What does the transition phase look like from the previous owner to the new owner? Why should you prioritize your business plan from the start? Do you have insurance for your practice and clinicians?
In this podcast episode, Alison Pidgeon speaks with Kathleen Coughlin about selling a Private Practice. They discuss structuring transition periods, consulting with the new owner, and achieving your business plan.
Podcast Sponsor: Brighter Vision
It’s Brighter Vision’s biggest sale of the season!
With the holiday season in full swing and the new year right around the corner now is the perfect opportunity to think critically about your future marketing initiatives and consider what improvements can be made to ensure you’re attracting the clients you need to grow your practice.
If you find yourself in need of a professional website that’s properly optimized to rank well in online searches and targeted to speak to your ideal client, Brighter Vision would love to help.
Best of all, as a Grow a Group Practice listener, you can get your first month completely free.
So, if you’re ready to get started or just want to learn more about how Brighter Vision can help you grow your practice, head on over to brightervision.com/joe.
Meet Kathleen Coughlin, LCSW
Kathleen Coughlin is a Licenced Clinical Social Worker and Private Practice Strategist. As a Behavioral Health Consultant and Strategist, she tailors services to meet the specific needs of her client’s team and organization.
Kathleen has owned, operated, and sold 2 behavioral health group counseling practices since 2001. She launched her first practice in Pennsylvania in 2001, later selling it in 2018. The practice on average would provide 600-650 sessions per month.
She then started the initial steps to open a new group counseling and consulting practice in Florida. In less than 3.5 years, the group practice was started, scaled, and positioned to be acquired. The practice on average provided 400-450 sessions per month and continues to provide outpatient mental health counseling in the local community.
Email her at [email protected]
In This Podcast
- Assisting the new owner
- Prioritize your business plan
- Invest in protection for your practice
Assisting the new owner
It is common that the previous owner of the business, especially in private practice, will stay on for a few months to help the new owner settle into the business well.
Especially those first two to three months with the credentialling, helping them learn the intake process, working with them as they go through learning the electronic health records and co-pays, deductibles … going from the ground up because it’s so important for them to understand the inner workings. (Kathleen Coughlin)
Give the new owner some time to establish their footing in the business so that they can build solid plans and feel confident in making their own decisions.
You can continue to support the billing, manage the clinicians, and be available to answer any questions from the new owner. All this work from the previous owner is of course still paid.
Prioritize your business plan
It’s important as a professional that you have a good business plan in place. I always encourage people that are starting out, especially if I’m consulting with them, don’t only think about yourself when you’re starting, think about if it could grow into something more. (Kathleen Coughlin)
Work to develop the foundation of your business so that it can stand apart from you, and grow the business up from this foundation so that it is its own entity.
Focus on the foundation instead of quickly piecing things together to get clients. Having a strong foundation can take time to build, but it is one of the greatest investments of time and energy that you can make in your business.
Invest in protection for your practice
You can purchase extended defense limits that can payout and protect you and your practice if a case was ever brought up against the practice or the clinicians.
Once you’ve had a malpractice situation you can’t change any of [your protection] so if you’re in a one million to three plan with a five-thousand-dollar defense limit, until whatever it is that’s going on is remedied, you cannot make any changes. (Kathleen Coughlin)
It is important to arrange insurance for your practice like how you arrange insurance for your home. Check the policies that you purchase for your practice and see what the fine print is before you buy them.
Useful links mentioned in this episode:
- Visit Kathleen Coughlin’s website
- Connect on Facebook, Instagram, and LinkedIn
- Email her at [email protected]
- Check out brightervision.com/joe for your first month free
Check out these additional resources:
- Kathleen Coughlin Sold Two Private Practices – Part 1 of 2 | GP 93
- Group Practice Launch
- Group Practice Boss: www.practiceofthepractice.com/grouppracticeboss $149 a month
- Email Alison: [email protected]
- PoP Group Practice Owners Facebook Group
- Free resources to help you start, grow, and scale
- Work with us
- Consult With Alison
- Alison Pidgeon on Therapy for Your Money Podcast
- Practice of the Practice Network
Meet Alison Pidgeon, Group Practice Owner
Alison Pidgeon, LPC is the owner of Move Forward Counseling, a group practice in Lancaster, PA and she runs a virtual assistant company, Move Forward Virtual Assistants.
