Why and How to Stop Taking Insurance in Your Private Practice
If you're tired of dealing with the limitations and frustrations of accepting insurance in your private practice, you may be ready to transition to private pay. This guide is written based on my clients' experiences switching from insurance to private pay. It will provide you with the steps necessary to successfully transition away from insurance and build a sustainable practice that meets the needs of your clients and your business. Let's dive in!
The drawbacks of accepting insurance in your private practice.
There're two ways of filling your caseload:
Accepting clients via insurance panels.
Marketing to attract private pay clients.
Both ways are viable in building your private practice and filling your caseload. And while marketing to attract private pay clients demands time and some financial investments, there are a number of drawbacks to working with insurance.
In fact, according to some sources, only about 20% of therapists on Psychology Today accept insurance.
Insurance companies often dictate the length and type of treatment, which can limit your ability to provide the best care for your clients. Additionally, the administrative tasks, and the non-billable time you spend dealing with insurance companies, can significantly reduce your paycheck. You end up spending unpaid time you could have spent with clients on the administrative minutiae.
And when you do get paid, the reimbursement rates are often lower, driving you to see more clients to have ends meet and sustain your practice.
How to stop taking insurance in private practice: making the transition
For many therapists transitioning to private pay is not only a financial matter. Often it poses a dilemma, creating a barrier to access to treatment for their clients.
Providers who go into the mental health field do so because they want to help people. Transitioning from insurance to private pay may reduce access to clients who don't have the means to pay your full fee. That said, continuing to take insurance and having to see a large number of weekly clients may backfire in the long run.
In the system of taking insurance, you may end up working with clients who are not the best fit for your practice which may lead to burnout and professional dissatisfaction. So you're not doing anyone favors by remaining in insurance panels.
Conquering this mental roadblock is just the first step. Next, you'll need to plan your communication with your current insurance clients. Miscommunication can lead to a loss of a long-term client who would otherwise stay in your private pay practice.
Here's an example of a conversation I had with a friend of mine a while back. My friend complained that her therapist of several years decided to move away from taking insurance.
"I just don't know how I can afford her, but I really don't want to look for a new therapist." My friend said.
"Why don't you call your insurance company and ask what portion it will cover for a therapist out of network?" I asked.
To my surprise, my friend said that it didn't even occur to her to do that.
What surprised me even more, is that the therapist didn't offer this information to her client whom she was seeing for several years. Here was a situation in which a long-term client relationship could potentially be lost. Ironically, this relationship wouldn't be lost because of the transition itself, but because of her poor communication.
That's why preparing for client conversations is crucial in your success to transition from insurance. You need to make sure to give ample notice about the change to your current clients so they can prepare themselves when the time comes.
You may also consider doing this in stages, first transitioning the new clients and later the "older" clients. If you decide that you can manage it, you may also allocate a number of spots to sliding-scale clients who would otherwise lose access to care.
The most important element of this process is establishing your fees and sticking to them. To gain confidence in your fees, you'll have to look at other providers in your area and examine the weekly workload you'd like to have. This will give you an idea of your practice's sustainability and your future profits.
Next, you'll have to explain your transition to your clients with their benefits in mind and start marketing your private pay practice.
Explaining the benefits of private pay vs insurance
As a clinician, you're trained to think in professional terms, and your business decisions are often a reflection of your professional thinking.
But your clients aren't trained in your profession. They don't know what options are available for them when you make the decision to switch from insurance to private pay. So if you decide that you'd like to keep a long-term client, it's your duty to explain all the avenues they can take to keep seeing you.
It's true that many people have a high deductible for out-of-network services, in which case they need to be made aware of the benefits of becoming a private pay client. But remember, most clients stay with a therapist because they like them and they don't want to look for someone else. Not everyone may be your ideal client, but if you want to keep them, regardless of the business decisions you'll be making, you need to be proactive in retaining them.
There's no guarantee that every one of your insurance clients will stay with you after your transition to private pay, but you'll be able to keep a portion of your clientele if you show transparency and care. Here's how you can handle the communication:
Spend time explaining all the payment options that are available to your client that would make it easier to afford your services. Just like you, your clients don't like dealing with insurance claims and they need to be armed with as much information as possible when they call their insurance.
As I mentioned earlier, go over the benefits of paying you out-of-pocket. For example, most people don't know about the difference between disclosing their diagnosis to an insurance company and keeping therapy sessions private.
Consider incorporating a sliding-scale option for your practice. You can determine ahead of time how many people you can offer it to and do it strategically. A loyal client will appreciate the gesture and will likely recommend you to someone else or remain with you longer.
If your client decides that none of these reasons are convincing enough to pay out-of-pocket for therapy, make sure you talk to her about her next steps in finding a new therapist. It is not easy for a person to find the right therapist from an insurance database. Often it is a frustrating process that involves unanswered calls and a trial-and-error approach. If you can, recommend a colleague that takes insurance. It might seem that you are losing a client to your competition, but in essence, you create a good existing experience for your client and open a referral opportunity with your colleague. You are also leaving an open door for your client to return to your practice if she decides to pay out-of-pocket after all.
Setting your private pay fees
If you're wondering how to stop taking insurance in your private practice, you need to dedicate some thought to establishing your fees.
As a private pay practitioner, you're in charge of commanding your rates but picking a random number that just sounds good is not a sound strategy. Your fees are usually dictated by several criteria:
The market. That means looking at other private pay providers that offer similar services for a similar niche as yours.
Your brand recognition. Simply put, it's your reputation and people's awareness of your services. If you're a known provider with a strong referral network, you'll be able to charge higher fees right away.
Your lifestyle expectations. This element is no less important than the other two. Calculating how much you would need to make to sustain your business, provide for your family and pay those student loans will help you determine your fees.
Your workload. This is as simple as figuring out your capacity to see clients. Some therapists have the stamina to see 25 clients a week, while others can only commit to 12. There's no right number, only what works for you and your practice.
Marketing your private pay practice
As I mentioned at the beginning of this article, the only way to attract private pay clients is through marketing.
Unlike being paneled with insurance, you won't be sent new clients all the time unless you work on attracting them yourself. If it sounds a little scary, it needn't be. There're many ways you can market your private pay practice on any budget. Bet here's a simple list that will help you get started:
Start creating your online presence by building a website.
Network with providers that complement your practice's niche.
Reach out to local publications to have an article written about you.
Invest in ads, both online and offline.
All this requires some legwork, but you don't need to do everything at once. And if you feel that you need help figuring it out, find a professional to guide you.
You can start now, by booking a free consultation by clicking below.
Tips for success in a private pay practice
The extra time you spend with your client, trying to smoothly transition them from insurance to private pay, is an investment. Generally speaking, retaining an existing client is less expensive than finding a new one. Announcing the change in your practice billing without handholding your clients throughout this process is denying yourself the opportunity to work with a client who trusts you and looks forward to your sessions together.
One key tip is to focus on providing exceptional customer service which means offering flexible scheduling, prompt communication, and consistently asking for feedback as a way to improve your relationship.
Finally, it’s important to set clear expectations and boundaries with clients regarding payment and cancellation policies. No matter how daunting the topic of money is for you, protecting yourself and managing your clients' expectations is the number one priority for your success.
