10 Costly Mistakes When Starting A Group Practice
There are recurring mistakes that we see when therapists are trying to start a group practice. More often than not, people are either unaware of their mistakes or don’t know the steps to take to avoid them.
Let’s take a look at some of these common mistakes:
Setting Clinician Pay Rates Too High
As clinicians, we were never trained on how to set pay rates for others. In fact, prior to hiring clinicians, all we know is taking payments directly from clients. Thus, how do we determine a rate of pay that is fair for both the therapist and the practice owner.
Often practice owners fall for the lie that if they don’t pay high enough, then they will not attract qualified clinicians. This is simply not the case. Here is a question I have for you: “Did you become a therapist because of all the money you would make seeing clients?” No. None of us did. There are plenty of occupations out there where we could have made much more money. We went into this work for other reasons. Thus, it is likely those that you interview, at least the ones you would actually want to hire in your practice, also went into this field for reasons other than financial.
Of course, you still want to provide a competitive pay but also acknowledge that you offer much more than that. You will want to highlight the other offers you provide such as supervision, flexible schedule, a non-toxic culture, faith-based work environment, therapists seeing their ideal clients, just to name a few.
Sadly, and usually with the first hire, but sometimes even beyond, practice owners set pay rates too high. Thus, the practice does not make profit and the owner is forced to see a full caseload just to pay the bills. It is not worth starting a group practice if you have to work harder and make less than a solo owner.
Though every situation can vary slightly, here are our best rules to follow when hiring therapists. If you are hiring 1099 clinicians, do not pay them more than 60% of what comes into the practice per session. In fact, you may want to do less if you are providing other services such as supervision or an assistant to answer phones. For a W2 hire, you do not want to pay more than 45% of the total brought into the practice. This 45% needs to include everything you pay the therapist including payroll taxes, health insurance, retirement, supervision, and other benefits. Know that you do not have to have all this when you first hire but you need to consider it when you set rates at the time of hiring.
It is very challenging to go backwards and lower pay down the road. When it comes to all areas of finances in your practice, I play it safe and am conservative with pay and expenses. Because, if your practice does not make profit, everyone suffers - you, the team, and the clients. If you make profit, you can invest it in your team and your business, thus providing more therapy in your community. Isn’t that what we all want!
Inability to Decrease your Client Load
Due to multiple factors including paying your clinicians too much or making poor financial decisions, you get stuck with a large caseload to keep up with the practice expenses. Or, you struggle to transfer your clients or continue to take on new ones, thus creating larger problems for you with a huge caseload.
When you have a large client load it can cause a domino effect in your life in way too many areas. First, let's think about what happens when you have a lot on your plate: you lose focus, burn out, rush to complete tasks, and your quality of work goes down. This is directly correlated to a large client load. You may feel the need to rush sessions, which can in turn be very noticeable to the client, causing them to leave. Also, seeing so many clients can lead you to reject your own personal care, leading to burnout. You pour out but you don’t allow others to pour into you! As therapists, we want to make sure our clients receive the best help possible. So, let’s choose quality over quantity every time! Only take in what you know you can handle.
Unable to Fill Clinician Caseloads
Identifying the caseload that works best for your practice is up to you. The average caseload ranges from about 6-8 clients per day. The problem arises when we run into the issue of not being able to fill our clinicians caseloads. It’s often discouraging for not only the individual, but for the practice.
When therapists decide to start a group practice, one of the biggest fears is the inability to grow a caseload. And, without the right pieces in place, it is a challenge. But, the good news is if you are getting at least 2-3 referrals per week, you are on track to start filling someone’s caseload. And, you have likely already grown your own caseload, so you do know some of what to do. You want to continue the good work while also investing in additional marketing strategies to not have all your eggs in one basket. Multiple marketing streams is a good idea, especially for a group practice. On a side note, we talk all about this in my upcoming mastermind “Start A Group Practice Mastermind” if you want to learn step by step how to make it happen.
Purchasing Too Much Office Space
Therapists often assume that each clinician needs their own office space. This is faulty thinking. In fact, you should be able to get 12 hours out of each office for at least 6 days a week. Yes, you heard me correctly. We often advise that clinicians not get office space until they start their practice. You can have your first clinicians use your current office when you are not in the space. Therefore, you can get 3 clinicians into one office for a while as you fill caseloads.
When Whitney was growing her group practice, she had 6 clinicians in 2 offices. I know it sounds like a lot, but it gave her time to develop savings to invest in the next office space, which ended up being just downstairs.
