait until you can put all the right pieces in place than to cut too many corners on your practice start-up. I’ve seen too many good therapists fail in their first year or so because they took a super bare-bones approach to their start-up.
You can read more here about starting your practice: How Skimping On Your Practice Startup Can Cost You Dearly
Send Out Press Releases, Letters, etc. and Organize an Open House
Don’t forget to spread the word about your new practice to your community. Letting friends, family, neighbors, and those in the medical and mental health community know you are launching your practice should definintely be one of the steps you include on your checklist.
I’ve talked to therapists who’ve had success with a variety of techniques announcing the opening of their new practice, (different therapists have used different techniques depending upon the nature of their practice), including:
Whatever you decide to do to announce your new practice, remember that it is up to you to let people know about who you are and the services you offer. Much better to open your new private practice with a bang than a whimper!
*As with all information provided on this site, this post is not intended to provide legal or tax advice. You should consult with an attorney and tax professional for further information.
Copyright © 2012 Real Psych Practice LLC