Alison has been working with Practice of the Practice since 2016. She has helped over 70 therapist entrepreneurs start and grow their businesses, through mastermind groups and individual consulting.
Transformation From A Private Practice To Group Practice
In addition, she is a private practice consultant for Practice of the Practice. Allison’s private practice ‘grew up.’ What started out as a solo private practice in early 2015 quickly grew into a group practice and has been expanding ever since.
Thanks For Listening!
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You are listening to the Grow a Group Practice podcast. Whether you were thinking about starting a group practice or in the beginning stages, or want to learn how to scale up your already existing group practice, you are in the right place. I’m Alison Pidgeon, your host, a serial entrepreneur with four businesses, one of which is a large group practice that I started in 2015. Each week, I feature a guest or topic that is relevant to group practice owners. Let’s get started.
Hi and welcome to the Grow a Group Practice podcast. I’m Alison Pidgeon, your host. I am so glad you tuned in today. Today is part two of our interview with Kathleen Coughlin. She’s a clinician. She’s owned two different group practices and has sold both of them and now she is doing business consulting, helping other therapists with various aspects of their business. If you want to go back and hear the vast majority of story about how she sold her two practices, definitely check out last week’s episode. That’s the first part of the interview and today is the second part. Yes, without further ado, let’s hear the rest of the interview with Kathleen.
So you sold the second practice to somebody who was working in the practice already?
That is correct.
Okay, so kind of the similar story from the first practice?
Yes. She actually started with us in an internal role and really got to understand the inner workings of it. So she really saw the phone calls to claims manage to maybe how hard you have to work to kind of keep things going. We very much kept things in-house between two people to three people running the business. So in order to keep your cost down you want to make sure you have like a lean team because otherwise I think in the counseling you’re not going to be bringing home, if you’re paying out large salaries to two or three people outside of your clinicians, it’s very hard to keep the costs down.
So we had put in a lot of steps and I think as she looks at it, she is kind of like I think more electronic tech savvy and has like different ideas of like how to scale up the operations and just looking how to do it in an easier fashion. Because she’s one person, we were super lucky to find an assistant for her in the last two weeks and I think she’s going to be an excellent asset to her team. So in that sale in itself, I think in the next couple months we’ll be working out of being so directly involved and just being more in a consultative role as well.
Nice. So when you decided, okay, I’m going to build this up and then in three years I’m going to sell it, was there like a particular number in mind that you wanted to get for the practice, just so that you had enough money to allow you to start something new or what was the goal with that?
So my angle, there really wasn’t a specific number. It’s just, I kind of knew what I could do in a short period of time and that was just a good number for me as a family and being able to kind of like look in general as like, what did I want to do long-term. And I really wanted to kind of take a step back from the clinical practice, the business aspect, being on call 24 hours a day and really being able to, if I wanted to see clients seeing clients during set hours, I have very strict hours. I see clients from 6:00 AM to 12 noon, three days a week. Then I do my consultations at other times of the day, but I really like the early part of the day. If the clients are interested in coming, it works for both of us in that regard. So she’s a little bit later starter and we kind of like balance each other out as we like, kind of co-work through some of these opportunities and obviously challenges that sometimes come up out of these transactions as well.
So I’m curious about kind of the emotional aspect of selling your business. I know for me, my business, a lot of times feels like another child. So I guess I was just curious, is that ever hard emotionally for you to think about, oh, I’m going to going to let somebody else take care of my baby and I’m not going to be a part of their life every day anymore? Was that hard for you?
It’s funny. Yes, it is funny because now I’m in a position where I don’t have the phone support to me any longer and my husband and I were able to go to the beach for like an hour the other day and just sit and we can leave our phones in the car and not have to worry about answering calls or not having someone available to take the calls. So I think in general it’s like definitely a transition from one a person who’s buying the business and that big transit of time that they’re going into to two on the other end. You’re coming out of the practice and building your new life and how each kind of adjust but balance each other out and support one another through that process. I know it’s interesting because I was talking with her last weekend, the lady at the practice in Florida and she’s like, I feel like I can breathe now that we hired that new person. I’m like, that’s so awesome because that’s like the best feeling and knowing that that’s a good fit for her is really important.
