How to Operate a Group Therapy Practice
I conducted my first counseling session at Neurodiverse Counseling Services on February 14th, 2019. Initially, my intention was to simply operate my own practice, but as other therapists expressed interest in joining, we transitioned into a group practice. Here is some of what I’ve learned about operating a group practice, along with examples of how I’ve applied these insights.
Section 1: Practical Essentials
Before you begin, I’m going to assume that you already operate a solo practice and aim to build into a group. If you have not started your solo practice, check out my other article on how to start a private practice, and I will not repeat these steps in this post.
If you are a private-pay group practice, you may skip the first two steps. However, I strongly suggest you work with EAP and insurance companies, as it will be difficult to support a large enough referral base for a group practice unless your marketing is exceptional. We were private pay for over a year before getting on our first insurance panel, slowly adding new contracts as our team expanded.
1. Obtain an NPI-2 Number
An NPI-2 is necessary to credential your group practice with insurance payers. Apply for an NPI-2 through the National Plan and Provider Enumeration System (NPPES).
2. Secure Group Insurance Contracts
Insurance Credentialing: Get your practice credentialed with insurance companies to accept insurance from clients. Below are some contacts to get you started, though there may be other impactful options depending on your state.
Apply to Cigna as a clinic.
Request participation in Aetna as a facility.
BCBS will only consider groups with 50+ credentialed providers, so you will unlikely be eligible.
Optum will only consider groups with 5+ credentialed providers. You will need to contact Network Management for a group contract. Additional instructions can be found here.
You may also want to consider Headway (this is an affiliate link, and we earn $350 if you sign up through it), which can help manage credentialing with the abovementioned insurance companies. However, I strongly recommend obtaining your own contracts, as you should be able to negotiate higher rates than Headway as your practice gains experience.
3. Choose a Payroll System
A Payroll management system can automate payroll processes, including calculating and filing payroll taxes, ensuring compliance with federal, state, and local regulations, and managing employee benefits such as health insurance and retirement plans. We had previously paid an accountant to manage payroll services, but a more experienced accountant suggested using Gusto (this is an affiliate link, and we earn $300 if you sign up through it) and managing it myself.
4. Decide on Employment Structure: 1099 vs. W-2
Determine whether to hire clinicians as independent contractors (1099) or employees (W-2). We recommend discussing this with an employment attorney and your accountant. You can also read the IRS rules for classifying employees and contractors.
5. Check Your Finances
Initial Investment
Determine the capital required to start your practice, including loans or personal savings.
Budgeting
Create a detailed budget considering all potential costs: rent, salaries, malpractice insurance, utilities, software, marketing, and administrative expenses.
Ensure you have sufficient funds to cover these costs, especially during the initial stages.
Check out these templates from Heard and Simple Practice for examples.
Financial Projections
Develop financial projections for the first year, including best-case and worst-case scenarios, to understand potential cash flow issues and plan accordingly.
Scaling Considerations:
As your practice grows, understand that margins may thin and risks may increase. Larger practices often face significant overhead costs and operational complexities, requiring more resources and careful management to avoid financial strain.
Cost Management
Monitor expenses closely and regularly review financial statements to ensure sustainability.
Adjust your budget as necessary to align with actual income and expenses.
Professional Advice
Consider hiring a financial advisor or accountant specializing in healthcare practices to help manage your finances and provide strategic advice.
6. Determine Compensation
Develop a clear and competitive compensation structure for your clinicians, considering factors like market rates, experience, and benefits. Be transparent with your compensation package (check out our job posting for an example). Employees have a right to know the expected pay before applying to work at your group.
Research: Understand the market rates for clinicians in your area. My goal has always been to pay 10-15% higher than other practices in our area.
Compensation Models: Decide between salary, hourly, or percentage-based compensation. Check the laws or hire an employment attorney to ensure you follow labor laws. This article from TherapyNotes does a nice job of breaking down these options.
Benefits: As your practice improves its financial health, offer benefits such as health insurance, retirement plans, and professional development opportunities.
7. Office Space
Assessing Space Requirements
Clinician Needs: Determine how many clinicians will work in your practice and estimate the number of clients you expect to see daily to ensure the space comfortably accommodates this volume.
Amenities: Consider the need for waiting areas, restrooms, storage for supplies, and possibly a staff lounge.
Lease vs. Own
Leasing: Leasing offers more flexibility if you anticipate changes in the size of your practice. Short-term leases can be beneficial if you are unsure of long-term needs. Leasing typically requires a smaller upfront investment compared to purchasing a property. Landlords usually handle maintenance and repairs, reducing your responsibilities. Most practices will lease.
Owning: Purchasing property can be a good investment, allowing you to build equity over time. Owning your space gives you the freedom to make significant alterations to suit your practice’s specific needs. Owning provides long-term stability without the risk of lease non-renewal or rent increases.
