The Ultimate Guide to Starting Your Own Private Practice

Starting a private practice as a therapist, psychologist or other behavioral health professional is a thrilling experience. You get to choose your clients, set your own hours and use new techniques to grow professionally. Being your own boss can feel liberating, but it also takes some business know-how. You'll need to consider factors like legal requirements, how you'll get paid and how you'll find new clients in addition to your work as a therapist or psychologist. In this post, we'll show you what you need to know to help you start a rewarding and lucrative journey.

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8 Steps for Starting a Private Practice

8 Steps for Starting a Private Practice

Here's a list of things you must consider before you jump into private practice as a psychologist, therapist or another behavioral health clinician. The following elements will help you avoid mistakes early on and keep you moving in the right direction.

1. Develop Your Business Plan

Every business needs a plan. A thoughtfully devised business plan will be your map and help you make critical decisions, stay organized and keep on track with your goals. You might require a detailed business plan if you need to apply for a loan or grant for your practice. Preparing a business plan should be one of the first steps you take. Here are elements to include in your plan:

  • Mission: Write a mission statement describing your reasons for running a practice, who you wish to serve and how you plan to help your clients. If you have values that play a vital role in shaping your vision, include these with your mission statement.
  • Goals: Aim to include specific and attainable long-term goals and short-term goals. Expect your goals to change as you evolve. For example, a long-term goal might be to see 15 clients a week in two years. A short-term goal may be to write one blog post a week for your practice's website during the first three months of opening. Consider what your business needs the most. Identify key performance indicators (KPIs) and make a plan for tracking them.
  • Financial information: The financial component of your business plan will include your office rent and utilities, staff wages, liability insurance, training courses, marketing costs and other related operating expenses. Also, consider how you'll save for retirement and vacation time. Once you know how much it'll cost to run your practice, figure out the minimum income required to pay your bills and support your lifestyle. This will help you set your fees.
  • Marketing strategy: Determine the client base you want to reach and how you'll connect with referral sources. Include your strategy in your business plan. You can reach more people and help them contact you by developing a website and social media pages. If you create a website, include helpful blog posts related to therapy and self-care, so people can find you when they search for answers online.
  • Population research: Make sure you have a good understanding of the people you'll be serving. Pay attention to what specialties your area might need and trends that could influence your practice, such as changes to insurance guidelines.

2. Take Care of Legal Requirements

When you own a therapy private practice, it's considered a small business regulated by local and state laws. You might ask an attorney or accountant to help you establish your practice and ensure you're compliant with regulations. Some areas you'll need to consider include:

  • Zoning codes: Zoning codes regulate where you can practice and the type of building you can use for your business. Zoning laws also govern details like the signs you're allowed to install to advertise your practice.
  • Business licenses: You may need to obtain a business license that will grant you the right to operate your practice in your municipality. Depending on your location, you may also need a county license. Check with your local and state governments to see exactly what you need to practice within your specific area.
  • Ethical and legal qualifications: What specialty do you wish to practice? Do you have the certifications and licenses needed to offer the services you wish to provide? You can check your state licensing board to ensure you have the necessary credentials.
  • Malpractice and liability insurance: Before you accept clients, you need malpractice insurance to protect you in case you are sued. You may also want general liability insurance to guard you against lawsuits if a client is injured while visiting your office. You may be able to get discounted insurance by joining a professional organization like the American Psychological Association (APA).
  • Business structure: Your business structure impacts the amount of taxes you pay and may offer legal protection if your practice is sued. You have several options to choose from, such as registering as a limited liability company or a professional limited liability company. These distinctions add some legal separation between you and your business. You may wish to speak with an attorney or accountant to determine the best structure for your needs.
  • Tax and practice identifiers: You will also need to file for an employee identification number (EIN), which the Internal Revenue Service (IRS) uses to identify your business for tax purposes. It works similarly to a social security number but for organizations. You will also need a national provider identifier (NPI), a 10-digit number assigned to healthcare providers. Even if you don't plan to take insurance, your NPI will help with authorizations and eligibility information and allow patients to seek reimbursement through their providers.

3. Set Up Your Finances and Determine Fees

Create a financial plan for your practice. You'll need to set up a business bank account and, likely, a separate business credit card. Then, find a system to track income and expenses and develop your budget. Expenses to consider include:

  • The costs of filing and legal expertise for setting up the business.
  • Website hosting and maintenance costs.
  • Electronic health record (EHR) software.
  • Rent, utilities, furniture and upkeep for your office space.
  • Phone and internet services.
  • Staff pay and benefits if hiring additional help.

