021: Avoid These 3 Money Mistakes that Make Therapists Want to Quit

June 10, 2024
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In this podcast episode, therapist and host Dr. Jen Blanchette delves into the top three money mistakes private practice therapists make, often leading to burnout and the desire to quit. Drawing from her own experiences and the issues therapists commonly face, Dr. Blanchette offers valuable insights and practical solutions.

  • The first mistake discussed is the failure to recoup earned income, such as not charging for no-shows or unpaid bills. Dr. Blanchette emphasizes the importance of implementing clear cancellation policies and effectively communicating them to clients.
  • The second mistake revolves around undercharging for services, often driven by imposter syndrome and the fear of losing clients. Dr. Blanchette advises therapists to conduct market research, understand their value, and gradually increase their fees.
  • The final mistake centers on therapists’ failure to calculate their financial numbers accurately, resulting in stress and financial instability. Dr. Blanchette recommends creating a budget, setting clear financial goals, and regularly reviewing progress. By addressing these money mistakes, therapists can achieve financial success and find joy in their private practices.

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Speaker A: This is the Finding Joy after Burnout podcast, a podcast for therapists and mental health professionals. Together, we unravel burnout and find our road back to Joy. Here’s your host, Doctor Jen Blanchette.

Speaker B: Hello, therapist. Welcome back to the program. So this month, in June, we are June of 2024, we are having a focus on money. So today I’m going to talk with you about the top three money mistakes private practice therapists make that makes them want to quit. So a lot of this is tried and true from my own experiences, believe me. But also some of the themes that I’ve heard therapists talking about recently of why they’re just feeling stressed out financially. And so I want to help you kind of avoid some of those traps that I have fallen into myself in times past. Okay, so we’re going to jump right in. I think one of the stories I always tell people is that in the pandemic in 2020, I probably saw the most clients that I had seen. And so I did have a part time practice. I saw clients probably. I’m just trying. It’s hard to remember, like, that point, but I think I averaged around 15 to 18 clients at that point in time. And my kids were really small, so I was taking care of children at the. At home. And during the pandemic, of course, that was all the times, because they didn’t have anywhere to go. I realized that in the pandemic, I was seeing as many clients as I had ever seen in my private practice. And I grossed about $80,000, not bad for an income rate. And when I really did calculations and looked at overhead, I had an office. At the time, I was taking home about $50,000, which was close to my salary on postdoc. And so here I am, you know, more than ten years post licensure. And I really didn’t see the payoff. I didn’t really see that I was really benefiting from my private practice at the point. At that point in time. And I think just sitting with those numbers had me really look at the value for my services, the exchange in therapy for the fee that I was receiving, and also running a business. So I really was running my private practice, not like a business. So it was kind of like, okay, well, you can’t come. I get it. Well, just. We’ll schedule next week. And so those missed sessions really, really add up. So let’s jump right into the top three. Number one is not recouping the money you earn. Okay. Many therapists, myself included, when I was in private practice failed to charge for no shows, enforced a strict cancellation policy or follow up on co pays and unpaid bills. We are not the best billing people in the world, my friends, at all. We didn’t go to school for anything related to business, most of us. So understanding that the impact on our cancellation policies and no show can add up to around. I’ve seen some calculations, around $10,000 per year. Let’s just pause there for a second. What could you do with an extra $10,000? I think you could do a lot with that money. I think I could do a lot with that money. So it is not something we should laugh at. To think that the discomfort that we might feel with talking with the client about the cancellation policy is going to be uncomfortable. I’m going to upset the client that might be there. But I think we also avoid those conversations because we don’t have practice in our training, talking about money, talking about how it can impact us financially. So number one would be implementing, so if we’re thinking about what to do is implementing a no show policy. So if we don’t have a no show policy, then we need to make sure we have a clear, written no show policies, a policy for no shows and cancellations. So when I closed my private practice, I went to a no cancellation policy. I know people are like, what is a no cancellation policy? Basically, if you were a client in my schedule, that was your slot, and I expected that you paid that fee. So if clients did need to reschedule or whatever, for whatever reason, I would tell them, okay, well, we could have two sessions next week instead of our regular session time to know that I depended on that client showing up for my own income. So I know that is maybe more of a controversial cancellation policy, but at least think about a 48 hours. So there could be a client you could put in the slot, perhaps. But typically we don’t have, we’re not like a medical doctor where they have patients just ready to put into that slot, which is typically a 15 minutes slot. It’s much easier for a, you know, a primary care physician to put in a, put in a patient for 15 minutes versus an hour. So it’s an hour of our time that we cannot bill for. So really having those policies very clear and then talking about them often. Talking about them often with your clients, why that you need to do this? And even telling them, hey, you know, it really, it costs me about $10,000 a year for my no shows and cancellations. And so for me to be profitable and to you know, have money for my kids dance or my kids soccer or whatever it is that you want to save money for. Maybe it’s a bathroom. For me, I always talk about my bathroom. That hasn’t happened yet. When I get my bathroom, I’m going