Shared vs. Assigned Office Space
Shared Space: Shared spaces can be more cost-effective, as multiple clinicians can use the same rooms at different times. However, you will need to implement an efficient scheduling system to avoid conflicts and ensure all clinicians have access to the space when needed.
Assigned Space: Clinicians can personalize their assigned space, making it more comfortable and conducive to their style of therapy. Provides a consistent space for clients, which can be important for building trust and a sense of safety.
Since many of our clinicians work hybrid schedules, we have a blended approach in which 2-4 clinicians will share a single office.
Location Considerations
Accessibility: Choose a location that is easily accessible by public transportation and has ample parking for clients.
Neighborhood: Consider the safety and ambiance of the neighborhood, as well as proximity to other healthcare providers and amenities that clients may find useful.
Visibility: A location with good visibility can enhance your practice’s presence and attract walk-in clients.
Section 2: Operations Management
1. Apply Lean Design Approaches
Embrace lean design approaches to optimize efficiency, reduce waste, and continually improve processes within your practice (check out our other post on a more comprehensive look at lean design engineering).
Value Identification: Clearly define what constitutes value from the client's perspective.
Value Stream Mapping: Analyze current processes to identify and eliminate non-value-added steps.
Flow Optimization: Ensure smooth and efficient workflow, minimizing bottlenecks and delays.
Continuous Improvement (Kaizen): Foster a culture of ongoing improvement where employees regularly suggest and implement process enhancements.
2. Establish Clear Policies and Procedures
Develop and implement clear policies and procedures for all aspects of the practice, from clinical protocols to administrative tasks. This ensures consistency and helps manage expectations for both employees and clients.
Create a detailed employee handbook that covers policies on ethics, confidentiality, billing, scheduling, and crisis management. Regularly review and update these policies to reflect changes in regulations and best practices.
We include policies on Documentation Best Practices, Integrating Security Measures for HIPAA Compliance, and Insurance Billing Best Practices. We also have policies on office space use, PTO, and a Supervisory Agreement.
3. Focus on Financial Management
Use bookkeeping software to maintain your books. Our accountant recommended we use Quickbooks (use our affiliate link for a 75% discount off your first six months). I prefer to manage my own books to save $400 per month on something I complete in about thirty minutes each month. It was easy to learn how to create rules to automate the categorization of income and expenses.
Hire a financial advisor or accountant to assist with financial planning and tax compliance. Our accountant helped organize our S-Corp but primarily just completes our taxes at the end of the year. There are no other responsibilities other than answering questions that come up every once in a while.
Review monthly profit and loss statements to ensure the financial health of the group.
4. Marketing and Outreach
Develop a marketing strategy to attract clients and build your practice's reputation.
Ensure the basics are complete.
Create a professional website with detailed information about your services, team, and mission.
Consider online directories, especially when getting started.
Psychology Today is consistently at the top of SEO when people use Google to search for “find a therapist,” increasing the chances of your profile being seen. Some clients may incorrectly assume this is a listing of all therapists in their area.
Use social media and online advertising to reach a wider audience. While I personally do not use paid online advertising (Such as Google or FaceBook ads), these are viable strategies. However, I would suggest outsourcing to an expert as there is a lot of competition in the ad space universe, and it is possible to waste a lot of money with little return on investment if you are uncertain about how to use ads effectively. Additionally, I do not use social media as, for me, this is too labor-intensive and also disinteresting. Others may prefer this route, and it is also a viable strategy. However, it may also be worthwhile to outsource to an expert so as to cut through the noise of therapist Facebook, Instagram, and TikTok.
Engage in community outreach by participating in local events and networking with other healthcare providers. Network has consistently been one of our primary marketing strategies. We also provide free consultation services to the community to further build our network.
Create content that supports the community. This is another consistent marketing strategy of ours. The more content we add to our website, the more visitors we get. Our Self-Study Resources for Therapists, Blog, and Private Practice Engineering webpages consistently bring visitors to our website.
5. Quality Assurance and Continuous Improvement
Regularly collect feedback from clients and staff through surveys and evaluations. For clients, you may want to consider the Scott Miller Session Rating Scale. For staff, you may be interested in the ProQOL to explore compassion fatigue in your group.
Track Key Performance Indicators (KPIs) for your practice. You likely will want to track monthly profit and loss statements, total sessions completed each month, cancellation/no-show rates, average revenue per session, completed intakes and discharges per month, referrals and conversions, and referral sources.
6. Legal and Ethical Considerations
Ensure your practice complies with all relevant laws and regulations, including your licensing board, insurance contracts, and federal and state labor laws.