So when you get to that period where you actually sell the practice and the new owner is taking over and then it’s very common for the old owner to stay in the business for a period of time just to help with any, like you said, any questions or just make sure that transition goes really smooth what exactly are doing during those initial first few months? Is it just depends on what the new owner wants or is it kind of like similar, no matter who is taking over?
I would say, I think if you’re looking at an individual owner taking over your practice or large companies out there that will take over practices, you probably have a lot more, I guess solid policies, procedures, operations, et cetera. But as an independent business owner and working with someone is you’re really in initial like three to six, let’s say one to six months, especially those first two to three months, the credentialing, helping them learn the intake process working with them as they kind of go through learning the electronic, the ledgers that we use and co-pays, deductibles, how to collect all that information and also checking benefits and really going from the ground up. Because it’s so important for them to understand the inner workings.
Then as time goes on, which is kind of where we’re at now, May 17th, 2021 was the sale date. Then at this point here we are October 12, approximately a week and a half ago really started the billing process and teaching that and training on that. So giving that person time to really kind of get their footing, get solid plans in place and to feel confident enough in what they’re doing and not just throw everything at them all at one time. So we continue to support the billing and continue, on my end is on the clinical manager and helping to support that for a couple more months as well.
So hours a week are you still putting into the practice?
Approximately, I would 10 to 12 hours per week.
Okay, and is that something put in the sale agreement that you get, I’m assuming you’re getting paid for your time. You’re not working for free.
Yes. Then I do see clients as well. So you can do that a couple different ways. I mean, you can incorporate that into the sale agreement. You can incorporate supervision into the sale agreement. You can incorporate your, because as a independent business owner, you’re also coming out of that practice. So you want to stagger so that it’s not a big hit to the new owner like, okay, Kathleen was seeing 20 clients a week and now she’s not going to see any, well, we have to build up someone else to kind of transition in over time to build that or more sessions per week for that new individual that would eventually take my spot as well.
So it’s better to do that slowly than have it be abrupt?
What’s been your favorite part of the whole process of selling your business?
I would say kind of looking at one, I think going through this whole process, it helps you learn a lot related to business planning. It also helps you really learn different approaches to running and operating businesses and especially private practices. I think we’re going into a whole new world of practice management. You have the larger organizations that are, some are giving you referrals. Some are taking any referrals that you’re providing them, they’re able to kind of manage your practice from the background. And you submit your claims in, you do your notes on their platform and then you can kind of get paid or you can do kind of that individual practice where you’re managing all that internally as well.
So I think for me, it’s kind of on like the landscape of understanding how things are changing so that we can kind of also keep up with the necessary tweaks to our system to help her continue to excel and grow and looking at the contracts and can we increase in rates and what are the clinicians that we’re bringing on? What kind of specialties do they have and getting to know them as well and making sure that working as a clinician and then also working with a new clinician to help them make good decisions for the team and then also making good decisions on the business aspect as well. So I think I really have enjoyed that transition and then also transitioning into a different role for myself professionally as well.
Nice. I guess before we kind of switch gears and talk about some other things, is there anything that we didn’t talk about related to selling a practice that you think would be important for people to know if it’s something that they’re thinking about doing?
I’m trying to think. I don’t, I wouldn’t say specifically. I think it’s just really important that as a professional, you really have a good business plan in place. I always encourage people as they are starting out, especially as I’m consulting with them, don’t just think about yourself when you’re starting. Think about it, it could grow into something more. So really working to develop that foundation and building on that foundation versus kind of piecing things together quickly when you get your first client, I feel that’s really super important.
If you have a good solid foundation, as you add your staff to that foundation, I think you’re bringing a lot of value to your practice. I always say your practice is an asset. And my program I refer to for the individual consulting is start scale and sell your private practice because there’s so many opportunities just generally how to start, but also how to scale operations up in a good, healthy pace so that you’re not feeling overwhelmed and you’re not letting things slip because clinically as professionals we have to make sure that we’re caring for the needs of our clients. We need to make sure that we’re also caring for the needs of the business and then also making sure that we’re caring for the needs of our staff who are taking care of the clients. So it’s really important to be able to kind of help that person learn how to balance those two hats so that they can continue to grow and develop in those areas.
