Greetings readers, it’s been 7 years since I first wrote on this issue, and to date it remains still one of the most asked about topics. This month I present to you a re-visitation, and update! According to Salary.com, a Licensed Professional Counselor (or ‘Family Counselor’) working in Cambridge, MA makes a median average of $43,144 per year. A Substance Abuse Counselor (or ‘Chemical Dependency Counselor’) makes an average of
$57,411. In a city where the average cost of a 1500 square foot home exceeds a million dollars ($747 per foot, and expected to grow 3.6% this year, according to Zillow), working as a fulltime therapist is financially untenable. And while Cambridge (where I lived when I went into private practice) is expensive, the math isn’t too dissimilar in other cities across the country. For example: Nobody chooses the profession of counseling for the high pay. But is financial struggle our collective fate? Is the practice of counseling relegated to people who don’t need to make a living, or as a side passion one must pursue separately from a full-time job? I hope not,
and I don’t believe so. I’ve found that with hard work and good planning, earning an income of $100,000 per year in private practice is an obtainable goal. As counselors, we loathe to discuss money–we want to focus on patient care. However, money is a necessary part of keeping the practice doors open. The fact is, you can’t help anyone if you’re out of business, and a counseling practice is precisely that—a business. Hence, in this column we’re going to
look at the financial aspects of running a viable counseling business/practice. Client FeesClient fees vary depending on the location of your practice, and the payer(s) you work with. For example, in Oregon a masters-level clinician accepting 3rd party insurance payments (for example, a combination of Anthem, United Healthcare, and Cigna) might earn $99 for a diagnostic evaluation (90791). Ongoing appointments for individual or family psychotherapy (90834/90837/90847) might pay around $70. For now, let’s estimate that all your clients pay for services with insurance, and your average fee for a 45-minute session is $75. Fulltime CaseloadThe number
of sessions that constitutes a fulltime caseload is hotly debated. Some professionals feel that 30 sessions per week is too heavy of a caseload, while others find that they can comfortably serve 40+ clients per week (I say ‘hotly’ debated because providers who opt for fewer clients have been known to accuse those with heavier caseloads of being unethical. I find 35 sessions per week to be a sustainable number for a full-time clinician. With this number, if you’re providing 45-minute sessions, that’s 26.25 hours of face-to-face work with clients each week. With schedule gaps and practice management duties, you’re looking at a 45-hour workweek. It’s a full-time job to be sure, but not unendurable. In addition, let’s say that you give yourself a modest 4-week vacation each year. Calculations: 35 (sessions per week) x 48 (weeks per year) = 1,680 (sessions per year) 1,680 (sessions per year) x $75 (fee per session) = $126,000 (yearly revenue) Practice ExpensesNow that revenues are calculated, we need to subtract any/all practice expenses. There are large, small, and hidden costs to running a practice: from patient parking, to coffee, to organic tissues, to printer ink. Below is a sample (broad category) expense list.
Furniture, if not financed, will be an initial outlay of several thousand dollars.
This number is often contested as it applies to the costs of professional CEUs. Note that $800 won’t get you to a national conference, but it will cover the basics. There are quality low cost CEU options, one just needs to look.
There’s no ‘correct’ amount to spend on marketing or advertising. In fact, many counselors spend almost nothing. However, for the sake of this exercise, let’s earmark 5 percent of your gross yearly revenue for the marketing and advertising your practice (5% of $126,000 (yearly revenue) = $6,300).
While some counselors prefer to do their own medical billing, you may wish to hire a company to handle it for you. A customary cost is 8 percent of what the billing company collects, which comes out to around 5.5 percent of your gross revenue. Note that it’s 5.5 percent because medical billing companies don’t customarily take a share of client deductibles, or co-pays (5.5% of $126,000 (yearly revenue) = $6,930).
Calculations: $126,000 (revenue) – $25,310 (expenses) = $100,870 (net) And there you have it! A 6-figure private practice. VariablesWhile the above provides a theoretical outline of private practice financials, no counseling practice will perfectly mirror the example. To help you determine with greater accurately your finances, here’s a list of variables that could potentially detract from, or enhance, your practice’s earnings. Possible Detractors:
Possible Enhancements:
As a rule, counselors aren’t motivated by money, or excited by numbers (who enjoyed psych-stats?), but understanding the financial aspects of your practice can help you to have a successful career doing what you love, and helping others. As always, I welcome your questions, and comments @anthonycentore. Can you make money in private practice?Although earning potential will vary depending on the hours you work, your location, and the cost of living, taking home a six-figure salary while operating a private practice is achievable. As medical billers, we often see clients who are trying to grow their business and increase their take-home pay.
How much do therapists make in California per hour?How much does a Mental Health Therapist make in California? As of Sep 28, 2022, the average annual pay for a Mental Health Therapist in California is $69,805 a year. Just in case you need a simple salary calculator, that works out to be approximately $33.56 an hour.
How much do California therapists make?How much does a Clinical Therapist make in California? The average Clinical Therapist salary in California is $59,717 as of September 26, 2022, but the range typically falls between $55,237 and $64,523.
How much does a licensed therapist make in Los Angeles?While ZipRecruiter is seeing salaries as high as $153,081 and as low as $37,350, the majority of Licensed Therapist salaries currently range between $58,917 (25th percentile) to $101,001 (75th percentile) with top earners (90th percentile) making $132,564 annually in Los Angeles.
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