Throughout grad school, I always assumed I would accept insurance if I ever launched into private practice. In fact, I’m ashamed to say that I used to be super judgy of therapists who didn’t accept insurance. I thought they were elitist and didn’t care about ensuring that therapy is accessible for everyone.

But here I am running my very own cash-only therapy practice.

Am I being hypocritical? Sometimes I can still let myself ponder that possibility. But after being on insurance panels for a brief stint in 2013, I learned that the reality of accepting insurance was not as glamorous as I’d thought.

The purpose of this post is not to try to “sell” you on whether you should have a cash-only therapy practice or not, but just to give you a little window into my experience to help you weigh out the possibilities for your practice.

When I first started out in private practice, several therapists told me the only way to have a thriving practice is to be on insurance panels.

For all y’all who’ve heard that before: let me tell you it’s a straight up lie!

So why do people keep peddling this false information? I think this happens as a result of others’ insecurities that they project on us, even if with the best of intentions:

Cash only private practice didn’t work for me, so it wouldn’t work for anyone else.

I’m afraid it wouldn’t work for me, so I’m uncomfortable with the idea that you could have success with it.

I think also society, in general, has a tendency to perpetuate myths, even after we observe evidence that they’re false.

My Journey with Insurance-Based Therapy Practice

Full Disclosure: I did not have a good experience being on insurance panels. However, don’t let this deter you! I did it completely the wrong way. I’ll tell you a little bit about that later.

After I completed graduate school, I dove into private practice. My first job was at a cash-only therapy practice. Shortly thereafter I began a second postdoctoral internship at a clinic that primarily accepted payment by billing insurance. Here are some of the pros and cons I experienced in that setting, plus all the things I could have improved:

Pros of insurance-based therapy practice:

• Full Practice. I got busy really quickly. Within just a couple of weeks, I was seeing at least 15 clients in the three days a week that I worked there.
• No Marketing. Piggybacking off of that pro, I didn’t have to do any marketing at all. Potential clients called in because they got our clinic’s name through their insurance provider.
• Accessibility. This is a HUGE pro of accepting insurance and the biggest asset for me. I loved that I could work with many clients who otherwise would not have access to therapy if they paid the full fee.

Unfortunately, this was the extent of the pros for me (can you tell I was unhappy there?). Let’s get into the cons:

Cons of insurance-based therapy practice:

• Lack of Control. I didn’t have any control over what clients I met with. Unless I was completely unqualified to work with a particular client, I had to take everyone who called. I mean everyone.
• Pay. Insurance decides how much they believe the going rate is for your services based on your qualifications and zip code, but they often judge this as much lower than the market rate. From that, they only pay you a percentage of that rate.
  • A further note on pay: from my personal experience, even after going through a thorough pre-approval process to make sure a potential client qualified to apply their insurance for my services, still about 50% of the claims would get denied.
• Wasted Time. I spent around 3-5 hours per week on hold with insurance companies contesting denied claims. Not only did this waste my time, this was time that I could have been meeting with clients. So I also see this affecting pay as well.
• Disrupted Therapy. Even though about half my claims were denied, I often didn’t receive notice of a denied claim from insurance until several months after submitting my first claim for a particular client. Sometimes I would be 3 months into weekly therapy with a client before they found out that they owed me $1500 they didn’t expect to pay. Understandably, clients were often upset and stopped therapy at this point.
• Stigmatization. Insurance only pays when we give an ICD-10 diagnosis, and even then it often needs to be a moderate or severe diagnosis for them to cover therapy services. Not everyone meets criteria for a more severe diagnosis, and for those who do they may not wish to have that on their insurance record.

Recommended improvements for a successful insurance-based practice.

There are a few things I wish I had access to in order to set myself up for success while accepting insurance:

• Get specialized training. Insurance billing is a PROCESS. If you’re thinking of billing insurance yourself, explore coursework specifically designed to teach you how to do it. It’s not a “learn as you go” type of endeavor. Any little error on a claim is cause for insurance to deny the claim.
• Employ someone to bill insurance. Don’t like the idea of spending 20% of your workweek on hold with insurance? You may want to consider hiring someone to do that for you. In my opinion, this is the best way to have a successful insurance-based practice while maintaining your sanity (unless you love that elevator music they blare while you’re on hold). If you work in a group practice, it’s much more manageable to hire one person to do the billing for everyone.

My Experience Running a Cash-Only Therapy Practice

Aside from that one year when I was on insurance panels, I’ve run a cash-only therapy practice for over six years. There are a few pros and cons to consider with this option as well:

Pros of a cash-only therapy practice:

• Work with clients you want to work with. You have the full freedom to select what clients you work with in a cash-only practice. Not only does this make the work more enjoyable for me, but it allows me the emotional margin to work with more clients while staying healthy.
• Work less & get paid more. Between insurance paying a fraction of market rate and denying so many claims, my experience has been that I earn about four times more per hour seeing cash-only clients versus billing insurance.
• Establish yourself as a specialist in your niche. When you hone in on a niche, you have the opportunity to be known as the “resident expert” on a particular topic in your community. As opposed to my experience receiving calls from potential clients experiencing an array of presenting issues when I was on insurance panels, currently nearly all potential clients who reach out to me already fit neatly into my niche.

Cons of a cash-only therapy practice:

• Marketing. When running a cash-only therapy practice, you’re in charge of making sure people find you who are willing to pay you out of pocket. This takes a significant amount of business savvy requiring extra training.
• Build your brand and know your niche. Since there’s no Business School in psychology grad school (though I wish they included some of that), you have to learn the business side elsewhere.
• Growth can be slow at first. Due to the steep learning curve when it comes to running the business side of a cash-only therapy practice, many therapists find that growth can be extremely slow at first.

Recommended improvements for a successful cash-only therapy practice:

• Get specialized training in business marketing. There are many options out there today teaching therapists about the business side of launching a successful cash-only therapy practice (If you want to stay in the loop about my upcoming e-course covering everything you need to launch your private practice, sign up here to be the first to know when it drops!)
• Make the transition slowly while working another job. Making the transition to a cash-only practice slowly while you work at another job that helps pay your bills makes the process so much easier. This offers space to slowly ramp up so you don’t feel like you’re treading in deep water.

It’s important to think through the pros and cons of each of these to decide what might work best for you. For me, the “cons” of a cash-only practice play to my strengths well and the cons of insurance were troublesome enough that I wasn’t willing to continue on that path.

After all was said and done, the best fit for me was to run a cash-only therapy practice. The primary determining factor was the realization that I could see less than ten cash pay clients per week and still make more money than I would while seeing 30 or more clients per week while billing insurance.

I hope you found this article helpful as you decide whether to go through insurance or to run a cash-only therapy practice. Be sure to do lots of research on this one – it will pay off later!

If you’re thinking about taking the plunge into private practice but you aren’t sure where to start, check out my free guide that walks you through everything you need to know to get started in private practice: Start a Private Practice in Counseling.

Until next time, from one therapist to another: I wish you well!

-Marie

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