Tips for Starting a Psychiatry Private Practice

Starting a psychiatry private practice is a substantial decision to consider. 

You may have many different reasons for making this bold move, but are wondering where to begin. The first thing to do is to make sure that this is the right time in your career to do this. 

Initially, you may need to take on more expenses until your practice is full, and it can take time to become profitable.

Depending on your market, it could take months to fill your practice, so you’ll need to think about how you can make ends meet in the short term.

Consider maintaining a part-time position and start your practice on the side while you grow your client list.

Starting a psychiatry private practice is not impossible, but there are many steps involved. Having built a private practice myself, one mistake I made was not utilizing resources available, and instead, trying to do everything myself by trial and error. 

First, research resources to use, such as an online course, a Facebook group, or a mentor. There’s no need to recreate the wheel; follow the process that others have followed before you. 

If you’re wondering how to open a private psychiatry practice, you’re in the right place. In this article, we’ll go over the steps required for starting a private practice in psychology or psychiatry, along with associated costs, pros and cons, and more.

Steps for starting a private practice in psychology or psychiatry

Psychiatry and psychology practices are very similar in many respects. Both require very little equipment in the office to function effectively. You can also start off virtually and then transition to an in-person practice. 

While psychiatry practices are started by physicians and psychology practices are started by therapists and counselors, the business structure and goals may be the same for both. 

Generally, there are three main steps to starting a psychiatry private practice:

Creating the business entity

You will need to determine the legal structure and tax structure of your business and find professionals who will advise you appropriately. You’ll also need a name and business address.

Starting your marketing strategy

Developing a logo and website can be fun, and you’ll want to put extra time into this to make sure you won’t need to change it in the future. It may take some time to get the word out that you’re opening your doors, so start this process early.

Physical space and technology

If you will be offering in-person psychiatry services, there are many factors you will need to consider related to location, signage, parking, accessibility, and space. Your practice will also need an electronic health record (EHR), phone system, and email system.

How much does it cost to start a psychiatry private practice?

The first year after starting a psychiatry private practice can be relatively unpredictable, so I’d recommend that you keep your expenses as low as possible at first. You may always decide later to spend more as your practice grows and you get more patients. 

The cost of starting a psychiatry private practice ranges widely.

For example, if you decide to hire a web development company to create your website, you could spend in excess of $10,000. On the other end of the spectrum, you could hire a web designer from a for-hire service for a couple hundred dollars, or use a website builder that’s integrated into your EHR. Virtually every aspect of starting a private practice has a similar cost range.

Be sure to carefully consider and choose your EHR system based on the features you actually need. Getting stuck in an expensive contract with very little revenue will be an added expense you may regret later.  

Here are some general ranges to expect when starting a psychiatry private practice:

• Business entity: Filing articles, obtaining a registered agent, and obtaining a virtual address can range from $200 to $400.
  
• Accounting: If you plan on hiring a bookkeeper, a payroll service, and an accountant, this can range from $200 to $400 per month.
  
• Technology services: Obtaining an email, phone and fax number, EHR, and billing clearinghouse can range from $200 to $400 per month.
  
• Advising services: Working with a lawyer, accountant, or coach can range from $200 to $600 per hour, for approximately two to six hours for the first month.
  
• Marketing services: Developing professional graphics and creating and hosting a website can range from $100 to $2000.

This private practice budget template can help you track your spending and guide your decision-making.

How to start a telepsychiatry practice

If you’re wondering how to start a private practice that offers telepsychiatry, rather than in-person appointments, there are various aspects you need to consider. 

Starting a telepsychiatry practice can bring the initial capital investment within reach for many people. You don’t need to worry about an expensive down payment or lease, and there’s no need to purchase decor and furnishings, which can add up quickly. 

In-person offices also have other added expenses, such as:

• Property taxes
• Office condo association dues
• Cleaning services
• Incidental expenses, such as supplies
• Utilities 

It may be wise to consider starting virtually to keep expenses low. Then, as you are feeling more stable in your practice, you can obtain office space if you feel that is the best decision for you. You may find it beneficial to have the added office support in person, or find practicing in person more satisfying.

To start a telepsychiatry practice, start to familiarize yourself with the state laws regarding requirements for telehealth practice. You should know your state’s definition of a telehealth visit, as there are subtle differences among states. 

Since video communication will be the mainstay of your practice, you should research and select a platform that is well-known, stable, and reliable. This can save you time, money, and headaches down the road—and your patients will be more satisfied too. 

Pros and cons of starting a psychiatry private practice

Starting a private practice in psychology or psychiatry is not for everyone. You need to be self-motivated and relatively comfortable with uncertainty and a lack of structure. 

There will not be a separate department for IT or HR help to rely on for advice. Instead, you will need to reach out to a mentor and coach and use your best judgment. 

You will need to make the most of the resources you have available to you, such as your malpractice provider. 

Despite your best efforts, there may be factors beyond your control at play related to insurance reimbursement or other market factors. 

Not every private practice is successful, so it’s possible you may spend considerable effort, only to find it was not quite what you expected. 

There will be unforeseen challenges that may take some creative thinking to solve.

It may be difficult to decide whether it is worth it for you to continue in private practice or to work for a practice that takes care of administrative headaches.

If you’re successful, however, you could have an incredibly rewarding journey after starting a private practice in psychology or psychiatry. 

You will have much more flexibility in your schedule and will not need to ask anyone for time off or to cut back your hours. You can set your own hours and create the exact culture and environment that you feel is most compatible with your personal guiding philosophy and techniques for patient healing. 

This could feel like you have a creative outlet and an opportunity for a major leadership position in your community. As your practice grows, word will spread in your community and you may receive referrals from professionals around you. 

Choosing an EHR for psychiatrists

Some EHR systems can cater to the needs of psychiatrists specifically, so it’s important to choose an EHR for psychiatrists that works for you. 

As physicians, psychiatrists require features such as note writing, a client portal, billing, and prescribing.

In addition, here are some features of EHRs that are specific to psychiatrists:

• Group therapy note writing.
  
• Use of the DSM-5 in a diagnostic database.
  
• Physical exam templates with mental status exam terminology.
  
• Prioritization of psychiatric medications in a prescription database.
  
• Optimization of a telehealth workflow for visits and payment collection.
  
• Customizable intake forms, treatment plans, and assessments.

How SimplePractice streamlines running your practice

SimplePractice is HIPAA-compliant practice management software with everything you need to run your practice built into the platform—from booking and scheduling to insurance and client billing.

If you’ve been considering switching to an EHR system, SimplePractice empowers you to run a fully paperless practice—so you get more time for the things that matter most to you.

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