One element of finances that can be particularly challenging is establishing your fees. Setting an hourly rate may not come easy to someone passionate about helping others. However, to grow your business and keep it thriving, you need to make a profit. To determine your fee, consider these tips:

  • Find out what other counselors charge in your area: First, research other counselors in your area and consider what they charge. Focus on researching behavioral health professionals who have similar training and experience as you. By setting comparable rates to other practices in your area, you won't have to feel like you're charging too low or too high for your services, and you'll have better luck attracting clients.
  • Don't set your rates too low: It's recommended to set fees that match the top half of other local counselors. You don't want to charge too little because potential clients will likely care about your reputation more than low costs.
  • Consider your financial obligations: Figure out what you need to charge to operate your practice. You'll need to consider how many clients you can realistically see per week to meet your financial goals.
  • Know what to expect with insurance company contracts: If you plan to accept insurance, determine the rates you can expect to receive with each company you're interested in. Remember, you'll need to charge clients what the insurance payer agrees to pay, and this can also affect your rates for self-paying clients. Insurance companies may offer a lower fee than the typical rate in your community, but you'll have access to more clients by accepting insurance.

4. Establish Your Office and Software

These two resources create the foundation for how you will deliver your services. Investing in a platform and space that meet your needs can save you money in the long run and provide an improved patient experience.

Your office plays a vital role in making clients feel comfortable and encouraged to return. For example, according to one study, participants preferred therapy offices with soft and orderly features. You'll want to invest in your office space and make it feel cozy and welcoming. This doesn't mean you have to spend all of your savings on furniture or decor, but you will want to put some thought into the way your office looks and feels. Here are some tips:

  • Bring in nature: You can use the healing and stress-reducing qualities of nature by decorating your office with plants or serene landscape paintings. If you have windows, allow natural light to brighten the room. If you do not have any windows, use soft-light table lamps instead of fluorescent overhead lights.
  • Display your credentials: Help your clients feel confident in your expertise by hanging your diplomas on the wall.
  • Provide comfortable chairs: Make sure you have comfortable seating for your clients. The APA recommends including a chair with a back at shoulder height to give the client a sense of protection. It's also a good idea to include a small table next to the chair so the client can place their belongings and establish a "territory."
  • Choose light colors: Select soothing shades of blue or green for the walls to create a calm, relaxing environment.

When it comes to software, modern resources are vital for efficiently offering high-quality care and the modern experience your patients have come to expect from their providers. Consider these elements when choosing your digital tools:

  • EHR: Your EHR underpins nearly every interaction you have with your patients. It needs to be compliant with the Health Insurance Portability and Accountability Act (HIPAA), with strong security and features that facilitate easy, effective documentation. Look for third-party integrations, too, which can help you connect with labs, clearinghouses, health information exchanges and more.
  • Telehealth platforms: Telehealth has become a major opportunity to reach more patients, including those who struggle to get to the office or who simply prefer the convenience of a video call. These systems must also be HIPAA-compliant and reliable. Ideally, your telehealth solution should work on a variety of platforms, so you and your clients can access it from any device. Other helpful tools include virtual waiting rooms, screen sharing and group sessions.
  • Billing and payment systems: Healthcare billing and insurance payments can be complicated. Look for billing and payment systems that simplify the process on your end — particularly with integration to your EHR — and allow clients to make payments conveniently.
  • Scheduling platforms and messaging tools: Scheduling and messaging tools can offer modern functionality like patient self-scheduling, appointment reminders, easy digital communication and in-office notifications upon arrival.

Other resources to consider include assessment tools, patient portals, document management solutions and e-prescribing. Remember that not all solutions are designed for behavioral health or even healthcare. Make sure that the platform you choose can meet your unique needs, especially regarding security and charting. ICANotes offers all of these features and more to serve behavioral health providers in various settings.

Upcoming Webinar

Unlocking AI: Growing Your Mental Health Practice with AI

Thursday, December 7th, 2023, 1:00 PM EST

Join us for an enlightening webinar where we'll explore innovative strategies for growing your mental health practice through the power of artificial intelligence (AI) in digital marketing.

In this webinar, we'll uncover the potential of AI-driven marketing to enhance your outreach, engage with your audience, and ultimately get more clients for your practice.

All attendees will receive our free PDF "AI Tools for Mental Health Professionals".

What You'll Learn:

  • How to Use AI to Get More Clients
  • Maximizing ChatGPT for Your Practice
  • Using AI to Enhance Social Media Marketing
  • Creating AI Outlines for Content Creation
  • Tools and Platforms for Marketing Automation

5. Get Your Documentation in Order

Private counseling practice requirements include a good amount of paperwork. You'll need to comply with the Health Insurance Portability and Accountability Act (HIPAA) and other state and federal laws that require documentation and forms. If you accept insurance, you'll need a system for submitting claims to get reimbursed. All of your records must be kept secure and, ideally, organized and easy to access. By staying organized, you can save time and complete documentation requirements efficiently.

Examples of paperwork you may need to keep with each patient's record include:

  • Contact information.
  • Billing information.
  • Documentation of informed consent.
  • Documentation of consent for release of information.
  • Diagnosis or reason the patient requests your services.
  • Medical history.
  • Assessments.
  • Treatment plan.
  • Progress notes.