It’s Brighter Vision’s biggest sale of the season. With the holiday season in full swing and the new year right around the corner now is the perfect opportunity to think critically about your future marketing initiatives and consider what improvements can be made to ensure you’re attracting the clients you need to grow your practice. If you find yourself in need of a professional website, that’s properly optimized to rank well in online searches and targeted to speak to your ideal client, Brighter Vision would love to help. Best of all, as a Grow a Group Practice listener, you can get your first month completely free. So if you’re ready to get started or just want to learn more about how Brighter Vision can help you grow your practice, head on over to brightervision.com/joe. That’s brightervision.com/joe.
That’s a good segue into then next thing I wanted to talk about, which was the specific work that you do with business consulting. I know one of the things that you mentioned was about helping people scale up their practice. So can you tell us a little bit more about what you do?
Sure, absolutely. So I know there’s a lot of programs out there that are more over a period of weeks or a couple months. Like you might be working with a group of so many professionals learning how to build and scale your private practice. I think you can get really deep into the weeds of that. I also think it’s a very doable experience to learn under the direction of someone. I don’t really know, we all know that we don’t go to school and they teach this. I was very proud to hear I’m actually consulting with someone in Connecticut and she was invited into one of the master level programs to just talk about this.
So that was super exciting to hear because I’m like in the social work program I went to, nobody ever talks about private practice. You shouldn’t go work in private practice. So for me coming out, I really didn’t know where to go and how to do it. So it was really a learning experience. So I really love working with clinicians on a one to one, really understanding where they’re at, where do they want to go. Some people are coming in and saying, I haven’t done anything yet. What are my steps? I kind of have a step by step sheet that I can give them as to kind of goes through the steps of things to get started on. Then some people are coming on saying, which I love is like, hey, my husband and I are like either both therapists or one’s a therapist. I saw somebody today posted my husband is therapist. I’m a therapist, my husband’s an engineer. That was the exact same setup that we have.
So it was kind of funny because it was kind of coming from the same direction. It’s like working with that person and where they’re at and really trying to help them build that program that they’re envisioning but being able to do it in a well structured manner. Sometimes it could be someone coming on saying, here’s where I am. I always look at where are you with your practice? How is your practices, is it brick and mortar? Is it a combination of telehealth and brick and mortar? Where are you with business planning, business development, financially with staffing? Do you have a staff on board? Do you have an assistant? How are you doing your billing? I think you really go through that with each individual or the team of people that’s working together.
A lot of my work has been on helping the clinicians really understand what it does take to kind of run a successful practice because it really makes me sad is when you’re in the groups and people are saying, I feel like any give up here. I don’t feel like this is working for me. It’s really just trying to structure things a little bit differently, maybe taking different approaches to marketing. I’ve never paid for any marketing in my practice ever, except for Psychology Today. I don’t look at that as marketing. I just look at that as a presence outside of my website. Those are the only I would say marketing things that I’ve ever paid for in my practice.
A lot of my work has been on building relationships in the community, getting out to schools, getting into doctors’ offices, having them know that you’re available for seeing clients, getting into like the county Sheriff’s office, being available for critical incident support. So those are the kinds of things that I’ve found that have really helped me build my practice, especially coming to Florida. I did not know the area. I told a friend what I liked and what I was looking for. He gave me three cities. I came down and visited him three times, finally found a house and really just was like, okay, now what? And kind of like getting out there and getting a sense of like, what does the community need?
Then really on my end, coming from the Northeast, looking at rates, I thought it was going to be a really simple transition down with regard to contracting and finding out there was huge differences in rates from the Pennsylvania area to the Florida area. So starting there and like, how can I build that up after being a provider in some of these networks for close to 16, 17 years and coming here. It’s like, well, that really doesn’t matter. You’re kind of like starting over again. So that was a little bit frustrating.
So helping people understand, like you can go back to the insurance companies and you can request rate increases, helping them see what are the specialty areas in your practice and your team, assisting them with kind of website development and understanding of what it is with relation to expenses and what are the expenses you’re going to see on a monthly basis. If you’re doing telehealth, what are the expenses you’ll see on a monthly basis, you have a brick and mortar practice, ways to keep expenses down and also helping clinicians to really recognize we all have to have our malpractice policies that when you’re offered a malpractice policy, you’re typically given boxes to check off and really understanding what you’re checking off.
