In Part 1 and Part 2 of Tips to Improve the Financial Health of Your Practice, we covered insurance and client payment policies. In this installment, we discuss 5 more ways to set your business up for success.
1. Commit to annual rate increases (at least for new clients)
There are two ways to grow your practice’s revenue. You can either increase your client load and keep your current rates, or increase your rates, lose clients unable to pay your new rate, but retain the higher-paying clients.
Low rates may get you some business in the beginning. However, you risk being viewed as the cheapest provider and ultimately putting your practice’s financial health in jeopardy. Instead, commit to (unapologetically) increasing your rates consistently, and stick to it. If you aren’t comfortable raising rates for all clients, consider raising rates for new clients only.
Low rates may get you some business in the beginning. However, you risk being viewed as the cheapest provider and ultimately putting your practice’s financial health in jeopardy.
You can prepare clients by communicating a statement like this in your practice policy document: “Each year, on January 1, my rates will go up between [INSERT RANGE]%.” Have clients sign this form during their first visit. Communication is key.
In fact, how you handle communicating your rate increases could be the difference between retaining a client or losing them to the practice down the street. Consider the following tips when planning for a rate increase.
5 tips to raise your rates
Research, research, research.
If you have any uncertainty about what to charge or how much to increase your rates, you will need to spend some time researching the market. Gain insight into what your competition is charging. (To learn what others in your area are charging for CPT codes 90791, 90834, and 90837, check out our annual rates reports here and here.) While this is just one of the many data points that you should consider when setting your rate, it’s arguably one of the most important.
Understand your differentiating factors.
After doing research on other providers in your area, you will need to determine your unique selling proposition. Do you specialize in a specific type of therapy? Or offer the option of video visits for busy clients who cannot make it into your office? Do you see clients on weekends and evenings? Or maybe you have an advanced degree or 20+ years’ experience? In other words: what do you provide that sets you apart from others in your field?
Give clients advance notice.
Informing clients at least a month or two in advance allows them time to get used to the new prices and to plan accordingly. If you have a waiting room, post your new rates in an area dedicated for practice announcements. At the end of an appointment, mention the rate change verbally, then follow up with a personal email with additional details.
Confidence is key.
The way in which you deliver this news to clients can impact the outcome. Communicate confidence by emphasizing the following three points: (1) I value you as a client, (2) Price changes are an important part of sustaining my business, (3) This price increase is warranted.
Do not apologize.
Providers may feel the need to apologize when informing clients of a rate increase. This should be avoided. As a business owner, you’re responsible for growing and nurturing a successful practice.
The most important part about raising your rates is to believe in yourself. If you don’t believe in your own value, how can you expect a client to?
2. Set expectations about how long clients will be in treatment
Setting expectations up front helps clients understand their goals for therapy. They’re more likely to stick it out when the work gets hard, instead of feeling like there’s no end in sight. This is especially important for clients who have never been to therapy before and have no idea how long treatment will take.
Let the client know that they may think about dropping out—it’s a normal response to difficult work. If a clinician never mentions that some clients prematurely end treatment, they may feel bad about bringing it up. Acknowledging the bumps in the journey ahead encourages the client to be vulnerable about where they stand with therapy.
Lastly, increasing communication efforts during the later stages of treatment ensures that clients understand why they should continue attending their appointments until they receive a formal discharge.
For more information on strategies to best set expectations, check out Premature Termination in Psychotherapy by Joshua K. Swift.
3. Preparation is key to survive seasonal lulls
According to an article by therapist Jeff Guenther, published on Therapy Den, January and March are the most popular months people actively seek therapy, while November and December are least popular. While this trend may not be true for all practices, it’s fairly safe to assume that July, August, and December will not be your busiest months.
January and March are the most popular months people actively seek therapy, while November and December are least popular.
The first step to cope with slower periods is simply knowing when they occur. Look at your monthly income across the last few years and identify the lowest months. If you’re a SimplePractice customer, this information is readily available in the Insights section.
The second, more challenging step is to come up with some innovative ideas to fill these gaps. We could go into a lengthy summary of several ways to earn non-client income, but because this topic is covered so extensively on almost every relevant blog, our list below is just a few examples of way to supplement your income.
Alternative income source ideas
- Selling online CE courses
- Offering Telehealth sessions
- Joining Talkspace
- Offering private practice consulting
- Writing a book
- Writing paid articles for relevant blogs
- Guest speaking at conferences or events
The option are endless. Just Google “alternative sources of income for private practice therapists” and you will find a ton of ideas.
4. Maintain separate personal and professional bank accounts
Do you juggle personal and practice-related expenses through one bank account? While initially it may seem easier to manage one account, this practice is never a good idea.
Here’s why you need a separate business bank account:
- It keeps your business expenses completely separate from your personal expenses. Your accounts will be easier to manage, and you’ll get a much more accurate idea of the financial health of your practice.
- Preparing your annual tax return is MUCH easier when you have separate accounts.
- Having a business bank account looks more professional and gives you more credibility.
If you only have one checking account, opening a business account should be a top priority.
5. Sign up for a trial of SimplePractice
Keeping track of the many ways your clients will pay you gets messy—and making sure you’re keeping solid records gets even messier. An EHR like SimplePractice can streamline your entire billing process, with features like online payments, e-claim filing, and AutoPay.
Additionally, an EHR can be a powerful analytics tool. When you organize your practice finances, you’re able to plan for the future. SimplePractice has an Insights page that shows how much you made the previous month, how much you’re projected to make this month, and how much you’ve earned for the whole year. Use your data strategically, to see where you could invest back in your business, or where you may need to improve.
Trying SimplePractice is 100% risk-free. Plus, during the 30-day trial, you get full access to every feature. Try Telehealth, send paperless intakes to new clients, create your own note templates (or choose one from our template library), send assessments (GAD, PHQ-9, DAST-10, etc.) to have clients fill out electronically. You can also use the top-rated mobile app. Sign up today for a free 30-day trial of SimplePractice.
We hope that you utilize these tips as well as those from our previous posts to improve the financial health of your practice. Do you have advice of your own that you feel might make an impact? Please share tips in the comments below.
Looking for more financial tips?
If you found these tips useful, here are more blog posts you may like:
•Tips to Improve the Financial Health of Your Practice, Part 1
•Tips to Improve the Financial Health of Your Practice, Part 2