The Practice Institute

One frequently asked question by those early in practice is “What expenses are deductible on my taxes?” In my book with Jeff Barnett, Financial Success in Mental Health Practice:  Essential Tools and Strategies for Practitioners we present a list of
business expense categories that we had taken as deductions. These include:

•    Office supplies – e.g., paper, pencils, pens, computer software, coffee, tea paper               cups,etc.
•    Telephone – e.g., telephone company charges, answering service, long distance calls related to the practice
•    Legal and Professional Services – e.g., consultation with attorneys, accountant fees, payments for transcription services, payment for a Psychometrist to conduct psychological testing
•    Office rent
•    Postage
•    Automobile – e.g., parking for practice-related activities, mileage allowance for consultation or volunteer services
•    Bank charges – to cover costs of business account
•    Books
•    Subscriptions to Professional Journals
•    Psychological Tests
•    Photocopying
•    Continuing Education (including costs of attending professional meetings including hotels and meals)
•    Professional Dues
•    Licensure Fees
•    Marketing – e.g., development of promotional materials, taking to lunch potential referral sources.
•    Furniture
•    Malpractice Insurance
•    Office Overhead Insurance
•    Computer hardware
•    Cell phone and pager.
•    Staff salaries and benefits.

So now it’s coming to the end of the year and you want to reduce your tax liability. Review the above list and see what you could be spending your monies on now rather than next year. If you do then the deduction is on this year’s taxes. Perhaps you can buy 6 months worth of anticipated postage? For psychologists perhaps instead of purchasing one pack of Beck Depression Inventories that you purchase 4 instead. Is it time to buy a new lamp for your office? New waiting room furniture? Have a new book (or books) that you think you will need next year, or want to subscribe to a new journal? Purchase/subscribe before the end of the year and it is a deduction for this year.

Know what it deductible and take a look at your income for this year and anticipated income for next year. It may be advantageous to make purchases this year rather than next year. It may similarly be advantageous to delay income to next year. If that is the case wait until the end of the month to bill your insurance cases for all of December. The monies won’t come until January and be credited next year.

Close inspection of your income patterns and knowing what expenses are deductible can help you better manage your tax liability.

I have long advocated that as graduate educated mental health professionals we should take advantage of our entire skill set to make a living. We are not limited to assessment and psychotherapy, but over the course of my career I have earned money from conducting research, providing supervision, teaching, developing products, and writing.

I recently responded to an ad looking for a mental health professional to do some writing of website material for an organization. The task was not that difficult but I was limited in my time to be able to complete the writing deadline. So I asked a newly licensed psychologist that I knew if she would be interested in doing the main bulk of writing and I would serve in an editorial role. In doing this I offered her 85% of the consulting fee and I would keep 15% for my role. The task was to write ten 1-page papers related to different mental health topics according to a template provided by the client.

I then asked her this often difficult question for new professionals, “How much do you want to charge to do the writing?” I suggested that she think about it for a day. She then got back to me and said, “How about $400 for the ten papers. From my Internet search it seems like the going rate for writing is $40 per hour.”

I said, “Fine, I will ask for $800.”

The client wrote back an hour later and said please have the project completed within ten days.

The moral of the story is that it is important not to undersell yourself, undersell your services, and undersell the value of what you have to offer. You may offer to do work at a reduced fee because you find the work inherently interesting, want to learn a new area, want to get your foot in the door with a company or referral source, or because you have a value in offering “some” of your services at a reduced rate.

Another important issue is to make sure that you are not in a position of desperation for a piece of work (or for clients) and you will be in a better position to negotiate. In my book with Jeff Barnett, Financial Success in Mental Health Practice:  Essential Tools and Strategies for Practitioners we have a list of “Twenty Principles of Private Practice Success.” Principle Number 13 reads as follows:

Private Practitioners Need to Become Comfortable With Negotiating From a
Position of Strength. If You Are Desperate For the Job or Income You Will
Negotiate From a Position of Weakness. Strength is Found in the Ability to Say
No Thank You and Walk Away.