In addition to clinical notes, you'll also need to create policies for your fees, payments, confidentiality, releases of information, appointment cancellation and other topics. Many forms and documents need to be retained for a specific length of time, too, according to HIPAA.

One way to keep all your forms and notes organized is to use comprehensive EHR software. EHR software can help you turn your office into a paperless practice. This means fewer cluttered shelves, more office space and high security for your clients' records. With an EHR designed for behavioral health, you can keep patient charts, progress notes, billing information and other required documents in an easy-to-access place. You have the option to scan documents, too, if you want to eliminate paper completely.

If you use EHR software in your practice, consider using time-saving templates for treatment plans and progress notes. Once you customize templates to meet your needs, you can create a system and stick to it, so you can focus on client care rather than formatting notes.

6. Create a Plan to Reach New Patients

You may feel intimidated by networking and finding clients, especially if you're not one to "sell yourself." Attracting clients doesn't have to be difficult or time-consuming if you know where to look. Here are tips to attract clients and increase revenue:

  • Join an insurance panel: Joining an insurance panel may not be for everyone, but it's worth considering if you want to potentially reach more clients. You'll have to fill out an application for each panel you wish to join, and it can take months to complete the credentialing process, so you'll want to start applying to different insurance companies before you open your doors.
  • Network with other therapists and professionals: Get to know other behavioral health professionals in your region and bring business cards when you meet. After other professionals get to know you, they might think of you when they need to refer clients to a counselor in your area of expertise. You can even search beyond behavioral health and connect with other professionals who may provide referrals, like school counselors, primary care physicians or massage therapists.
  • Advertise: You have plenty of ways to market your business, and many options are low-cost or free. You might register with an online directory for a fee or create a basic website and email links to colleagues who might refer people to you. You can also get your name out there by offering your knowledge at live speaking events, answering questions on online forums or making appearances in the community.
  • Create a niche: Choose a niche in an area you're passionate about to build knowledge and target an audience. For example, you might specialize in trauma, substance abuse or bereavement counseling. Imagine your ideal client and whether they may be seeking treatment in your town or city to help you pinpoint your niche.

7. Start Slow and Take Care of Yourself

Running a successful practice takes time, patience and persistence. It might be months, maybe years, before you've built up a regular clientele, depending on factors such as your location and networking efforts.

In the meantime, you still need to make a living and find ways to fund your business. You can save on initial costs by slowly building your business on a part-time basis. For example, instead of renting an expensive office by yourself, you might share a space with another therapist until you obtain a steady flow of clients. This will also help you save costs on furniture and office equipment at first, and you'll be able to see clients immediately. Here are a few more benefits of starting part-time:

  • You can learn business basics without overwhelming yourself: As a therapist, your first concern is probably serving your clients the best you can. When you open a private practice for counseling, you also need to focus on the business side. By starting part-time, you give yourself a chance to learn the basics without too much pressure or commitment.
  • You can test your niche: If you desire to focus on a specialty, particularly one that's unique in your area, running a part-time practice allows you to see whether you can find clients in your region. You'll also have more time to grow your clientele without having to give up areas you're passionate about.
  • You can supplement your income and increase your savings: As a part-time business owner, you can continue working for another agency to help you meet financial obligations until your private practice takes off. You can also use your other job to help you save money to invest in your practice.

It's also important to consider your personal needs and develop a clear plan for work-life balance.

8. Be Prepared for the Top Challenges of Private Practice

Running your own business is no easy task. Be ready for common pitfalls, such as:

  • Finding a specialty that sets you apart and meets patient needs.
  • High administration costs due to inefficient practices and compliance problems.
  • The need for networking and marketing.
  • Time management challenges.

Be realistic about your strengths and weaknesses, and lean on your resources when needed.

Simplify Documentation With ICANotes

Simplify Documentation With ICANotes

Operating a private practice requires a few business skills, but ultimately, your main job will still be to help your clients. If you feel overwhelmed by the work it takes to run a private practice, keep in mind that there are tons of resources available to make your workload much more manageable.

For example, ICANotes EHR software for behavioral health can reduce the burden of documentation, so you can focus more on growing your practice and providing client care. With ICANotes, you'll enjoy time-saving, HIPAA-compliant features such as integrated billing solutions, intuitive note-taking templates and a convenient patient portal. ICANotes was designed to increase documentation accuracy while saving you time. To learn more, request a free trial or schedule a live demo today.

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Related Posts:

What Are the Most Important Practice Management Features for Behavioral and Mental Health Clinicians?
What You Need to Know About EHRs and Patient Privacy
How to Train Your Staff on Using an EHR
Seven Strategies to Gain More Clients for Your Practice
Top 5 Reasons Behavioral Health Professionals Get Sued


Last updated October 12, 2022