Balancing Service and Profit as a Therapist

In order to have a successful therapeutic practice the therapist (owner) needs to balance time and energy between serving the needs of patients and generating the profit that the business deserves. Allotting time for each set of tasks is important. The reason that one becomes a therapist or counselor is that one wants to help people, to be of service to them in dealing with personal difficulties. One of the most important personal aspects of treating people is keeping their problems separate from yours. And, in regard to your business it has to do with balancing service and profit as a therapist.

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Business Management vs. Professional Practice Management

As a therapist, all of your training, both classroom and clinical, is focused on working with patients, diagnosing, and treating. None of that training and experience helps with managing a small business, which is what your practice also is if you have a solo or independent practice. Whether you expected it or not, you are running a business with one hand while you are treating patients with the other. This means balancing time with face to face patient contact, treatment plans, documentation, care coordination and the rest with monitoring cash flow and profitability. Because you are highly skilled in one area and a novice in the other, balancing service and profit as a therapist may seem overwhelming at the beginning.

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Separating Clinical and Business Processes

A big part of why you are a good therapist is that you learned a system for interacting with your patients, providing treatment, and keeping track of the necessary records while also keeping up with your own professional growth. Balancing service and profit as a therapist requires that you develop a parallel system for managing your business. This means keeping the two facets of your life, the professional and the business, separate at time and blending them when necessary for the success of both.

A large practice handles the business by hiring an employee (or several) to do the billing, handle the bookkeeping, set up and manage appointments, pay the bills, and oversee the cash flow of the business operation. The professional side of the operation takes place in the exam or consulting room. A solo or small therapeutic practice does not have the luxury of hiring support staff to handle these jobs.

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Keeping Clinical Practice and Business Activities Separate

While your therapeutic practice keeps confidential records with patient names and information, your business records should only include amounts owed, dates billed, names, and addresses. Do not mix your clinical and business records. The best way to do this is to keep separate records and management systems with separate entries for each. On the business side we commonly recommend and use QuickBooks Desktop or QuickBooks Online. The reports generated by your bookkeeping system should not include individual identifying information but only business information. Here is where you should keep track of your office expenses, income broken down by type such as cash payments and payments from insurance. Here is where you will track billing, payments, and bills that are overdue.

Just as you allot time for patient visits, documentation, and your continuing education, you should allot time for business management. And, just as you went to school to learn your profession, you need to allot time to learn how to manage your business.  You learned your profession from professionals and this should apply to your business as well.

Clinical Processes

• Time with patients
• Session Notes
• Treatment Plans
  
• Processes for Intake
• Appointments and Reminders
  
• Insurance Clain Filings
• Receiving Client Payments
• Care coordination with other professionals

Business Processes

• Practice Income Tracking
  
• Tracking Overhead and Expenses
• Paying Due Bills
• Keeping Track of Profit and Loss
• Tracking Cash Flow and Budgeting
• Marketing Your Practice
• Paying Employees and Contract Workers

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Unlock Efficiency with Time Management Insights

Knowing how your time is spent is important both for knowing how well you are running your professional practice and how effective you are in managing your business. A “time study” is simple. Just keep track of what you are doing every hour of the day for a week or two. This will give you a good idea of how many “billable” hours you are working versus how much unpaid time you are devoting to managing the business side. This information is useful when you start thinking about outsourcing business functions like your billing and bookkeeping. For example, if you are missing out on ten hours of patient contact for which you can charge in each week it will tell you how much you can spend for someone to do business activities which they will be able do quicker and more efficiently than you can!

An important part of having your private practice processes running smoothly is to understand how your time is spent on the various processes. Also, it is good to know how much time you are spending on the various tasks.  This is where doing a time study can come in handy.  Simply take a week and start documenting how you spend your time and track it.

The other part of tracking your time is that it tells you how efficient you are. It helps you prioritize your tasks, cut out activities that simply take time and do not add to either your income or your business efficiency. It tells you, like with the decision to outsource, when to delegate tasks. And, it can be a cue that you need to automate some of the jobs that you do on a routine basis. There are many useful business apps that save time and money.

And, you will learn where you can consolidate similar jobs so that you don’t repeat activities that could be done in conjunction with other tasks.

As a treatment professional your time is your most valuable commodity next to your knowledge and skills. Track it and then guard it. For help making the business side of your therapeutic practice more efficient and more profitable, contact us at Mental Health Accounting for advice.