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What are some suggestions for starting and running your group practice? How should you go about managing your group practice’s finances? Are there adjustments that you can make to run your practice both in-office and online?
In this podcast episode, Alison Pidgeon shares a Q&A podcast she did with Whitney Owens, where they answer some questions about group practice.
Tired of never quite feeling comfortable with your practice financials? I’d like you to meet GreenOak Accounting. Their goal is to empower private practice owners with the financial information they need to make good business decisions. They specialize in working with solo and group private practices in the mental health industry, so they are uniquely positioned to help with figuring out what’s “normal” in your business finances and what’s not. So if you’ve ever had a conversation with your accountant or bookkeeper that left you wishing that they understood private practice or had some best practices to share, head over to www.greenoakaccounting.com and schedule a free consultation to see if they might be a good fit for you. They can help with all your accounting needs from bookkeeping to payroll to Profit First and budgeting & forecasting.
Meet Whitney Owens
Whitney Owens is a Licensed Professional Counselor and Private Practice Consultant. She lives in Savannah, Georgia, where she owns a group private practice, Water’s Edge Counseling.
In addition to running her practice, she offers individual and group consulting through Practice of the Practice. Whitney places a special emphasis on helping clinicians start and grow faith-based practices. Whitney has spoken at the Licensed Professional Counselors Association of Georgia’s annual convention and at Killin’ It Camp. Whitney is a wife and mother of two beautiful girls.
This entrepreneur went from a private practice owner to being a consultant. Providing fellow clinicians the tools they need to run a successful practice.
Visit Whitney’s website, connect with her on Facebook, listen to her podcast, or consult with Whitney. Email Whitney at email@example.com
In This Podcast
- Putting a down payment on an office building
- What banks look for in loan candidates
- Having multiple professions in your practice
- The most common mistakes made by group practice owners
- Hiring associate-level clinicians for your practice
- Tips for obtaining certifications for women and minority business owners
- Adjusting to having a hybrid office
- Typical revenue for expenses
- Rule of thumb for marketing expenditure
- Ensuring you have the necessary HR policies in place
- Systems and strategies for managing a busy practice
Putting a down payment on an office building
When buying an office building, you’re going to need to do some research about the options you have regarding the percentage you’d need to spend as a down payment. From my experience in 2018, this percentage ranges from 15% to as much as 30% or 40%, so make sure to “shop around” and talk to a few banks before settling with one that causes you to lose out on a lot of money.
What banks look for in loan candidates
Some tips for being a desirable candidate for the commercial loan:
- Experience and stability – It helps to know that you’ve been in business for a while and that things have become stable enough for you to be buying a property. Take along two or three years of tax returns when you meet with the bank.
- Sufficient information about current rent – When I bought the building for her practice, the bank used the amount that she was paying in rent as a starting point to establish what she would pay in mortgage payments, so take along some recent financial statements and be prepared to have that discussion.
Having multiple professions in your practice
Neither Whitney nor I are 100% sure about the legal details when it comes to hiring people of multiple professions in your practice, such as psychiatrists, massage therapists, and nutritional therapists all under one roof. However, I have done consulting with people who have done this, such as people who run wellness centers, so it’s not necessarily a clear-cut yes or no when it comes to having multiple professions in your practice.
I have heard some different things, but mainly this is based on state laws, so do some research in your own state and make sure what is and isn’t allowed there in terms of multiple different mental health licenses being issued to the same practice. Ultimately, it is best to consult your legal advisor or attorney before hiring anyone from a different profession into your practice, so as to avoid any legal repercussions.
The most common mistakes made by group practice owners
- When people start their group practice before getting advice from people with experience, they often end up paying their staff way too much without putting enough aside for themselves or their overhead. They then end up having to work a lot of extra hours to be able to pay themselves a decent salary and to cover all the other expenses.
- In the early stages of running the practice, people think that they have to spend lots of money on marketing, a lot of which is spent on campaigns or methods that do not work and are essentially a waste of time and money. Instead, try to figure out what types of marketing work best for you and your practice, and spend your marketing budget on those things.
Hiring associate-level clinicians for your practice
I like hiring associate-level clinicians, who are students who have already got their master’s degrees but still need to work the required amount of clinical hours before getting their licenses. These associate-level clinicians are sometimes referred to as interns in the same way as some medical students while completing their residency.
At my practice, I hire someone to supervise the associate-level clinicians, and both of us sign off on the associate level clinicians’ hours for them to take to the licensing board. This is also financially feasible because you typically pay interns and associate-level clinicians much less than you would a fully licensed clinician, so I am able to offer clinical services at much lower rates than I would if all of the staff in my practice were fully licensed clinicians.
I often recommend to my consulting clients that, when it comes to hiring, they need to do whatever makes more sense financially for the practice and for them as the practice owner. So, if you’re hiring interns that need to be constantly supervised and you end up not seeing many clients yourself, make sure that your numbers add up and you aren’t making big financial mistakes.
Tips for obtaining certifications for women and minority business owners
So, B Corp status basically means that you’re agreeing to operate your business in a very ethical way, that you’re paying your staff a living wage, that you’re thinking about, you know, utilizing other services/vendors in your business that are maybe minority-owned or women-owned, you are thinking about the environment and being as environmentally friendly as possible…
This varies from state to state but there might be a special designation for women-owned businesses. In Pennsylvania, for example, there is an application process that you can go through to be designated a truly 100% women-owned business and get special advantages, such as tax breaks. Similarly, you could be certified as a B Corporation.
Adjusting to having a hybrid office
Since COVID-19 has forced many businesses to move online, either partially or fully, it is important to think about adjustments that can and should be made when considering turning your physical practice into a hybrid online/in-office practice. One adjustment I have made so far is to have half of the therapists working in the office and half of them working from home providing telehealth therapy.
