[JOE SANOK]
This is the Practice of the Practice podcast with Joe session number 672.

I’m Joe Sanok, your host, and welcome to the Practice of the Practice podcast. We are about six weeks into 2022, and I hope you’re kicking it. I hope you are doing some awesome things in your world, but you’re also finding that time to just pace yourself out, figure out what you need in life. Hopefully you haven’t been too hard on yourself. If you didn’t meet those new year’s resolutions, there’s always time to jump back on the wagon, take small steps in the right direction.

I was doing a daily plank in 2021, for most of it and I realized I stopped for a little bit. Sometimes you just jump right back in and say it’s about progress, not perfection. So we’re taking steps forward, whether that’s in your private practice or your group practice, keep taking those small steps in the right direction.

Well, today I’m so excited. I have Alison Pidgeon and Whitney Owens back on the Practice of the Practice podcast, two consultants that are with Practice of the Practice. They are group practice owners. They are just amazing women who think like entrepreneurs and are entrepreneurs and launch things and grow things, and often intimidate me because they’re such bad asses. But today we’re talking about why to start a group practice in 2022. These two are probably the best positioned to answer this question about starting a group practice in 2022, because they are in charge of Group Practice Boss, Group Practice Launch, pretty much everything group practice within Practice of the Practice. There’s lot of practices in that sentence. These two are overseeing and teaching and consulting on. So Alison, Whitney, welcome to the Practice of the Practice podcast.
[ALISON PIDGEON]
Hi Joe.
[WHITNEY OWENS]
Hi, I’m glad to be here.
[ALISON]
We’re going to talk over each other now. Thank you so much.
[JOE]
Well, I mean, it’s going to be hard to not just have fun and just chit chat. We got to get down business today. No, we can have fun. So you two oversee Group Practice Launch, which is a six-month program that takes people from that moment that they think I want to add a clinician to having their first hire. Then you have Group Practice Boss, which supports group practice owners. So you have your pulse on so many trends. Let’s start with you, Alison. We were talking about out one reason to start a group of practice right now, especially around telehealth. What have you been noticing within these communities and the people that you consult with around how easy it is to start a group practice, especially with telehealth?
[ALISON]
I think obviously with telehealth being so prevalent now, and I don’t think it’s going anywhere, I think insurance companies are just going to continue allowing it. I think obviously now clients have gotten used to it and a lot of them see the value in doing their sessions virtually. So I think it’s even easier now to start a Group Practice Because you don’t have that initial startup costs associated with rent and furnishing office space. And obviously with a group practice, you’re looking at multiple offices, multi-year leases.

So if you can eliminate that startup cost, it’s just even easier. We actually want to open an office in the county to the Northwest of us and we couldn’t find an office to rent. So while we were waiting, we hired people and had them start working. We’re saving money every month towards the office that we’re eventually going to open but it was relatively low startup cost to have those people start.
[JOE]
When you think about splits or how people are paid or I think that sometimes owners feel, well, if I don’t have an office, why am I even taking a split or as much of a split? Couldn’t someone just start a practice on their own? Why would they ever work with me? How do you respond to that when people are apprehensive of being just online or having that be a big portion of what they offer in regards to the split question or the why someone wouldn’t start it on their own question?
[ALISON]
I think there’s always going to be therapists who have no interest in running their own business. They just want to come and do therapy and go home and they don’t want to worry about paying taxes and marketing and having an admin staff hired to answer the phone and all of those things that we think about as business owners. So I think whether it’s virtual or you have a brick and mortar or both there’s still folks who just don’t want to go into business for themselves.

I think too that whether people are working from home or in an office, they’re recognizing that there’s a level of support and benefits and perks that they’re getting as part of a group practice that they wouldn’t get from being self-employed. So I think we try really hard to make sure, even though we have a whole branch of our practice, that’s all telehealth we try to make them really feel like they’re still a part of the team and they’re supported. We still have a culture and they still feel there’s some sense of belongingness to this organization and they’re not just sort of flying blind on their own.
[JOE]
Yes. Those are such good points. Now, Whitney when you think about 2022 and the uniqueness of this year and positioning yourself around starting a group practice, why should someone consider a group practice this year and maybe not delay?
[WHITNEY]
My question that I say back to people is why not? There’s so many benefits from having a group practice, unless you have a really good reason that you don’t want to do it, or you’ve even thought about wanting to do it. You can have a group practice that first of all meets the needs of your community. Like with the pandemic we all, as therapists, like I’m hearing stories over and over of clinicians that are feeling burned out, overwhelmed. Just this week, some people called our practice and said, “Hey, we’re on a three month wait list.” Or a good friend of mine was like, “I tried to call a specialist. I’m on a six month wait list for my daughter.” So we need these services more available.