Check out the Informed Consent we use at our group and suggested security measures to ensure HIPAA compliance.
Consult with legal professionals to ensure your policies and practices are compliant.
7. Referral Coordination
Establish Clear Processes
Develop detailed procedures for managing incoming referrals, ensuring consistency and efficiency. Outline the steps for receiving, processing, and assigning referrals to the appropriate clinicians.
Identify and establish relationships with reliable referral sources, such as primary care physicians, schools, community organizations, and other healthcare providers.
Keep thorough records of all referral sources and track the outcomes of referred clients to maintain strong relationships and ensure accountability.
Hiring a Virtual Assistant
As your practice grows, consider hiring a virtual assistant to handle incoming phone calls, emails, and other referral-related tasks. This helps streamline the process and allows clinicians to focus on providing care. A virtual assistant can help with:
Answering and directing phone calls and emails related to referrals.
Scheduling initial appointments and consultations.
Maintaining an organized system for tracking and following up on referrals.
Connecting Referrals with Clinicians
Develop a system to match clients with the most suitable clinicians based on their needs, preferences, and expertise.
Ensure the referral process takes into account the availability and specialization of each clinician to provide the best possible care for clients.
Implement a follow-up process to ensure clients are successfully connected with their assigned clinician and to address any initial concerns or adjustments.
8. Hiring processes
Determine Hiring Needs
Client Demand: Evaluate the current and projected demand for services to determine how many additional clinicians are needed.
Specializations: Identify any gaps in your team’s specializations and seek clinicians who can fill those gaps.
Capacity: Assess your practice’s capacity to support additional clinicians, including office space, administrative support, and financial resources.
Identify criteria for hiring clinicians
Our criteria are fairly simple – we want clinicians who value neurodiversity-affirming practice.
Establish an application and interview process to ensure candidates are a good fit for your group.
Onboarding
Develop a comprehensive onboarding program to help new hires integrate smoothly into your practice, understand your policies and procedures, and have their questions preemptively answered.
Create an onboarding checklist to ensure completion of all tasks.
For interns, we also include a curriculum to support their educational goals.
Section 3: Leadership
1. Genuinely Care for Your Team
Your role as a leader is to facilitate the growth and development of your team.
Inspire and motivate your team to exceed their own expectations and continuously develop their capabilities.
Take the time to learn about your employees' values and what motivates them. Understand their career goals, strengths, and areas for growth, and help them map out a path to achieve their aspirations.
Mentor and coach your team, empowering them to develop their own practices.
Be a Safe Haven.
Your practice is a place where clinicians can retreat in times of distress and receive support and reassurance - personally and professionally.
Be available and responsive to your team. Maintain an open-door policy where people feel comfortable approaching you with their concerns, ideas, and feedback.
Regularly recognize and celebrate your employees' achievements and milestones.
Promote a healthy work-life balance by encouraging reasonable work hours, offering flexible schedules, and supporting their personal well-being.
Offer your clinicians as many resources and as much compensation as possible. This includes competitive pay, continuing education opportunities, and creative engagement activities.
2. Avoid the Ivory Tower: Continue to Practice Therapy
By continuing to conduct counseling sessions, you demonstrate your commitment to the core mission of your practice and model professional behavior for your team. Even in a large practice, seeing clients weekly can keep you grounded in the realities of therapeutic work.
I still conduct 10-14 weekly counseling sessions and supervise 6-10 clinicians. It is hard to imagine disconnecting further from my therapist identity.
Clinicians are more likely to respect and follow a leader who is also practicing. It fosters a sense of camaraderie and trust when they see you are equally committed to client care.
Leaders who actively practice therapy are better equipped to provide relevant and practical supervision, offering guidance based on current clinical experience.
Regular client interactions help you stay updated with the latest therapeutic techniques and challenges faced in practice, ensuring your clinical skills remain sharp and relevant. Being involved in day-to-day operations and maintaining a connection to the therapist role helps you understand the needs and challenges of your clinicians.
3. Foster Collaboration and Community
Promote teamwork within the group and with other practices.
Develop initiatives to encourage connection and collaboration amongst your team.
Offer consultations and support to therapists who reach out, learning from each interaction.
Adopt a prosocial approach, viewing the community as collaborators rather than competitors.
4. Have a Central Mission and Vision
Define and commit to a central mission and vision.
This statement should genuinely capture the most meaningful aspects of your group. It should serve as a beacon for your team and community, inspiring and guiding them.
Avoid generic or clichéd aims that do not distinguish your practice from others. Instead, represent the unique reasons why you operate a group practice.
A clear mission and vision provide a unified purpose that guides your team's actions and decisions, leading to cohesive and consistent practice operations.
Clinicians who resonate with the mission and vision are more likely to be engaged, motivated, and committed to their work.