When a client calls to schedule an appointment, the practice elaborates on the risks associated with physical appointments and the benefits of telehealth, allowing the client to make an informed decision about what would be best for them. Even after this pandemic, it could be good to continue providing telehealth services from your practice as well as in-office consultations.
I suggest having a sort of “hybrid schedule”, so some therapists could work in the office part of the time and from home the rest of the time. Another idea is to hire therapists who work 100% remotely to work via telehealth, as this would allow you to expand your practice while saving on additional rent and could also diversify the scope of therapy available to your clients.
Typical revenue for expenses
Green Oak Accounting provides a chart of the ranges of what you could expect to spend in the different areas of running your group practice. Break it down as follows:
- Therapists salaries = 45-50% of your budget
- Administration (VA, office manager, receptionist, etc.) = 5-10% of your budget
- Overhead (rent, payment transaction fees, coffee for the office, marketing, etc.) = 15-25% of your budget
- Profit and owner’s pay = 15-35% (i.e. the rest of your budget)
My accountant ran the numbers for me and worked out those ranges specific to my business, so you should try to ask yours to do the same. That way, you can figure out which areas need a bit more of the budget, which are getting too much, and how to get a decent profit at the end of the day. This kind of breakdown is important for you to have so you can estimate how much it is per hour for your therapists to provide therapy, which is important information to share with insurance companies if you are an insurance-based practice rather than self-pay.
Rule of thumb for marketing expenditure
In my experience with my group practice, they were spending more money on marketing during the first two years than they are now. This makes sense because they were trying to put the word out there and get more clients, until about the two-year mark where word-of-mouth becomes a prominent form of marketing and you can trust that some of your existing clients will have recommended your practice or a specific therapist to their friends and family.
Now, since the practice is relatively well-established in the community and word-of-mouth referrals are more prevalent, the marketing does not have to be on such a large scale anymore and does not require as much from your budget. Whitney also noticed that sort of shift at the two-year mark, because word-of-mouth was bringing in about the same amount of referrals as the more ‘active’ marketing such as via Google ads.
Ensuring you have the necessary HR policies in place
When hiring employees, you need to have at least some sort of game plan when it comes to HR, be that through an official HR company, hiring someone dedicated to handling your HR, or finding a suitable attorney to help you manage it yourself. Ultimately, the choice you make on how to manage the HR protocol when hiring someone can depend on the cost point.
I took an employment attorney on board to help with following the necessary HR protocols, such as creating an offer letter that you send to the prospective employee in the place of a contract, which most people think that you have to draw up. I also set up a training handbook for which the attorney gave the green light from an HR standpoint. More recently, my assistant became the office manager and now also handles a lot of the HR, which includes calling the appropriate attorney for legal clarification where necessary.
An important thing to do is to establish what you are able to spend in terms of handling HR. Lawyers tend to charge a lot per hour, so an HR company may be more affordable within your practice’s budget. I have recently started working with a national HR company called Bambee HR, based out of California, who have representatives that you can work with and software that you can use on your side to keep track of personal files and data.
Systems and strategies for managing a busy practice
Learn to delegate and hire an assistant
Figure out what tasks or roles are integral for you to perform and which are not, then hire someone to handle those other tasks. One of the mistakes that Whitney sees business owners make is waiting too long to hire an assistant, to the point where you end up neglecting the work that you, specifically, are supposed to do. For example, you as a therapist need to prioritize seeing clients over answering the phone and managing the office admin, so it’s a good idea to hire someone who will dedicate themselves to those other tasks and allow you to actually do therapy work.
Get someone to handle all your marketing for you
It is important to have one person or a team that is dedicated to managing all the marketing, such as your social media profiles. In this way, you don’t have to worry about it on top of the other things that come with being a practice owner.
Books mentioned in this episode
- Peter Wyngaard and Dr. Susan Danielson on Running a Group Practice as a Married Couple | GP 25
- Register for the Pivot Your Group Practice Intensive 2020
- Grow a Group Practice Podcast Episode 18 (5 Things I Learned from Buying an Office Building)
- B Corporation
- Green Oak Accounting
- Faith In Practice Facebook Group
- Email Whitney: firstname.lastname@example.org
- Email Alison: email@example.com
- PoP Group Practice Owners Facebook Group
- Free resources to help you start, grow and scale
- Work with us
- Consult With Alison
Meet Alison Pidgeon
Alison is a serial entrepreneur with four businesses, one of which is a 15 clinician group practice. She’s also a mom to three boys, wife, coffee drinker, and loves to travel. She started her practice in 2015 and, four years later, has two locations. With a specialization in women’s issues, the practices have made a positive impact on the community by offering different types of specialties not being offered anywhere else in the area.
Alison has been working with Practice of the Practice since 2016 and has helped over 70 therapist entrepreneurs start and grow their businesses, through mastermind groups and individual consulting.
Thanks For Listening!
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Green Oak Accounting is the accounting firm I use for my own group practice. I started working with them in the beginning of 2020 and I am so glad I did. Julie and her team are super impressive. They’re always on top of things. When COVID-19 started, they were super helpful with navigating me through the whole process of getting SBA loans. They really helped me to navigate all of the changes that were happening and how it was affecting the finances in my practice. What I love about them is that I felt like, in my practice, it had grown to the point where I really needed a sort of CFO perspective, that Chief Financial Officer perspective to help me make business decisions based on my financials and I feel like that is what they provide. So if you are running a group practice and you’re feeling like it’s hard for you to make business decisions, because you don’t have a professional and expert to look at your numbers and help you figure out what, you know, decisions to make in your business, based on that definitely check out Green Oak Accounting. You can go over to their website greenoakaccounting.com, you can schedule a free consultation to see if they would be a good fit. They can do everything from bookkeeping to payroll, they can set up profit first. They also do budgeting and forecasting. So, I am so glad that they are sponsoring this podcast because it’s such a great service and I have really benefited from it.