In this writing project I asked for double what my colleague was going to ask for to complete the work. I was able to do so (and she benefitted from it) because the work would have “nice to get” but was not something “I had to get.”

Ask for your value and often ye shall get your value.

Recently Chris Peterson, a leader in the Positive Psychology movement, died at age 62. It is a reminder that just because we are mental health professionals we are not immune from experiencing life’s trials, tribulations, and indeed the very ending of life.

In TPI “Interview with the Authors” (available in the archives for TPI members only) Brad Johnson and Jeff Barnett described Brad’s personal and professional experience in being diagnosed and treated for a brain tumor.

So what happens to our practices, our patients, our records, and our professional obligations if we become incapacitated or die?  Are patients left to “fend for themselves?”

Because of our obligations each mental health professional should develop what has been termed a “Professional Will.”   This delineates how you want your practice affairs handled in case of disability or death.

An outline of a Professional Will for a mental health clinician is provided on the website of Psychologist Ken Pope and may be found at  www.kspope.com/therapistas/will.php
According to Dr. Pope and his co-author Dr. Melba Vasquez the Professional Will should include the following sections:

•    Who takes charges?
•    Who serves as backup?
•    Coordinated planning for the Executor
•    Your office, its key, and its security
•    Your schedule
•    Client records and contact information
•    Avenues of communication for clients and colleagues
•    Informed consent
•    Client notification
•    Colleague notification
•    Professional liability coverage
•    Attorney for professional issues
•    Billing records, procedures, and instructions
•    Expenses

Pope and Vasquez suggest a legal review of the Professional Will, making copies of the document, and the importance of reviewing and updating the document.

Guidelines for preparing a Professional Will, along with a sample format, is provided by the State of Oregon may be found at http://www.oregon.gov/obpe/docs/guidelines_for_preparing_your_professional_will.pdf

A one credit CE course on writing the Professional Will is offered by The Zur Institute at http://www.zurinstitute.com/wills_clinicalupdate.html

Remember, “life happens” whether we want it to or not. Be professionally prepared in the unfortunate circumstance that it happens to you.

When Collecting Every Penny Possible is a Mistake

Steven Walfish, Ph.D.

I conduct substance abuse evaluations as part of child custody cases. As part of the evaluation process I request records from previous therapists the parties may have seen
for individual or couples therapy.

By law clinicians are allowed to recoup costs for copying and providing records.  It makes good business sense to collect these monies to offset overhead costs.

I requested records from Dr. X. He calls and says he will be happy to send me the records but first wanted me to know the chart was 175 pages long. He computed the amount due to be $170.80 and he would mail the records once he received the check from me.

So I called Dr. X and said, “While I know you are legally entitled to $170.80 I find this to be an outrageous fee for a clerical task. Therefore, I would like for you to accept $35 instead, because I think that is a more reasonable amount.” He replies, “I know this is an outrageous fee but it is what the law allows so this is what I’m going to charge. Pass the fee on to the clients who are millionaires.”

I do not pass such fees on to my clients. While I probably may do so: (a) it was not included in my financial agreement (since no one had ever asked for reimbursement previously) with the client, and (b) it doesn’t fit with my personal values.

I ask Dr. X to reconsider and he declines. On an occasional basis I have referred clients to Dr. X because he is an excellent clinician. I inform him that I will no longer do so if he won’t budge. He stays steadfast with his request to collect the outrageous fee.

In our book Financial Success in Mental Health Practice Jeff Barnett and I discuss the importance of maintaining good customer service practices.  This is with the clients that we see in our offices and the gatekeepers that send us clients to see. There are lots of excellent clinicians in my urban area to refer clients in need. Because of this customer service practice Dr. X is no longer on my referral radar.

In this instance Dr. X earned an additional $135 above what I offered for copying and mailing the records.  Because no future referrals will be coming his way he lost out on revenues from potential future clients, as well as clients that those satisfied customers that he treated may have referred his way.

The morale of the story: Be reasonable in your financial decisions and people will remember your reasonableness. Be unreasonable in your financial decisions and people will remember your unreasonableness.