FedSearch - Federated network search engine

Michael Reeder LCPC · @admin

134 followers · 432 posts · Server mastodon.clinicians-exchange.org

TITLE: Costs of Running a Small Business or Co-op

I want to start a conversation on typical costs of a small practice -- be it a co-op, or a business owner employing therapists as contractors or employees.

I'm partly reacting to a comment elsewhere about "mini capitalists taking 50% from all the associates was f$&%^ up" but am not interested in being butt-hurt about it. Instead, this seems an opportunity to discuss costs...

The BEST split I've ever seen out of a small practice (10-15 therapists) gave their contractors 70% of revenue from billing. At the small practice (where I was co-owner) we gave our employees about 50% of revenue from billing. (We had to cover employment taxes & services of a payroll company for employees.)

I'm pretty sure that economies of scale come into play here & larger practices could pay better. We only had 3-4 psychotherapists (plus 2 owners) yet had to maintain the same structures as a larger practice.

Some costs:

1) Therapy Appointment EHR -- $100-$200/month?

2) Cleaning person 2x per month -- $50-$70 per visit for common areas, & this should have been higher. Cleaning a small area in the Baltimore area should cost $70-$150 per visit. We asked our therapists to keep their offices clean & paid them a token extra $10-$20 per month on the assumption that they were doing so.

3) Payroll taxes. 5%?

4) Billing company. We paid an expert biller $20 per hour just to trouble-shoot problem claims.

5) Our office manager (my business partner's husband) was free.

6) Rent for 3 offices. A very low $800-$1200 per month (depending on when as we had 1, 2, then 3 offices). Shared waiting area, kitchen, & bathrooms. This was a steal.

7) Office supplies, bathroom supplies, office furnishings, tea & paper cups, etc.

8) $15 per hour to a credentialing expert. Some companies used to charge about $300 flat fee per insurance company per therapist. (Then there is the issue of therapists who only work part-time or leave quickly after credentialing...)

9) Furnishing, furniture, a few old computers, sound machines, a bit of art & signage, some VoIP phones for those who did not want to use their personal cell phones.

10) Some marketing expenses, including separate Psychology Today profiles for everyone ($30/month X 3-4)

My business partner (& her husband) handled the heavy stuff of buying & moving furniture & setting up offices.

I managed sub-contractors (cleaning, payroll company, billing company -- including getting everyone credentialed), banking, most check-writing, chasing employees for paperwork... I usually put 3-8 hours per week into the business (more before it was up & running) in addition to my own separate full-time practice.

For which the owners got paid: $0
Not. One. Cent.
It took 50% of revenues to keep the small practice solvent.

My partner got a free office out of it (which I was welcome to also). I got nothing. This was about a 3-year endeavor which closed at the end of 2018.

We did shut down in an orderly fashion, transfer all clients to our former employees (who all set up private practices), pay all bills, & split the remaining bank account (getting back about what we had initially put in).

Now the answer to the high costs here would be to either:
a) Grow larger & get economies of scale, or
b) Do more ourselves

Similarly -- most people looking to form co-ops will likely respond that co-op members can split the duties.
YES -- this is a valid answer.

If we had gotten bigger, I would have cut back my full-time practice, spent more time on management & back office duties, & drawn a check from the practice.

You do have to ask yourself what your time is worth however. Let's say an insurance company pays you $60-$110 per session. Should you instead do your own billing ($20/hr. -- paid mainly for when insurance causes trouble), clean the bathrooms ($70?), do credentialing ($15/hr.), etc... Do you want the hours of headache doing these things as a business owner (& pull a bit of profit) or as a co-op member?

I used to be part of a therapy practice of independent one-person businesses run kinda like a co-op. As the last person brought on-board it was my job to keep the building bathrooms clean. This seemed fair to me at first. Then they did not bring anyone new on for 3 or 4 years. That was 3-4 years of keeping *FOUR* bathrooms clean. After that experience, I made sure to always have someone else paid to do that duty.

Just some thoughts on business metrics.

Experts on co-ops -- What do you find the expenses to be? Are you able to pay co-op members better, & if so -- how? Free labor of co-op members? Economies of scale? Long hours for a small management team? Low incomes?

#psychology #counseling #socialwork #psychotherapy @psychotherapist @psychology @socialpsych @socialwork #medicine #co-op #coop #smallbusiness #smallpractice #practicemanagement @psychiatry

#psychology #counseling #socialwork #psychotherapy #medicine #co #coop #smallbusiness #smallpractice #practicemanagement

Last updated 1 year ago

Original post