Purchasing New Furniture
Along with too much space, clinicians believe the space must be perfect for clients. I mean, isn’t that part of the therapy, a beautiful space. Yes, it is. But, truly, we care more about our space than our clients do. The most important part to them is compassionate and skilled therapy. This can be done on a handed down sofa or a gently used chair. As you grow, furniture can be replaced and updated.
Poor Hiring Choices
Who we keep around us is so important, especially in the workplace. Not only should we build a community of clinicians who get along well and fit the culture of the practice, but we want to be sure to hire people with a credible and quality-filled background. Things like checking references thoroughly can help with this. As discussed above, it’s also important not to rush in the hiring process as well because–well–we know where rushing gets us.
Increased Clinician Turnover
Turnover. As practice owners, we typically only want to see that name on our bakery order in the mornings topped with whipped cream. Although jobs like fast food make sense for this kind of term, we want to stay away from this in the therapy world. We want our clients to truly get to know us and get comfortable with us. Afterall, they are sharing deep things that they wouldn’t want to share with a stranger. We must strive for stability in this area more than anything else. If not, we risk losing clients, which is costly.
Speaking of losing people, when our hired therapists leave the practice either on their own terms or termination, it is one of the most costly situations in your practice. Naturally, some clients will not want to see another therapist at the practice. Therefore, you will have many clients not return for therapy. Also, the process of reaching out to clients, supervision of the leaving therapist, and administrative support rescheduling, creates additional stress and expense on the practice.
Misunderstanding of 1099 & W2 models
While 1099’s are given to independent contractors and W-2’s are given to employees, this can become a blurred line for some practice owners. When you don’t understand the difference between the two, it can cause confusion, leading to legal trouble that none of us want to get into.
The biggest problem we see with practice owners is treating contractors like employees but paying them like contractors. Thus, the practice loses and cannot sustain with the contractor receiving extras without paying for them such as clinical supervision, administrative assistance, and marketing. For contractors, these are a separate fee.
Deciding between contractors or employees when hiring is an important decision, not one to just do what your practice owner friend down the street did. To learn more about this decision, check out a blog Whitney Owens wrote on the topic: The Ins and Outs of 1099 vs W2.
Inaccurate Paperwork and Policies
They say most rules are created due to a problem arising. This is the case for most group practice owners. Sadly, policies are made too late, thus the practice experiencing costly mistakes.
It’s wise to have a legal team in your practice to avoid this mistake. Or, a consultant with paperwork and policies already created and reviewed by an attorney. In fact, my new mastermind “Start A Group Practice Mastermind,” provides policies, procedures, and handbooks for you to edit for your practice to help with this. Isn’t that pretty sweet!
And, as a disclaimer, you will need your attorney to also review the paperwork you use from us. But, we give you a great headstart, saving you tons of money in attorney fees.
Difficulty Hiring Faith-based Clinicians
As Wise Practice Consulting has a niche for being faith-based, this common mistake is near and dear to our hearts. Although we do want clinicians who are highly qualified and well sought-after, we want to make sure they align with our core values as well. As practice owners who often seek God on ethical decisions, policies, company culture, and everything in between, it’s important to hire others who also seek to do the same. Who you hire is a representation of your practice whether you like it or not. It can be hard to find those individuals, though, so what do we do?
Next Steps
We are here to guide you through the hiring process of starting a group practice. We will help you not make costly mistakes and give you the tools you need to be successful.
In fact, at Wise Practice Consulting, we run a Mastermind group several times a year to help you go from solo to group practice owner. To learn more about this opportunity, click here.
And if the Mastermind is no longer accepting new members, no problem, click here to learn more about our other services at Wise Practice and we will point you in the right direction either through individual consulting or our Wise Practice Membership Community.
Get ready to have the group practice of your dreams without the costly mistakes.
Grow your practice today!
Navigating tough conversations with your team can be overwhelming, especially if you are unsure of what is the best route to take. This is why I offer a range of personalized business coaching services to help you make a plan, execute it and track the results. I offer 3-month and 6-month business consulting packages, Enneagram Training, and a Wise Practice Community Membership. Implement tracking methods for your practice today and reach out to Wise Practice Consulting if you need help getting started! Get in touch today to learn more.
Looking for Likeminded Individuals?
The Wise Practice Summit is a conference for faith-based practice owners looking to connect with one another and grow their business. This October we are meeting in beautiful Greenville, SC. Every year the summit is pack with amazing speakers, sponsors, and a tight knit community you too could belong to—learn more.
