Did you know that expanding into a group practice could kill your practice?
A group practice could also be an amazing source of income for you now and in the future. A successful group practice doesn't just happen, it requires thoughtfulness, and great planning to ensure a healthy, happy transition.
Group Practices Can Be Tricky
Did you know that some therapists make less running a group practice than people running a solo practice? They work longer hours, spend more time marketing, sometimes spend just as much time with clients, they lose out on sleep... and they may not be making money. Here are a few issues to watch for when designing a group practice:
You put your employees first
We are not saying not to care for your employees- but you need to take care of YOU too! This means taking care of your energy needs, your financial needs, your space needs, etc. If you aren't healthy and happy in your private practice and doing well financially- it is impossible for you to create a happy, healthy, sustainable practice for your group.
You put your employees second
Ok... I'm being a bit silly. However, I've seen therapists who employed other therapists and never ran the numbers. What do I mean by that? They are literally paying their employees below the poverty wage, but expecting them to do amazing work. Your employee can't do great work consistently when they are worrying about paying the bills. You need to create a scenario in which everybody is happy and healthy. And yes, this includes if you are employee pre-licensed therapists. Remember, someone who has completed their degrees can't live on student loans anymore- they are expected to make a livable wage and start paying BACK loans within 6 months!
You Expand the Problems
Any process you have as an individual that isn't rock solid is going to get bigger when you expand into a group practice. In fact, some processes that worked just fine as a solo-therapist won't translate effectively into a group practice. Before you bring on another employee- be sure to get your practice as streamlined as it can possibly be. A secondary benefit of this is that you will actually improve customer service and your clients will get more time with you!
You Don't Really Calculate the Return on Investment
We talked about calculating return on investment for therapists previously. Calculating return on investment in a group practice is much trickier. I wish I had an easy calculation for this one. I developed a fun excel spreadsheet for the Business School Bootcamp for Therapists for our group practice therapists because it can get pretty tricky.
Be Honest About What Running a Group Practice Takes
You need to be honest about how much time it takes to market additional people in your practice, how your caseload might shrink, and calculate the top and bottom income of each group member. While having an employee who can only take 5 clients might make you feel less anxious (easier to fill) it also limits the ROI you can get from marketing this individual. Also, depending on the supervisory needs of the individual- I've talked to MANY therapists who realized they were LOSING money on employing people. Make sure you have a clear system and you have all the numbers in your handy-dandy business plan! Don't have a business plan yet? Check out our mini business school bootcamp for therapists and start taking control of your business.
Simple ROI for Hiring One Therapist Into Your Practice
Now- let's do a simple ROI for someone who is hiring just one employee. Let's say that person is bringing with them 3 weekly clients at $125 a session ($1500 a month gross). The goal is 20 hours per week, and the owner of the practice needs about 5 hours a week to market and provide oversight and training to this person- hours that mean dropping down their caseload by 5.
Monthly expenses for worker's compensation, payroll, payroll taxes, etc. are about $125 a month. Even though it looks like there is more $ coming in-without expanding past 3 clients- this is actually still a loss- because the owner could be seeing 5 clients a week at $150 a session ($3k per month). If the split is 60% to the employee and 40% to the owner ($50 a session to the employer) at 3 sessions a week there is a loss of $2,525 for the owner!
The employee needs to be seeing about 16 clients per week to break even. If the employee is seeing a full caseload of 20 clients the additional "passive" income would be about $800. Of course, over time, the 5 hours a week may reduce as things become streamlined which would create a bigger return on the investment of time you put into training and marketing your employee!
Is Expanding Into Group Practice the Answer?
Wow... this isn't feeling so simple is it? Running a group practice is fabulous and powerful, but many therapists expand without running the numbers. Realize that you are becoming an employer, and that there are a lot of things to consider to ensure you sustain the work/life balance you need to be joyful and happy!
Are you already in group practice? Share your advice below. If we get enough group practices sharing advice below- we might even feature you in a future post! Do you have questions about expanding into a group practice? Share them below!