ACA Blog

Ryan Thomas Neace
Jul 21, 2011

On Being Private Pay Only: 3 Implications and 9 Suggestions for Success

Running a private pay practice sounds so dreamy. People walking in off the street, surrendering cash or credit card numbers. Consenting to paying out of pocket as if money was no object. Oh, how sweet it sounds! With all of the hemming and hawing you hear about insurance these days, you’d think running a private pay practice was the most straightforward, easy step toward easy street. But reality is far more daunting, and it is easy to get discouraged. Here are some implications to being private pay only, and a few suggestions for success. 1. You Must Be Novel. I am becoming increasingly convinced that if you’re not going to take clients who wish for you to direct bill their insurance companies, you must have some kind of game-changing novelty that outpaces the others in some way. Otherwise, at least in my neck of the woods, there are just too many practices still providing in-network services. Suggestions to compete with your insurance-taking cohorts: a. Find a therapist or two in the area who are known to be “in-demand”. Hire them. Pay them more then what they’re getting, and charge more for people to see them. b. Find therapists that practice a particular model or orientation that is unique to the area. If everyone is practicing CBT, find a Psychodynamic therapist. If everyone is secular humanist, find a Christian. c. Find practitioners that are certified in some way – sex therapists, substance abuse counselors, etc. Consider hiring a staff psychologist to do testing. 2. You Must Find Your Market (and It May Not Be Who You Think). This one is tough, based on my own experience thus far. The automatic thought is, “I must find people rich people!” Stands to reason, right? People are going to be shelling out money for services rather than cashing in on insurance benefits, so they must have some stash set aside in a jar marked “Mental Health Needs! Stay out!” Certainly you will want to market to people who are more financially well-off because they possess a greater financial ability to private-pay for services. But remember, wealthy people probably don’t get wealthy by running around looking for ways to pay cash for things their insurance would cover. It is possible that the wealthy may be more frugal than others. In that sense, there is no reason to assume automatically that they WILL come to your private pay practice simply because they CAN. Nor is there any reason to assume they should be your only target population. At The Change Group, we’ve actually surprising number of middle to upper middle class families willing to pay out of pocket for services, so long as: a) there is an acute need that has not been treated effectively elsewhere, and b) we provided good reimbursement documentation. Suggestions for finding your market: a. Instead of focusing so heavily on clients themselves, find the gap in services. In our area, we found that the public and private agency sector have standard outpatient therapy covered pretty well. The public and private inpatient sector is also accounted for well. But, for persons for whom outpatient is too little, but inpatient is too much, there lacks a substantial body of intensive outpatient programs. BAM! b. Pound the pavement every chance you get. Just what you always wanted to be, right? A door to door salesman? Since a better portion of your referrals may come from sources other than clients themselves, a little old-fashioned salesmanship is in order. On more than one occasion I’ve remarked how much sympathy I can now extend to pharmaceutical reps who have to practically bribe secretaries to get to the powers that be just beyond. But there’s really no way around it – print, internet, and other media advertisements can only get you so far. If you want to get the word out, visiting schools, doctor’s offices, churches, etc. to let them know about your practice is just part of the equation. And persistence, I’m told, is key! c. Hang your shingle – see who comes. In our little patch of Virginia, we actually see a surprising number of middle to upper middle class families who would prefer to use benefits, but are attracted to our model or one of our therapists (see #1 above). So, while they technically CAN afford it, they can’t afford to blow it. Most are still filing for reimbursement, so it wasn’t like they had gobs of money set aside. 3. Don’t Get Sidetracked. If my experience is any indication, building a private pay practice is likely to go slower than building one that accepts insurance. Much to our chagrin, we turn away a substantial amount of referrals simply because of the “no insurance” clause. Casting off the shackles of co-pays and deductibles can just be too large a stretch for some. So, while you’re trying to get your books full, it can be tempting to slide-off into any number of other projects that provide a more immediate return – teaching online classes, moonlighting at other practices, etc. Suggestions to keep focused: a. Manage your time well! Continue to keep a calendar, and don’t let the slots where clients aren’t find you sitting around twiddling your thumbs. The tendency during slow times is to fill them up with administrative tasks, billing, etc., or to get too heavily focused on the peripheral vocational items with which you’re involved to stay afloat. Don’t get me wrong – all of these things have to be done. But they can be a convenient excuse to spend all of your “free” time burying your nose in paperwork and avoiding the ugly truth – you gotta get more clients through the door! Fill up the empty slots with phone calls, marketing efforts, meetings with advisors, etc., and actually enter those tasks as “appointments” on your calendar. You can always move them if clients come a’calling! b. Manage your personal finances well! If you’re like me, you very easily grow accustomed to a certain standard of living. But starting a business of any kind is bound to take a toll on your income. When I left my other work to start our practice, I took a significant hit, and thus far have only made back a portion of that income. To boot, I now fund my own medical expenses, the upkeep of my office, and all of the other “hidden” costs of running a business. So, by definition, this means I must make a renewed effort to budget effectively personally and professionally, lest I add unnecessary financial pressure on top of everything else. c. Manage yourself well! As always, I’m a big advocate of therapy and therapeutic activities for therapists. But particularly when running a private pay practice that is on the uphill climb, I need these things even more. For me, this looks like: regularly commiserating with peers running fledgling businesses (especially counseling practices), keeping the lines of communication open with my spouse, eating healthily and staying in the gym, and maybe, just maybe, sitting in the client’s chair every once in a while. Starting a private pay practice is grueling, and you’ll need some support! I really believe you can have a successful counseling practice, and I don’t think you have to accept insurance if you don’t want to. But you will need to follow some basic guidelines, and to work hard to make your practice unique and well marketed, as well as to keep yourself healthy and sane. I hope the framework I’ve laid out here is helpful for you, and I’d love to hear your own suggestions!

Ryan Thomas Neace is a counselor, professor, and entrepreneur. He is the co-founder and managing director of The Change Group. More at

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