The other thing I really love is you can bring in people who are interns or associates who couldn’t start their own practice, but you can hire them at your practice instead of having them go work at an agency or at a hospital. That way they can do the good clinical counseling at your practice. So one of the great benefits is being able to meet the needs in the community. But the other amazing benefit is that you make more money and you have a flexible schedule to be able to do the work that you love. So, so many group practice owners that Alison and I work with, they start a Group Practice Because they have a side hustle they’re excited about, but they don’t have time to invest in that because they’re seeing all these clients. But once you start a group practice and you really get it going, your clinicians can do the clinical work and then you can start whatever side hustle that you’re excited about.
[JOE]
I’d love to talk a little bit more about the money, because I’m sure the three of us all, when we’re say doing a pre-consulting call with someone and they say help me figure out if it’s worth it financially for me to start a group practice, I would love to hear how each of you walk somebody through doing those numbers.
[ALISON]
I can certainly start. So I’m very big on the numbers and the data, because I think that it feels like a big risk sometimes to people to start a group practice and they want to know what is this actually going to look like from a financial perspective? Wat I tell folks is that you can expect to make about 20% profit and owner’s pay. That’s what will be the portion of the budget that will go towards those things. So you can extrapolate out how many offices do you have or how many clinicians do you need to hire? If you’re doing telehealth, how many session per week, per year? Knowing what your average reimbursement rate is and figuring out, okay, how many therapists do we need to, let’s just say generate a million dollars a year and then you can figure out, okay, well, if you can generate a million dollars a year, I could be making 20% of that.

At that point once you break the $350,000, $400,000 a year threshold, a lot of your salary as the owner is coming from what the other therapists are generating. So that’s where you can make that choice as the owner, if you want to keep seeing clients or not. But the beauty of that whole situation is that you have the option to stop seeing clients if you want to, because it’s not necessary at that point. I think that’s where talking through those real numbers helps people to see what it could be. I think too, we figured out that you only need seven full-time clinicians, I think Whitney, to reach a million dollars or something like that. So it’s not like you have to have this huge, like 50-person practice.
[JOE]
It seems like once you have some of those basic, the biggest step is going from zero to one. In the same way, going from zero to one, just client, when you first start out, that’s the biggest jump, but going from zero to one clinician, that’s when you have all the legal fees and all the support you need to get through all that. But then going from one to two and two to three and five to seven, it just gets easier and easier. It seems like then a lot of that infrastructure is there, so your actual cost per clinician, I would guess goes down over time because you have all those systems set up. You have that office space set up. You’re not adding all that room. Is that, Alison, would you say that’s pretty accurate or would you adjust that at all?
[ALISON]
I always tell people you’re going to have fixed expenses and variable expenses. So obviously a variable expense is the more clinicians you add, the more that’s going to go up, but your fixed expenses are going to be like, for example, if you rent a six-office suite, whether it has two people in it, or it has 12 people in it, you’re still paying the same amount of rent. So yes, absolutely. If that space is full, then that amount is going to go down per clinician because it is fully being utilized.
[JOE]
Yes.
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[JOE SANOK]
And Whitney, when people ask you about the financial side of like, is it worth it for me to even start a group practice, how do you think through that and talk people through it?
[WHITNEY]
Well, I think Alison explained it super well, and I use some of those same numbers that she just used. And also talking through numbers as far as, okay, let’s actually look at what are you going to charge the client? What is the practice going to make off that? Then actually running numbers. It’s really not that hard if you just write it all out and then look at how much is that person going to bring in and what are your expenses and then you know what the profit’s going to be off of that person. I think you can run those numbers easily in a smaller practice. I mean, I would suggest as you grow and account it, can it run those? So it’s really great.

