Getting started in private practice involves much more than finding office space and printing business cards. You need to be familiar with business regulations in your area, tax obligations and professional ethics. You also need to engage in business activities such as bookkeeping, record management, marketing and networking.
Leaving the security of a salaried job to go into private practice can be anxiety provoking. However, you can start gradually part-time, while in your day job. And it doesn't have to cost you a bundle.
The following is a brief outline of the steps and tasks toward getting established in private practice.
Step 1: Decide who, what, where
Decide on what types of people you most enjoy working with, or the types of problems that you want to treat.
Next consider where you can locate your office, so that it's convenient to people who might need your services. For example, if you want to work with children and families, it's better to have an office close to a residential area of family neighborhoods, rather than in a downtown business area. On the other hand, if your preference is to work with corporate employees and executives, then locate your practice where they can scoot out for an hour during the day or immediately before or after business hours. This might be downtown or in a suburban business area.
Step 2: Find office space
When you're just starting out, you can save a lot of money by subletting an office from a colleague or renting space from a commercial company that provides meeting space by the hour. Availability and prices vary from one location to another. If you plan to see people during evenings or weekends, make sure that you will have access to the building at those times, and that heat or air conditioning will be running. When you find a place that seems to fit, get a contract in writing and run it by an attorney before signing.
Another option is to join an existing practice. In most cases you will have little or no upfront payment to the practice. You may also have access to intake forms, informed consent agreements, HIPAA notifications, billing software and other business tools. When joining a group practice, you should always have a written agreement. Many clinicians on a tight budget will sign the agreement without having it reviewed by an attorney. However, we strongly recommend that you not skip this step. Paying for a couple of hours of legal consultation now can potentially save you thousands of dollars in the future. For more information on joining a practice see Dr. Jeff Zimmerman's article, "Joining a Practice: A Practical Guide."
Step 3: Attend to professional and business paperwork
Get your insurances in order. At the very least you should have malpractice insurance and coverage to protect against theft and loss of your paper and electronic records. Find out whether client accidents (slips and falls) are covered under your rental agreement.
For US residents: Apply for an Employer Identification Number (EIN) from the IRS. You will use this number instead of your social security number for your business tax forms. Speaking of taxes, the U.S. Small Business Administration website outlines various tax obligations and other responsibilities. If you practice outside the US, check with your country's tax authorities.
Should you incorporate? The majority of clinicians in solo practice operate as sole proprietors. To get advice for your specific situation, consult your tax professional.
Register your business name. Most states require you to register a "Doing Business As" (DBA) if you use any name other than your own. Thus, "Mary Jones, Psychotherapist" would need a DBA, but "Mary Jones" would not.
Some municipalities require that you get a license to do business in their jurisdictions.
If you want to accept clients' insurances, contact the major health insurance providers and request credentialing packets. Fill them out and read the terms, particularly those pertaining to what services and diagnoses are and are not covered, and what you need to do if you decide to stop being a participating provider in the future. To enroll as a Medicare provider go to the CMS website. To become a Medicaid provider, go to your state's website.
Create your forms for intake, informed consent, HIPAA and other forms. The APA Insurance Trust has forms that you can download and adapt to your practice. Also check with your national, state or provincial professional association.
Set up a bank account, plus a merchant account to accept credit cards. If you don't want to sign a 2-year contract with a bank credit card processor, try Square. The fees are reasonable (although not rock-bottom) and straightforward, with no hidden extras.
Set up a system for bookkeeping and management of your finances. If this is unfamiliar territory for you, the book Financial Management for Your Mental Health Practice: Key Concepts Made Simple by Zimmerman and Libby provides a good overview.
Step 4: Create marketing materials
Get business cards printed. Start with a small batch at this stage, since you may change your location in the next year or two.
Set up a website. If you're on a budget, you don't need to spend much money. We do not recommend the all-in-one hosting/design/content services that charge about $60/month. Here's why. One of the most economical ways to set up a website is to use free templates provided by the company that provides hosting for your site. Most of these templates require little or no technical knowledge. Later, when you're ready to trade up, you can move the content and the back-end database into a new design and layout.
Step 5: Get the word out!
Start marketing before you open your office. Give talks. Write a blog on topics of interest to your target audience(s). Participate in social media around your professional interests. Introduce yourself to other professionals ( e.g., physicians, attorneys, educators, other mental health professionals) who may be able to refer clients to you, and vice versa. Also get to know local business people by participating in community organizations and activities.
If your license, insurances and other paperwork are in place, you can start taking appointments before you open your doors!
Step 6: Create your professional support system
Professionals who can help you set up your business include accountants, attorneys, interior designers, insurance agents, insurance billers, and practice consultants such as TPI.
You should also identify peers and mentors who can advise you on clinical matters. Set up a local peer consultation group and/or participate in professional online group discussions. For specialized consultation, consider paying an expert.
When selecting a malpractice insurer, sign on with one that provides risk-management consultation via telephone. This service is helpful when you are confronted with a situation or decision that my have implications for ethical or legal consequences.