Most plans are 1 million, 3 million plans. You can get 2 million, 4 million. I think some of the companies offer a little bit higher, but most of your standard plans carry retainer of $5,000 if you need legal assistance. Well, I call it a retainer. It’s a $5,000 defense limit. That’s going to get your retainer if you’re lucky with a lawyer and not much more than that. So a lot of that in the event that there was ever a malpractice or anything like that that was ever challenged towards your individual or towards you as a group a lot of that funds will be coming out of your own pocket. So there is the ability to purchase extended defense limits. So you can go up to 100, 75, 100,000, 50,000, but once you kind of had a malpractice situation, you can’t change any of that.
So if you’re in a 1 million plan with a 5,000 defense limit until whatever it is that’s going on is remedied, or the judge would maybe mark off that you are not in that claimant’s claim anymore, you can’t make any changes. So it’s really important as you do with our homes, is to protect yourself as a professional. So I really help clinicians to recognize that and to really think, because at that point, if there’s anything that happens, it could be, I know you are working in a school, something happens. You’re the only licensed professional in that school setting and you can get thrown into a malpractice claim because a student was injured at the school and it can take four to six years for your name to come off of that.
Well, you’re really stuck in a position at that point, or you might have the school or the hospital that has you work there full time, but then you also are in a situation as a professional and also an individual that you can be served kind as well. So you want to make sure that you’re protected on that. I think that’s a really big key that I like encourage people. It’s to make sure they’re covering themselves.
Yes, that’s great advice. I think that’s one of those things that we don’t often think about. We just think like, oh, I’m going to go online and pay for this policy, but then we’re not really understanding, like you said, what we should be choosing. I always err on the side of buying all of the insurance, buying as much insurance I can.
So is part of your consulting then also helping people to learn what to do to build up their practice, to eventually sell it?
Yes. So if someone wants to come in and they want to look at that, and I have a coup couple individuals on I’m working with now, they’re like, I would love to in the next three to seven years, or in the next five years be able to kind of put this in a place where we can either find someone in our office that might be interested or look externally to someone that might be willing to kind of take over the practice and really helping them build that foundation that’s key. Because when it comes to practice management, I think this is where I see a lot of counselors get stuck, is we talk about like clawbacks and how do we protect ourself from clawbacks? And how do we protect ourself from audits?
Some companies will come in and say, here’s your facts. Can you send me these records or mail me these records? Some companies, depending on the amount that you’re bringing on a 1099 may say, I want to come on site. I want to look at every two years or every three years kind of like joint commission does and CARF does where they want to come on site and get, especially, if you’re in a larger group practice, they might want to see your files, see your personnel files, see your policy and procedure manuals, your compliance plans. So when you start to get bigger, you open yourself up to more and you want to make sure that you have that ready so that you’re not running around trying to develop that two to three weeks prior to an onsite audit.
So that’s one of the things that you help practices with as well? I know you mentioned you help them get ready for joint commission. Are there other types of audit?
Yes. It could be state licensing. It could be Medicaid. I work with programs that are wanting to become joint commission accredited to help them get the program to meet the standards that are going to be needed in order to meet the actual standards that the joint commission expects. Then also working with them on the development of policy and procedure manual. You can buy policy and procedure manuals, but when the joint commission, I used to work for the joint commission, when you bring them in, they’re looking, are these just generic policy and procedure manuals, or are these written to meet your organization’s needs? Do your staff know what happens if this happens? What should they do? Do they know the processes?
So when they’re being interviewed or your clients are being interviewed for maybe if you’re not had an onsite IOP audit from joint commission or something like that does your staff understand the policies and procedures associated with a high risk case? Do all of your documents, and this is something I do as well, do all of your documents cover all of the main areas that would be addressed in a site audit? So not only joint commission, but also insurance and there’s expectations of our documentation.
It’s really, really important that you’re on top of that documentation. I always encourage therapists. I’m like, let’s make this as simple as possible. Let’s get as many click boxes we can to bring that so that you’re always going to meet the requirements. I always say there’s one insurance company I’ve always gone by and I’ve never failed any of the audits that I have done after that, is you know what their expectations are. I’ve really found if we meet their expectations for outpatient counseling and medical necessity criteria, because there is criteria for the work that we’re doing, we need to make sure there is progress being shown.