I can look at all the clinicians at my practice and see who’s bringing in the most and who’s not and why is that? But another really important thing that Alison and I really work on with people is the importance of setting rates that are appropriate. We see way too many group practice owners paying their clinicians too much. So then like what Alison was saying, they get to that higher. We see that difference at the $350,000, 400,000 but if you get to that level and you’re paying your clinicians too much, you’re not going to see that benefit. You’re really going to notice it, because you’re going to be hustling really hard at that point, still making what you made in solo practice. So we really help people with that. Then, yes, just running those numbers correctly and we really work with you on that.
[JOE]
Well, and I think that brings us to the big question of 1099’s versus W2s. And actually tomorrow the next episode, we’re going to go step by step exactly through what people need to do to start a group practice or what they need to think through at each phase. So we’ll get into the actual nitty gritty in tomorrow’s show. But in regards to W2’s and 1099’s, Whitney, I remember when you were at Slow Down School for one of the sprints, you just were running numbers crazy. You were just, it was like John Nash from A Beautiful Mind. You’re just in your flow state, just going at it and you realized how much better it would be for you to have W2 than 1099. Walk us through maybe how people should think through that even before they start a practice in regards to who should do 1099’s, who should do W2’s? Is it always in people’s best interest to eventually move towards W2’s? And then Alison will hear from you after Whitney weighs in on this.
[WHITNEY]
I think the most important thing to consider is your culture, because when you do a 1099, there’s a lot more independent people running their own business literally. I mean, they come in with their LLC and they have their counseling business and they work under you. So that would be the reason to go more the 1099 route than anything in my mind. It’s the culture and how much you want to be involved in the practice. If you do a W2 model, you can definitely set things up in such a way that other people manage the practice as you grow, but there will be more involvement from you. There will be benefits offered in a different culture that you can create by having the W2. So I would say that’s the first thing to delineate.

Then with that, it’s thinking through, do you want to offer benefits and do you want to mentor people more, be more vested? Because you really have to go the W2 route, if you want to give bonuses or if you want to have health insurance, things like that. So those would be some of the biggest differences that we see, but across the board I think Alison, you can weigh in on this, but we usually see that W2 practices have greater profit than 1099s. I wish I could tell you some perfect formula for why that happens. I don’t really know, but it happens. We see that on a very regular basis. Both Alison and I made that transition in our own practices and found a lot of benefit from it.
[ALISON]
Yes, I would say if you had asked me three years ago if I wanted W2 employees in my own practice, I would’ve said, no, I love having 1099’s. It’s great because I like my folks to be independent and I’m not a micromanager by any stretch of the imagination. So what really, the scale for me was just hiring, retention, recruitment of therapists and decided to make the switch over to W2. It’s been awesome to see how much the practice has grown in a short amount of time. We switched over in the very beginning of 2020. We had 12 therapist at the end of the year we had 24 therapists. So we’re going to finish out the year with about 30. So we’ve almost tripled in size in two years because I think we made that switch and we were able to offer benefits and all of that thing.