Hello and welcome to the Grow a Group Practice podcast. I’m Alison Pidgeon, your host, and today, I have my fellow business consultant Whitney Owens here. Welcome to the podcast, Whitney.[WHITNEY]:
Hey, Alison. Good to be with you. [ALISON]:
Yeah, it’s always fun to have you on. So, we decided to ask our Facebook group for, just, questions that they had about group practice, and then Whitney and I were going to go through as many questions as we could and answer them for you. So, that is our goal today, so we’re going to be covering a wide range of topics, but hopefully there’s something in here that is valuable for you all to learn. So, anything you want to say before we get started, Whitney? [WHITNEY]:
No, I just love doing Q&A. It’s a lot of fun and, knowing that we’re really going to be able to help very specific questions, I really enjoy doing that. [ALISON]:
Yeah, great. So, the first question that we have is from Kayla Riley. So, she’s actually one of my past consulting clients, and she asked, “How much in terms of percentage do I need for a down payment on a commercial property? And what else do banks look for?” So, that is definitely something I can answer for you, Kayla. So, I bought a office building in late 2018 and went through that whole process, and I actually talked about it on a podcast episode, so if you want to hear a lot of detail about that, it was Episode 18 – 5 things I learned from buying an office building. But what I learned from kind of doing my research and talking to various banks is that there’s a very wide range of what they want you to put down. So, the lowest was 15%, and I’ve heard anywhere from up to 30 to 40%. So, huge, huge range. So, definitely shop around for, just, different quotes from banks because, obviously, the difference between 15 and 40% could be quite a bit of money. And then, the other question she has, what else do banks look for? So, I’m not exactly sure what all the things are that they look for. I think it really helps if you’ve been in business for a while, you know, you have two to three years of tax returns, I think that is really helpful because then they sort of see, like, Oh okay, this, you know, business is stable, it’s not a brand new business. Also, they looked at what I was paying in rent, and they assumed that I would obviously be able to keep paying that amount if I owned the building. So I think that was the other piece, like, what I was paying in rent was very similar to what I would have to pay in mortgage payment, so, for them that, you know, that just sort of seemed like a no-brainer because I was already paying that amount and could show on my financial statements that I was already paying that. So, let’s move on to our next question. I know you can’t comment on that, Whitney, so… [WHITNEY]:
Not yet, but I’m taking notes over here. [ALISON]:
Oh, are you? [WHITNEY]:
Yeah, cuz you just never know, like, you never know when your building is not going to be available, or if you’re renting, it’s just, you know… I rent month-to-month, which is really nice – if anything changes, I can get out of here pretty easily. But I’m always saving for a down payment, so it’s good to hear that feedback from you. [ALISON]:
Oh, nice. Okay, cool. So, Jacob Gibson had a question. He said, “Can we own a practice and therefore supervise to some degree with various professions, for example, massage therapist, nutrition, psychiatry, etc.” He said, “I heard it wasn’t okay…” [ALISON]:
Do you have any thoughts about that, Whitney? [WHITNEY]:
I have not. I guess he means, when he says supervised, just to make sure you think we’re on the same page here, he’s meaning “hire”, I’m guessing? [ALISON]:
Ah, I would think you’d definitely want to talk to an attorney about that, just to make sure, because I’m gonna guess every state has different laws. But I mean, I’ve done consulting with people and talked to people who do have other professions in their building, and that they’ve hired for their practice, because a lot of people want to have a wellness center, and so that would be included in that. What do you think? [ALISON]:
Yeah, so I’ve heard various things, like you said, just based on state laws. So, like, in New York they’re, for example, very picky about, even, like, the types of mental health license, like employing other types of mental health licenses. So, I think it’s really going to come down to what are the laws in your state, and I know, yeah, there are some places where they have that wellness center model and it’s no problem, and then other states where they view that as like, well, you’re not really qualified to, you know, employee a massage therapist because you don’t have that licensure. So, yeah, I definitely think that’s going to be a state-by-state kind of thing. [WHITNEY]:
Yeah, I ran into that problem when I was trying to hire a psychiatrist or a med provider at my practice, and I got my attorney involved, he called the medical board here in the state of Georgia to find out that you cannot prescribe medications unless you own the practice. So, unless a doctor is owning a practice that can prescribe the meds or has at least a 50%, I think, ownership, and I wasn’t ready to do that. So, it was it was unfortunate because there’s such a need for psychiatrists in this area, but then I couldn’t hire someone because of that. [ALISON]:
Right. Yeah. So, definitely something you need to check out with a lawyer. And then, Jacob’s second question was, “what are common mistakes that you see and counsel that you give most often?” [WHITNEY]:
Oh, yes. That’s a good one. [ALISON]:
I know. I feel like there’s so many things I could say. [WHITNEY]:
I think money is one of the biggest ones. What do you think? [ALISON]:
Yeah, I was actually gonna say the same thing. So, what I see most often is, like, you know, people will start a group practice and not get any, like, help from somebody who’s already been-there-done-that, like, what we do as consultants, and then they think they have to pay their staff better than everybody else, and then they get themselves into trouble because they are paying their staff too much, they can barely cover their overhead with what’s left over, and then they’re working, you know, crazy amounts of hours just to, you know, still pay themselves a salary, and then maybe, on top of that, cover some of the overhead, because they’re just paying their staff too much. [WHITNEY]:
Yes, exactly. [ALISON]:
You see that too? [WHITNEY]:
Exactly. Yes, exactly like that. I think another big mistake is marketing, and money with marketing. And so, people think, oh, I’ve got to do this… I’ve got to do that… So, they start spending all this time and money into all these different things, when they’re really not doing anything that’s working. And so, I’m always helping people figure out okay, here are the three really good ways your marketing (inaudible) working in your area, keep doing those, don’t do the 10 things you think you have to do. I mean, right now, we’re talking to great entrepreneurs here on the podcast. So, everyone’s got a million ideas, and then we hear ideas from other people, we think, well, I have to do this, that, and the other, when you really don’t. So, helping people like really hone that down on where you want to really spend your money and what’s actually working in your marketing. [ALISON]:
Yeah, I find that practice owners will be spending a lot of money on marketing, and then they’re not tracking to see if it’s actually working or not. And then they don’t ever sort of revisit, like, well, how many referrals am I actually getting from, like, the hundreds of dollars I’m spending on Google ads? Like, they just sort of, like, set it and forget it. You definitely need to be, like, checking up on how that’s going, to see if it’s worthwhile or not, because you could just be throwing money out the window. [WHITNEY]:
Yes, yes. And you bring up a good point on, kind of, watching your practice, those KPIs (key performance indicators). I’m amazed how many people I get on the phone with, that they know what a KPI is, but they don’t track any of them. [ALISON]:
So, I spend a lot of time with my consultees showing them forms, and ways to do KPIs in their practice, because I don’t want to do consulting with them if they’re not paying attention to what’s working within the consulting. So, we’re going to try some things, and we need to make sure it’s working. [ALISON]:
Yeah, for sure. That’s a really good point. So, the next question we have is from Mindful Wellness Counseling. This might be a good one for you, Whitney. She said, “any tips for running a successful internship program?” Have you taken interns before? [WHITNEY]:
I haven’t. [ALISON]:
You haven’t? Oh, I thought you had. [WHITNEY]:
No, no, I do hire a lot of… Now I do think this word ‘intern’ gets used differently in different places. In the state of Georgia, an intern is someone who’s in school still, hasn’t gotten their master’s degree. So, that’s what I think of ‘intern’, but I do think some people think of an ‘intern’ as an associate level clinician, so that’s someone who’s already gotten their master’s and is working towards licensure. Now, I do hire a lot of those. [ALISON]:
Okay. Can you give us a little bit of an overview of how that works? [WHITNEY]:
Yeah. So, I actually love hiring people right out of school, or maybe just out of their first job, because they’re moldable and I really like being able to train and mold someone to, kind of, the culture of the practice and the way that we do therapy with clients. And I also love it because I am a cash-pay practice, and we can offer lower fees to people when we have an associate level person, as opposed to when they see a licensed person, we have to raise that rate a lot. So, I’m able to, kind of, meet different financial needs within the community by having an associate level. But as far as the way we organize it in the practice, at least in the state of Georgia, it’s required that you have a director and a clinical supervisor. So, the clinical supervisor does the clinical supervision part, and the director is the boss and manages the business. And, basically, the director says, this person’s actually doing what they say they’re doing, seeing clients. And so, you need both people to sign off on your clinical hours when you go to the board for your license. So, I’m the director of the facility and then I have someone else on staff who does the supervision. So, I pay her to do the supervision, while she supervises all the other clinicians that are associate level. It works out really well. [ALISON]:
Okay, nice. Do you find it works out well financially to? [WHITNEY]:
Yes, because I can offer that low, like… really, an associate level person, you just can pay them so much less than a licensed person, because they’re working on their hours. Just like a medical student, when they’re in residency, makes a lot less while they’re in residency than when they actually get their medical degree and start practicing. [ALISON]:
Yeah, and I think that’s the one thing too that… I don’t have interns or, like, unlicensed people, but for my consulting clients, I always advise them, just make sure that it makes sense financially for you, as the practice owner, given that you’re probably going to spend a lot of time supervising them, and answering their questions, and all of that kind of stuff. So, just make sure you’re running those numbers ahead of time. [WHITNEY]:
That’s really good point, yeah. [ALISON]:
And then Mindful Wellness Counseling also had a question about any tips for obtaining certifications, like women- or minority business owners. So, I feel like this is another thing that might vary by state, because, typically, when you form a business entity in your state, you know, if your state has some sort of special designation for a women-owned business, I know here, in Pennsylvania, we do, and I can’t remember now off the top of my head, what it’s called… but I know there’s some sort of application process that you can go through to be designated, like, a, you know, truly 100% women-owned business, and you get some advantages or, I know in some states you get tax breaks, you know, those kinds of things. Something else you might want to look into also, and I don’t know if you’ve heard of this, Whitney, is the B Corp certification. So, B Corp status basically means that you’re agreeing to operate your business in a very ethical way, that you’re paying your staff a living wage, that you’re thinking about, you know, utilizing other services/vendors in your business that are maybe minority-owned or women-owned, you are thinking about the environment and being as environmentally friendly as possible. So, there’s all these, sort of, aspects to it of, just, you know, really operating your business in a way that, you know, isn’t just about money or, you know, profit or, you know, “we don’t care how much we’re ruining the environment”, “making our products and pumping pollution into the air”, like, you’re sort of taking all of that into account, and you have to, like, go through a whole process of, sort of, assessing your business, and then making changes, and then applying for that B Corp status. So, that’s something that I’ve been considering doing. It’s actually really popular in my area, and we have a like a business, I don’t know what you would call it, like, an office that supports businesses, it’s partially funded by the state, I think, that helps people get that B Corp certification. So, yeah, I would say definitely look into that. [WHITNEY]:
Alison, you’re always teaching me something. Like, I’m writing it down, I’m gonna look it up. I actually had never really thought that there was a status for, like, a women’s-only practice, that you could get tax write-offs and stuff like that… So, yeah, you did great answering it. [ALISON]:
Oh, good. Okay, thanks. So, our next question is from Pamela Warner, and she’s asking some questions about profit-first. Do you do profit-first in your practice, Whitney? [WHITNEY]:
Sorta. So, I definitely… Yeah, it’s overwhelming, right? I mean, the 12 different accounts and all that. So, I don’t have 12 different accounts, but I use the principles of Mike’s book, I also do the percentages and run numbers, I just do it a little differently than the way he specifically says. So, I might be able to answer the question. [ALISON]:
Okay. She says, “implementing profit first when you’re scaling a practice, do you find the TAPS Mike puts forth are good for a group mental health practice?” I think TAPS stands for, what, taxes and profit? Is that what it stands for? [WHITNEY]:
You know, it’s funny, I don’t have the book here with me. I can’t remember exactly what it stands for, but I think she’s referring to the different percentages within the book. [ALISON]:
So, like taxes, operating expenses, and then the owner’s part. So, yeah, I think that’s what she’s referring to. And that’s what I use all the time in my practice. Like, I look back at those numbers, especially what we were talking about earlier, the paying yourself. Too many business owners don’t pay themselves enough, so I love that he gives a good number for that. [ALISON]:
Yeah, and actually, I’ll say, too, that I can’t exactly answer this question right now, because I’m just going into profit-first. I have an accountant – they’re actually a sponsor of this podcast, Green Oak Accounting – and they specialize in therapy practices, and they’re actually helping me set all of that up, and so, we’re just in the beginning stages now of doing that. So, hopefully once I get into it, and, you know, they sort of guide me through the process, I’ll be able to speak in a much more detailed way about it. [WHITNEY]:
Yeah, so I’m excited about that. I’m in the process of opening all my bank accounts. [WHITNEY]:
Well, good luck with that. [ALISON]:
Yeah. Yeah. And so, the other question Pamela had that I thought was a good one is, “what adjustment would you make if, going forward, you want to have a hybrid practice in-office and online?” So, I think this is so important, given everything that’s happening with COVID right now, you know, I think it’s really changed our industry, for the better in a lot of ways, in terms of being able to do telehealth and, you know, especially for insurance-based practices, having that covered by insurance. So, are you changing anything in your practice, going forward, Whitney, to, kind of, incorporate more telehealth? [WHITNEY]:
Yes. So, we actually already are back in the office. And so, we just have a different setup for being in the office and a different setup for doing telehealth. But, like, when we work with clients over the phone when they schedule, we just kind of run through the risks with them, we run through the benefits of the telehealth experience, and let them make the decision for themselves on what they think is going to be best for them. And so, we actually have half our therapists going to the office and then half our therapists doing telehealth, depending on what the therapist is most comfortable with. [ALISON]:
Yeah, so I think this is a really good opportunity to think about, even after Coronavirus is over, like, how could you incorporate telehealth into your practice on a permanent basis because, again, I think there’s going to be a lot of cool opportunities to do that. And what I’m looking at doing is actually offering to my staff, when we are able to go back to the office, like some kind of hybrid schedule like, Hey, do you want to work in the office two days a week, you could work from home two days a week. Or, even, I’m in the process of hiring people to work 100% remotely, like they could live four hours away from me in another part of Pennsylvania, but they could still be an employee and do 100% telehealth. So, I think, you know, as we are figuring this out and experimenting with this new world that we’re living in, I’ll definitely be sharing kind of, like, how I figure out that process. But I think there’s a lot of really cool opportunities to not only expand your practice without adding on additional rent, which tends to be a big expense, but also, like, in my state of Pennsylvania, there’s so many areas that are rural, and people just don’t have good access to mental health care, and so that’s the other part that’s really exciting to me is, like, people could, you know, as long as they have a, you know, decent internet connection, they could have access to really great care by people who specialize in whatever their issue is, even if they live in the middle of nowhere. [WHITNEY]:
Yeah, I mean, I’m really grateful that we’ve set all this up because, at least here in Savannah, we evacuate a good bit for hurricanes. And in the past, I don’t know why, as a business owner, I didn’t think to do telehealth… I guess it was all the work that had to go into, like, the training because, at least in the state of Georgia, you have to get continuing education. But now, I’m glad that I have it, so we don’t have to shut down for one to two weeks every time there’s an evacuation. We’ve evacuated three times in the past four years. [ALISON]:
It’s a lot. [ALISON]:
Taking a week off is a lot of time, as a business owner, when all your therapists are off. [ALISON]:
Yeah. Especially when you weren’t, like, anticipating that. Yeah, yeah. Yeah, that would be huge. Cool. Okay. So, we have another question that is, again, like a financial question, from Ryan Russ. He asks, “I’d like to know what a usual/typical percentage of revenue for each expense should cost”. So, again, I will bring up Green Oak Accounting, because I love them so much. They put out a great kind of pie chart of ranges of what you should be spending on each area in a group practice. So, this is more for a practice that has W2 employees, but I’ll share with you how they have it split out. So, for salaries and therapists pay, they have a range of between 45 and 50%. So, you could take your, you know, sort of, average reimbursement rate, and then 45 to 50% of that is then what you would pay your staff/your therapists per hour. They give a range of 5 to 10% for administrative pay, meaning, like, your VA, your office manager, is about 5 to 10% of the budget. A range of between 15 and 25% is overhead, so that’s going to be, you know, when you pay your rent, and your credit card fees, and your, you know, you buy coffee for the office, and all that stuff falls into overhead. And then between – and this is a big range – between 15 and 35% is profit and owners pay. So, obviously depending on your situation, that might be on the lower end of the 15%, or the higher end of the 35%. Probably, if you’re self-pay practice, it’s more on the on the higher end, as opposed to an insurance-based practice. But just, like, to give people those numbers because it is hard to know what exactly you should be spending in each area. And obviously, they give ranges because depending on where you are, your, you know, your overhead may be very different than in another part of the country. Like, my clients who live in New York City, their rent is sky-high. So, you know, they’re going to be paying a lot more in rent than somebody, you know, who lives in my area. So, any other comments about that, Whitney? [WHITNEY]:
Well, I love that. I need that sheet, because I want to be able to look at it. And that goes very closely with some of the things I do with the profit-first, because Mike would say that once your business is at the 250,000 and higher, that’s when the business owner starts doing a 35% owners pay. [ALISON]:
Oh, nice. [WHITNEY]:
So, very similar. I mean, he does profit on top of that, so that we put you a little bit higher on that percentage right there. But that’s kind of how he does his numbers as well. I did have… my accountant, at one point, was able to take all my numbers for my business – she has access to my QuickBooks and stuff – and I was sending her all the employees, and kind of, how much they were making, and how many clients they were seeing, and she could tell me what kind of money we were bringing in after overhead for each therapist. So, that was really helpful. And actually, you were asking that question earlier about the associate and the licensed – I found that my associate therapists were bringing in more money for the practice overall than the licensed people were. [ALISON]:
Wow. That’s cool. [WHITNEY]:
Yeah, it was neat that she did that. I don’t know how she really did it, so I just have to get her to do it every year, so I can see how I’m doing. [ALISON]:
Yeah, something else really important, you know, if you’re not able to do this yourself, definitely find an accountant who could do this for you, but find out what it actually costs you per hour to have a therapist provide an hour of therapy. Because, if you take insurance, you’re going to want to know what that breakeven point is because, if there’s insurance companies paying you less than that, then they’re not worth being paneled with. So, I know for me, that number is about $75, so if an insurance company is like, Oh, we pay $60 a session, then I just won’t get paneled with them because it’s just not worth it. [WHITNEY]:
Such a good point. You know, another thing, and this is for both practices, but it’s maybe a little bit more the self-pay practice route… There’s so much marketing that we have to do to get clients, and I had heard someone explain one time that they were able to take the amount of money they put into marketing and the amount of money that a client pays when they come in, and was able to share with their staff, You know what, this is about what the price is per person to get that person in our door, like for the marketing, and had narrowed it down to like six appointments, like, if this person doesn’t come for five or six appointments, then we didn’t break it. Like that’s just breaking even. [ALISON]:
And for a therapist to hear that, because they don’t think about what the business owner puts into the marketing, and, you know, like, I have a director of marketing, I have to pay her for all the social media, all the websites, stuff like that, therapists need to know if they’re not seeing that client for very long, then we really aren’t making a profit. We’ve actually lost money if you only see ‘em for like two sessions. [ALISON]:
Yeah, yeah. And that’s actually a really good transition into our next question from Lindsey Anton. She asked, “Once you are established with the number of clinicians that feels right to you and keeping them busy enough, what is the rule of thumb percentage wise to spend on marketing?” So, obviously, that would fall into that ‘overhead’ category of what I had just mentioned from the pie chart. But what I have found is that the first two years, in my group practice, I spent a lot more money on marketing than I do now, because the community wasn’t familiar with us, because we were new. And so, I just had to do a lot more to, sort of, make people aware. And then I felt like, once we hit that two-year mark, what was cool is like, word-of-mouth really took off. And so, the clients my therapists did have obviously started, you know, telling their friends and family about us, and then it just seemed to, sort of, like, you know, grow on itself, you know, it just sort of, you know, exploded at that point, in terms of word-of-mouth referrals. So, I think it will definitely get to a point where you’re like, oh, wow, like, we have, you know, it’s sort of, almost, like, running by itself. Not that you’re not going to spend, you know, money on marketing or not that you’re going to stop marketing, it’s just, you’re probably going to see after the first two years, you could probably spend less money on marketing. Have you found that to be true, Whitney? [WHITNEY]:
Yes, I do. Totally agree with everything you said. I was just thinking about our last month I, you know, my group practice, we started as a group in 2018, and so, really just over that two-year mark, and just the last month, I noticed, gosh, we got almost just as many referrals by just word-of-mouth, than doing actual marketing, or Google, or whatever. So, I was really, I was really impressed by that. So, it’s funny that you bring that up right now, because that was exactly what I was thinking about, like, how amazing that was. And that is what happens… when you do good therapy, that’s the best kind of advertising that you can do. [ALISON]:
Oh, yeah, for sure. Yeah. And I think there’s definitely things that you could, you know, if your budget for marketing is somewhat tight, there’s a lot of things that you could do that just requires your time, like networking and things like that. So, you know, if you are starting out and you just don’t have a ton of money for marketing, like, doesn’t mean you can’t still market, it’s just going to mean you’re going to spend more time, probably, doing it. [WHITNEY]:
Yeah, I do think that this is, again, one of those big flaws for business owners, they spend too much on marketing. Like, you feel like you’ve got to do all this stuff. So, I say, don’t spend money on marketing unless you feel like you absolutely need to. [ALISON]:
Yeah. Yeah. I think there’s just so much you can do in making connections in the community, because we have such a, you know, personalized, high-touch kind of service, that people just want to get to know you before they’re comfortable referring to you. So, I think that’s just a big, big piece of it. [WHITNEY]:
Yeah, and I’m all about putting your money into SEO on your website, because it’s kind of the gift that keeps on giving. Once you’ve put all that money into it, and a lot of business owners will do that upfront, then it keeps happening. So, it’s really great. [ALISON]:
Yeah, that’s one thing I always tell my consulting clients too, like, if you’re in an area that’s not super competitive, like, if you’re in New York City, you probably should just forget about SEO, but if you’re in another part of the country, it would definitely be worth it. Like you said, put the money in on the front end, because that’s our number two source of referrals, we’re on page one of Google. So, you know, the work I did initially and the money I put into it initially, now, we don’t really put any money into it. It just sort of keeps, you know, giving us referrals because we kind of maintain it by, you know, posting blogs, but that’s about all we do at this point. So, yeah. Okay. So, next question is Troy Wise is asking about any guidance we have concerning having the necessary HR policies in place for new hires. So, Whitney, when you started with your W2 employees, did you use an HR company or… how did you figure out all of that stuff related to that? [WHITNEY]:
Yes, I’m really glad this question came up because I’m seeing this a lot more lately, on Facebook, about HR. I didn’t use anybody, I did it all myself. I have an attorney that I adore. He is an employee attorney, and so, I really do run a lot by him, so he knows what I need and don’t need. So, for example, when we’re hiring and – people get a little confused about this – when you’re hiring an employee, you don’t have to do a contract with them, you give them an offer letter. And so, he reviews the offer letter, and then I do have a handbook that I created, because I felt like it would help with the training process, so he did look at that. But that’s pretty much what I do from an HR standpoint, and then I just have a system in place for hiring. My assistant, that started out taking calls and now she’s pretty much the office manager, she does a lot of the HR for me as well, but it’s really just a conversation that the two of us have and then, if we run into a bind where we’re not sure what the law is, we just reach out to the attorney. So, I don’t really have a company necessarily that I work with. [ALISON]:
Okay, yeah, that’s definitely one route that you can take. Usually what I recommend is, just because of the cost factor, that it may be better to seek out an HR company, because we all know lawyers tend to charge a lot per hour. So, there’s, sort of, national HR companies, like, I just started working with, it’s called Bambee HR. So, it’s B, A, M, B, E, E, and they are based out of California, and they have HR reps that you can talk to, and then they also have software that you can keep all of your, like, personal files and stuff organized. So, I don’t have, specifically, obviously long-term feedback on how it’s been working with them, but so far, in our first month, it’s going well, and I feel like, for the price of what they’re offering, it’s very affordable and helpful. So, I did use an HR company actually, that was local to me when I was switching over my contractors to W2 employees, just because I wanted to make sure I was doing everything correctly. I didn’t want to get in trouble with, like, the federal government because I forgot to have them fill out some form, or whatever. They also helped me write my handbook, so. [WHITNEY]:
Yeah. If you’re going to set up, especially with W2 employees, if you’re going to set up a practice, yeah, you should definitely be talking to an HR professional. There’s just so many things that you just don’t know, and I think it’s worth it just to make sure, from a peace of mind standpoint, that you have things set up correctly. What’s nice, too, about those HR companies – not Bambee because that’s sort of, like, an ongoing subscription model type thing – but when I hired the local HR company, they let me, sort of, do it just on a project basis, just to, sort of, get everything transitioned over and set up and then, obviously, then I just paid them for the project, and then we were done. So, from that standpoint, it was very affordable. [WHITNEY]:
That is nice. I mean, you had such a huge undertaking there with your transition, and I’m sure it saved you a lot of time and energy. I mean, I will say, I do spend a lot of time on the training and the handbooks, like, I’ve actually just, last week, was going through the handbook again, so I’ve put several hours into it that, if I hired somebody out, it would probably be a lot easier. [ALISON]:
Yeah, yeah, that was the other thing. It was a big undertaking because I had 15 therapists I was trying to transition over, so… Yeah, it was definitely nice to have that person to ask questions. [WHITNEY]:
Super sure. [ALISON]:
Yeah. So, this is our last question from Helen Botello. She says, “what are some strategies and systems that you use to manage a busy practice so there is good work life balance? What do you delegate and outsource, etc.? Do you need to hire a receptionist, office manager, VA, and at what point did you need and were able to afford to do that?” This is such a good question. We could probably, like, spend a whole episode talking about this. [WHITNEY]:
Maybe we should. Yeah, why don’t you go ahead? I mean, you have a great assistant company, so I want you to be able to share about that. [ALISON]:
Yeah. So, I think that, for me, I realized that, if I was, you know, continuing to see lots of clients and continuing to try to wear all the hats in the business, I was really, like, stifling the business from growing. And I think it’s so hard to figure out how do you make that transition? Because it’s, you know, especially for practice owners, I think, maybe for all business owners, it’s just hard to give up, like certain things. Like, I’m always amazed at the practice owners who were like, “What do you mean I shouldn’t be the one answering the phone?” you know, like, yeah, you should be doing therapy and marketing your practice, not answering the phone, you know? But I think that, for me, I just looked at, okay, how can I begin to delegate things? And, it doesn’t have to be an overnight process, you know, I did it slowly over time, and to the point where, now, I don’t see any clients and really the only functions I do in the practice are some financial stuff, and I still mostly do the HR hiring piece, and then I also do anything related to, like, creating new services or expanding or something like that. But all the rest of it, the day-to-day, like, managing of the business, my two managers do, my office manager does, like, I’m really out of those loops, and that’s how I want it to be, because that allows me to spend my time doing business consulting, which I really love, and it allows me to start other businesses, and all of that kind of stuff. So, I think, yeah, it’s a process. Like I said, we could probably spend a whole other episode talking about that for half an hour. But what thoughts do you have about all of that, Whitney? [WHITNEY]:
Yeah, I do think one of the big mistakes that business owners make is waiting too long to hire an assistant. I cannot tell you how happy I was when I had an assistant finally answering the phones, and didn’t feel responsible, because of that stress that we have as business owners, like, Oh, I gotta hurry and get through this session because I got to take this call or I got to do this. Like, it’s just so much, it honestly makes it difficult for us to be with our clients. It makes it difficult for us to manage the business when we’re doing the details like that. So, I think another thing to consider when you’re trying to figure out when’s that time is, one, if you actually just don’t like it, then try to get someone else to do it. And that’s how I do a lot of my decision-making, because we all want to have a life that we enjoy, not one that we hate doing, and part of that’s our job. The other one is, going back to the KPIs and monitoring, how many calls are you missing because you’re in a session? And you can start tracking that. If you’re missing that, say you’re missing five calls a week because you’re in a session, okay, well, what is your conversion rate? Conversion rate meaning when you do get someone on the phone, how often do they actually convert into becoming a client? Well, if you tell me 20, or maybe you say 40, 40% of the people I’ve talked to, so two out of five, so you’re missing scheduling 2 people of that week, and so, if you can hire an assistant, which you’re going to pay a lot less, to be able to answer that and she gets one more person scheduled for you a month or a week, it’s probably going to pay for itself. And so, being able to run the numbers like that really helps to make it work out. Like, it was such a good feeling, when I would get done with the day, and I’d call my assistant and be like, “how was the day?” And she’s like “I scheduled you 2 new clients.” Yes! And I didn’t have to do it! [ALISON]:
Yeah. And I think that, you know, people often ask me, like, how did you grow your practice so quickly? And I, you know, obviously, there’s a lot to it, and a lot of different factors, but I think one of the biggest ones is like, really early on, I always had an assistant, and I always had somebody who was able to live answer the phone. So, you know, we all know that people tend to, like, start just going down the list of therapists, and if somebody doesn’t answer, they just move on to the next one. And so, you know, if you’re not really responding very quickly to new inquiries, like, you probably lost that client. And so, that’s something we see a lot with the virtual assistant company – I own another company called Move Forward Virtual Assistants – and by the time we get practice owners reaching out for a virtual assistant, they’re, like, drowning in work. And they needed an assistant, like, you know, six months ago. And so, yeah, we see people definitely waiting way too long, and then they’re totally stressed out, and it’s hard for them to train the assistant, and it just creates this whole, you know, mess. So, yeah, if you’re questioning if you need an assistant, you probably do need one. [WHITNEY]:
That’s right. That’s right. Another thing that I do farm out, you know, she was asking about other things, is the marketing piece, and I just am now doing that. I did have someone who I kind of contracted a little bit with SEO kind of stuff, but now I just hired my first person, part-time director of marketing. And it was great. Yesterday, I got on the phone with her. I was like, Hey, I don’t want to manage social media. I don’t want to do the Psychology Today profiles. I don’t want to do the website. I need you to actually put yourself on the website, so I don’t have to do it… And it was such a good feeling that I know that it’s going to take the business forward to have her doing it, because I was getting in the way. I was too busy to do the marketing that needed to be done. [ALISON]:
Yeah, for sure. Yeah, that’s such a good feeling when you get that off your plate. Well, Whitney, thank you so much. I always have so much fun when we get to sort of bounce ideas off of each other, and, you know, obviously, you have a little bit different perspective, being in a different part of the country, and running a self-pay practice, from me. So, I always like that we sort of, you know, can bring some different elements to answering these questions. So, thank you so much. [WHITNEY]:
Thank you, thank you. I’m always, like I said earlier, learning from you, and just, even as consultants, I’d like to say we know everything, but we really don’t. So, every time we get on podcasts together, I’m always learning and growing. And so, I really appreciate that from you. [ALISON]:
Yeah. And if folks want to get a hold of you, how can they get in touch with you? [WHITNEY]:
Oh, yeah. So, this is actually, for Alison and myself, we’re both with Practice of the Practice, so you can go to practiceofthepractice.com/apply, and you can answer some questions, and then you’ll get on the phone with Jess and she’ll talk to you for a few minutes, and then set up a free consulting call with one of us if you’re interested in working with one of us. And then, if you just want to get in touch with me for any reason, you can send me an email at firstname.lastname@example.org. [ALISON]:
Awesome. And then, you have a Facebook group as well, right? What is it called? [WHITNEY]:
Oh, yeah. Okay, let’s talk about that. So, my name within Practice of the Practice is called Faith in Practice, and so I do help people, not only the group practice part, but people that are building faith-based practices as well. So, there’s a Facebook group Faith in Practice, and I can send you the link for the show notes, or they know the link so they can include it in there. And, as well, I also have a podcast, so the Faith in Practice podcast. [ALISON]:
Awesome. Yeah. And I was going to say to you, I have a Facebook group as well as called PoP Group Practice Owners, so like Practice of the Practice, so it’s totally free. If you want to join, you’ll just have to answer a couple questions. But there’s, you know, good opportunities to interact with both me and Whitney in that group. And then, also, that’s how we were able to get the questions for the episode today. So, if that’s something that you’re interested in, I think, hopefully we’ll be doing more of these kinds of episodes in the future, and you want to join the group, then you could hopefully get your question answered. [WHITNEY]:
That’s awesome. [ALISON]:
Yeah. Great talking to you, Whitney. I’ll talk to you later.
Grow a Group Practice is part of the Practice of the Practice Podcast Network, a network of podcasts seeking to help you grow your group practice. To hear other podcasts like the Imperfect Thriving podcast, Bomb Mom podcast, Beta Male Revolution, or Empowered and Unapologetic, go to practiceofthepractice.com/network.
This podcast is designed to provide accurate and authoritative information in regard 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.