I think we need to make sure we also have documentation maybe why a client isn’t progressing in treatment. So these are all very important things included in progress notes. Also making sure as professionals we’re doing our notes in a timely fashion in the event that a company does say they want to come and do an audit, or they’re asking for records. You can’t be three months behind or two weeks behind on notes and be trying to get everything completed. So sometimes someone might call and say, “Hey, we had a client that made a complaint and there’s something wrong with one of your things in your building. We’re going to come on site, we’re going to check it out and while we’re there, we would like to see the client’s file. We’ll be there in 24 hours.” You need to be prepared for that as a clinician. So as your practice grows, these are things that can happen.
So if there’s a group practice owner right now who’s listening and they feel totally unprepared for an audit. What should they do?
I think there’s definitely an audit criteria available online. I think it’s very important it to go through the audit criteria of your insurances that you’re working with. So if you’re working with Optum or Cigna, Aetna, Magellan go through what audit criteria they’re going to look at in your files, understand the clinical guidelines for the different levels of care that you’re working in. So if you have out patient counseling, if you’re in an IOP program, a partial understanding what the auditors may be looking for, so risk assessments, they’re going to be looking for that.
They’re going to be looking for you, asking your clients do they want to mental health advance directives? There’s a lot of different things that you kind of learn by reviewing the audit checklist. Basically what they’ll do is they’ll send you that information and say, these are the policies we’re going to want to look at. This is the information we’re going to be expecting to see. If they don’t see it the first time that they come on site, they give you an opportunity to present that data and how you’re going to address that, usually within about a two week period of time.
You need to submit any thing that might have been notated. Let’s say your fire extinguisher, wasn’t, I don’t know, recharged. You need to get that completed. You need to show that maybe your clinical note didn’t have a suicide risk assessment in it, didn’t have eating disorder questions in it, it didn’t have questions about advanced directives. They may make recommendations specifically around that saying these need to be included in future notes. So those are things that can help, even though it might have been like when against you when it was like an audit. I really look at that as a growth experience because you’re just really honing in on how to make your program even better.
Yes. I agree. It’s good advice. Kathleen, it’s been great talking with you and you just seem like a wealth of knowledge and really fascinating to hear about your experiences with selling your practices and the consulting that you do. So if folks want to get a hold of you, what’s the best way for them to get in touch?
Sure, absolutely. I can give you my email and I will give you my website. My website is kcoughlin.com, So it’s K-C-O-U-G-H-L-I-N, then LSW. Then my email is [email protected]. I do have a Instagram account that’s under K. Coughlin Consults. Then I also do have a Facebook page that I started when I sold my practice. That’s really focusing in on helping clinicians as they grow and develop. We put some good resources on there that you can grab and pick from. That is under private practice and that’s going to be listed under, give me one second to go there. Under Facebook it’s going to be www.facebook.com/groups/privatepracticestrategist.
Okay, awesome. That’s a group that therapists can join.
Awesome. Well, thank you so much.
I appreciate you. I appreciate you taking the time and give a lot of great opportunities out there. I hope people don’t leave private practice and I hope they continue to push forward and use the great wealth of resources that are out in the community. I think in our own therapist communities is to how we can help one another develop and grow.
Yes. Thank you so much, Kathleen.
Absolutely. Thank you so much for the opportunity to meet today.
Thank you so much to Brighter Vision for being a sponsor of this podcast. I have been a Brighter Vision customer since 2016 and have always been really happy with my service. The tech support is great. They’re quick to get back to me and make changes to my website. We’re actually in the process right now of kind of revamping my original website because it is now five years old. So they’ve also been great with that process as well. So definitely check out the special they have going on right now over at brightervision.com/Joe.
If you are a group practice owner who is looking for some support and ways to navigate challenges and scaling up, and all of the things that group practice owners are faced with on a regular basis, consider joining our membership community, Group Practice Boss. You can find more details and sign up at practiceofthepractice.com slash Group Practice Boss. Thanks so much for listening and I’ll see you next time.
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This podcast is designed to provide accurate and authoritative information in regards to the subject matter covered. This is given with the understanding that neither the host, Practice of the Practice, or the guests are providing legal, mental health, or other professional information. If you need a professional, you should find one.