So I will say though, we don’t sort of try to steer our consulting clients one way or another. We just talk through like, okay, here’s the pros and cons of both. That’s the beauty of being a business owner. You get to make all those choices for yourself. So if somebody’s really clear that they want contractors, it’s like great, we can certainly help you with that. If they’re really clear they want W2 employees, great, we can help you with that too. So I don’t want anybody to think that just because Whitney and I have W2 employees we’ll look down our noses at you, if you have contractors.
[JOE]
Well, I think it’s one of those things of, like you said, the culture and what you want out of the business, how hands on do you want to be, how hands off, all sorts of different factors. I’m wondering, it’s a unique hiring environment right now at the time of this recording, where I’m hearing that, whether you’re looking for a front desk staff or a therapist or whatever, even my friends that own restaurants, it’s really hard to find good quality people. What are you seeing with those that are starting group practices in regards to finding clinicians to work for them? Is that a struggle right now? If so, what are they doing to address that? If not, why do you think? It’s not as much of a struggle? Is it regional? Yes, just talk to the hiring side of it. Why don’t we start with Alison?
[ALISON]
I would say it’s a problem pretty much all across the country. People are having trouble hiring, no matter if it’s for a therapist or an admin staff, or what have you. What I have been finding is that the practices that have greater or richer benefit packages seem to do better with attracting clinicians than those who maybe don’t have any benefits or they just have W2 employment with no benefits at all. So I fortunately haven’t had much trouble with hiring but we really ramped up our benefit package this year. So I think that’s a big reason why. That has been what I have been seeing. What about you, Whitney?
[WHITNEY]
I would say Joe, I found that to be the case, well, end of 2020 and going into 2021. It was a challenge. I feel like we’re coming out of that as group practice owners now. More people graduating. There was probably a little bit of a lull, and I’ve heard that from some different people who’ve graduated where they couldn’t do in person so it was pushing things out. I feel like there’s more people available to hire. That could be a little different if you have an insurance-based practice or a cash-pay practice, because the insurance-based practices tend to need licensed people. So that might be a little bit more challenging to find, but I feel like now associate level people are great. Even in my practice, I tried to hire from December, 2020, really into almost the fall of 2021. It was awful, six to nine months of just pushing it and trying to hire. Then I got two really great people right before the end of the year and they’re doing excellent. So I think that is improving, so we can be a little positive about that.
[JOE]
I think that’s the great thing about Group Practice Launch and Group Practice Boss. You get to see on a national level, other people’s struggles, other people’s ways that they think about things. Because I know that when I was mostly just regional I’d go to these licensed professional counselors of Northern Michigan meetings and be like, oh yes, you can’t make any money in Northern Michigan. We’re just a step above poverty in here. I’m thinking, “I’m charging almost $200 an hour and I’m only a few years of being here in Traverse City. That’s not been my experience.” So I think when you can zoom out and find people that are your people, that want to do things you can hear, yes, nationally we’re having problems hiring and here’s how we’re addressing it in Savannah or Lancaster or wherever, like to be able to think about it differently from a, let’s figure this out together on a national level and see what’s working.
[ALISON]
It’s been interesting, too, to work with people. I think a lot of practice owners just think, oh, I’m going to just run an ad on Indeed and I’ll get this flood of applicants. Then they don’t and then they’re just like, well, I guess it’s just really hard to hire people right now. So we talk a lot about like, okay, you’re going to have to be a little creative if you really want to hire people. You need a network and reach out to people personally through LinkedIn and things like that. You can’t just sort of pay a hundred bucks to run an ad and then expect that you’re going to find a bunch of great people. It’s not the hiring environment that we’re in right now.
[JOE]
Yes. Well, the two of you are, actually first I’ll ask you the last question I always ask and then we’ll talk about what’s coming up. So we’ll start with Whitney, Whitney, if every private practitioner in the world were listening right now, what would you want them to know?
[WHITNEY]
If you’ve ever wanted to start a group practice, you should do it now. This is the time that people need services more than ever and so being able to offer that is super important.
[JOE]
Alison, what about you?
[ALISON]
I think that’s the one thing that I think about, like, I wish I would’ve started sooner. I know you’ve mentioned that too, before, Joe, like you wish you would’ve left your W2 job and become an entrepreneur sooner and yes, same with me. So I think once people get into starting a group practice and they realize all the benefits they’re like, oh, why didn’t I do this a long time ago?
[JOE]
Yes, totally. Awesome. Well, the two of you have a webinar coming up on March 2nd at 1:00 o’clock Eastern, noon central, 11:00 mountain, 10:00 Pacific called how to make bank by starting a group practice. What are people going to get out of this webinar?
[WHITNEY]
We walk them through the steps of the money side of things and how having a group practice really does allow you to level up not only your practice, but at your financial gain. So we walk through that process with people of how starting that group practice step by step can really help you in making more cash flow.
[JOE]
Awesome. So you can register for that over at practiceofthepractice.com/bank. Again, that’s practiceofthepractice.com/bank, totally free March 2nd, 1:00 o’clock Eastern. Thank you so much for being on the Practice of the Practice podcast today.
[WHITNEY]
Thank you, Joe.
[ALISON]
Thanks, Joe.
[JOE]
Well, go take some action. If you are inspired, make sure you sign up for that webinar that is coming up right around the corner. So block out on your schedule. Just think different. In grad school, we weren’t taught all this. We weren’t taught about marketing or business or ROI or profit and loss statements. Be surrounded by the people that you want to become. Find that community of folks that can just surround you and you can learn from and grow from and maybe you can even contribute your ideas to, whether that’s Group Practice Launch, Group Practice Boss, or finding your own community, find that community so that you can level up in 2022.

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Thank you so much for letting me into your ears and into your brain. Have an amazing day. I’ll talk to you soon.

Special thanks to the band Silence is Sexy for your intro music. We really like it. And 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, the publisher, or the guests are rendering legal, accounting, clinical, or other professional information. If you want a professional, you should find one.