to, like, share pictures on the interwebs and all the things, because I always talk about, like, that’s one of my money goals. So think about what the impact of this money is. And so I think I can’t stress enough about consistency. So really consistently enforcing these. And it’s uncomfortable to do that for clients. But I think of myself. If I, you know, could not make a appointment with my therapist, I would want her to charge a no show fee or cancellation fee. I’ve told her to do this, and she doesn’t do it. So I had to think about myself and, like, what I would offer to another clinician. Okay, so I thought about making some scripts for you guys. So if you think that would be helpful for me to have, like, a bank of scripts that you could have, like, a cancellation policy, a couple of ideas for that, a no show policy, a couple of ideas for that, and then some scripts to talk with clients about, like, all right, you know, I see that you didn’t show up to your session, and then how to talk about that with clients, how to say, I did apply the no show fee, as we talked about in the beginning of our time together, for the full session fee. If you have a policy like I had, where I rescheduled clients, like, they would have two sessions, like, I’d build them, but then they have the opportunity, if it was available in my schedule, to come in a second time on the next week, then I would do that. So that’s kind of a way to help the client feel like they can get the value out of that no show fee. It’s kind of a little workaround that I found. Clients were like, oh, okay, well, I’ll just come in twice that week, for example. That works, I think, especially if you’re doing a skill based therapy that, like, that I was doing, like, Emdr, where they’re working on very specific things and they’re trying to get to those targets, and so working more quickly is advantageous to the client. All right, mistake number two, not charging enough for your services. So nice story for me. So coming into private practice, I didn’t know what to charge. I just looked around. Okay, they’re charging 125. I think that sounds good. So one of my podcasts said, let’s just vibe out our fee. So I think Felicia, who was on my last podcast, maybe she. On the last episode, maybe, maybe not. Anyway, she was just talking about how, I don’t know, at the agency, I was earning $30 an hour. So maybe I’ll just do 60, because that sounds like a good number. Honestly, that’s how I came into private practice. I really didn’t look at how much do I need to earn? How many clients do I need to earn at that fee? And I vibed out my fee, and I landed on 125. But I took all the insurance under the sun. Some of those insurance panels at that time when I came in, which was probably around 2014, so about ten years ago. So they range from, like, $88 all the way up to. I don’t know what my top end was at that point in time. Let’s say it was like, 120 ish or something like that. So that was maybe the top end of the fees that I was receiving from insurance. And so I really want you to think about looking at all of your sessions like, let’s just take a typical week. I saw ten clients at $100. That’s very easy math. So a total of $1,000. My average session fee is $100. And so the average number of clients that I’m seeing in a week, ten clients, I’m making roughly that thousand dollars a week. Is that enough money for me? And then calculating your expenses, your taxes, those types of things, and just do round numbers. So feel like you can do, like, okay, let me just round numbers up to feel like I can get a ballpark. And then if you need to kind of get more granular, you can. But I think just doing a rough estimation can be really helpful for you. It’s better than no plan. That’s how I went into it. Okay, so what are some reasons why we under charge? Oh, my gosh. I think there’s many. Right. There’s imposter syndrome. For me, coming in as a new psychologist with my clients, I was like, who am I to charge 125? This professional has been charging 125. They’ve been in this career for 20 years, and I’m year one newly minted psychologist. Who am I? So imposter syndrome is probably one of the biggest reasons. I find that clinicians don’t charge enough for their services. And I know there’s a lot of programs out there that will, you know, tell you to just increase your fees, and that is good. On face value, it is a great idea to increase your fees. I think, in practice, for a therapist, there are so many layers. There’s so many layers about fees that we really don’t think about. So we. We think about a number, and that number means something to us. Like, okay, well, if I charge $200, for example, no one’s going to be able to afford that. We’re in a bad market. We’re just. No one’s. I’m not going to get any clients. And so your nervous system starts activating around these numbers because your. Your nervous system is there to protect you. So it’s much safer to feel like, okay, if I’m in this ballpark, where other therapists are, that feels very safe. I’m swimming with the sea of other fish. There is safety in numbers. I’m going to stay with that because it seems, like safer. That makes total sense that your brain wants to tell you that a higher fee feels unsafe. So I think really thinking about, you know, what are the thoughts? What are the feelings in my body around this fee? And I do feel like you need to have some layer of comfort or some sense of comfort in your body about your feet, that, okay, this might feel like a little bit of a stretch, but also, I feel, like, pretty confident in this fee. Like, I can confidently charge this fee. All right. We also fear losing clients. So if we charge $200, for example, versus $100, will we lose out on potential business if we’re starting a new practice, or will we alienate some of our existing clients if we charge that fee? Totally understandable. It’s totally understandable that clients may not be able to afford that fee if we’re private pay only, or if they’re, you know, they don’t have great insurance benefits, for example. Makes a lot of sense. Unfortunately, undercharging leads to burnout, resentment, and financial instability as therapists struggle to cover their expenses and feel undervalued. I’ve read many, many statistics that therapists are the lowest paid, among the lowest paid of the highly educated professions. So we have a high level of education, yet we earn some of the lowest fees for our services. So what I’d encourage you to do is really think about doing some market research about rates in your area and think about where you can offer more value for your services. Okay. Do you offer something that’s a specialty in a particular niche? Is there a way to market yourself in that area to add more value? Just whether that be through your certifications, which clients don’t care about. They don’t. They’re just like, do you treat the problem that I have? Great. I would love for you to do that. I don’t think many clients really look a lot at our expertise, just that we’re licensed, that maybe we have a specialty in trauma or in eating disorders, if that’s your jam. But generally that we know what we’re talking about, that we can help that particular client. Right. Also, we can think about gradual increases to our fee to ease the transition for you as the clinician and also for your clients. So perhaps you think about an annual fee raise and get into that rhythm with clients that, hey, every year I’m looking to raise my fees to, you know, think about being competitive with the rate of inflation. So I’m going to look at the rate of inflation real quick and pause this for a second to see what it is. And prices have gone up, so my fee needs to go up to support my life. And just for some reference, so in 2022, the rate of was 9.59%. And so a lot of us felt that at the grocery store and things of that nature. So for that year, if you haven’t increased them since the pandemic, for example, we had close to a 10% rate of inflation in 2022. And then about three, or it’s roughly about 3% per year. But we had a huge, huge uptick in 2022. So just to think about increase your fees is normal for a lot of professions. So I’ve. Whenever I go to the hairstylist, it seems like those fees are increasing or other things have just gotten more expensive. Going out has gotten more expensive. So it makes sense that we can raise our fees to be competitive with where we need to be, like other service industries are doing. I’ll get off my high horse. That was a little rabbit hole I went down. But I think it was good. It was good for me to hear for myself. Some of this is like my own personal work. Yes, do that, Jen. Okay. And also some, you know, just think about how we can communicate it to our clients in a respectful way, in a way that they can receive well and understand. I think most people would understand that, and some people will take it as a personal attack. You have to consider the audience know that it’s going to be a problem for a small subset of clients, that they will just say no or they will be upset with you. That is not a reason to not do this work. But it’s. We fear that one person, so I can remember on my caseload when I closed my practice, and I had to tell people that I was closing my practice, and I would think about one or two people and how they would have difficulty with that. But I didn’t think about the other clients who were really gracious and gave me cards, and we had beautiful termination sessions and we really had a nice ending to our work. We often think about the really hard parts, which again, is normal for our brain to do, whereas it’s trying to protect us. Therapists, we know this, we specialize in nervous systems. So you have to recognize your own blind spots, that fear is preventing you from doing it. But we have to that you can look at how to protect yourself financially. Lastly, which is most important, we fail to calculate any numbers at all, or the right numbers or anything. So for me, like I told you, going into private practice, I calculated zero numbers. Zero for many, many years. I didn’t touch my website, I didn’t think about marketing. I was just an insurance based practice. And I worked very little too in the beginning years because my kids were really small, I was having children. And that’s the impact for a lot of typically women clinicians is that a lot of times when we’re starting our practices, we have children that we’re thinking of or we’re caretaking for someone in our families. So if you’re not a parent, you’re likely a caretaker or you’re the one that people look to, to do things in your community. So just thinking of that, most therapists really struggle to track their income and their expenses and financial needs. This can lead to so much stress. The amount of posts I see around tax time for therapists, and like the freakouts that happen about tax time, I think we rather we can tend to turtle head with regard to our finances because it’s not something we were trained to do or taught to do, really think about business at all. I think the impact of our ignorance of our financial numbers can result in underpricing your services. Again, not knowing the impact of cancellations stress the financial instability. So all of that can really impact us and then lead to that stuckness, being completely stuck in our private practice for way too long and not having a plan to increase our income. So some solutions for that. So I have a guide. So certainly grab that guide. It’s going to be in the show notes of this podcast. So if you look on the episode, there are show notes. Scroll down and there’ll be a link for that guide for you. So simple, budgeting income and expenses on a spreadsheet can be really helpful, if not just like jot it on a piece of paper. So you don’t really have to do the spreadsheet thing if you don’t want to. The tools. One of the tools I use is quickbooks for tracking my expenses and my income. And it gives you, like, handy dandy reports. I don’t get anything from QuickBooks, but that’s what I use, numbers and then try to look at them on the whole, you know, every quarter or so of how I’m doing with regard to making money. So also thinking about clear goals financially for your personal life, I think you start with your personal life first, because you have to figure out, okay, I need x amount of money to sustain the things that I want in my life, whether that be, you know, your home. So you’re kind of. I use Ramit Sethi’s framework of kind of calling fixed cost. So if my fixed costs are all my bills, my. My housing, and things of that nature, I calculate all that up, all the things that I want to do. So save hirement, things of that nature, and then the things I want, that is really where you want to be. So I think he has a 52 30. So 50% of your should be expenses or fixed costs, 20% should be savings, and 30% should be the things you actually want to do. And so your financial goals are really driven by those wants that is going to help us feel like we can. It means something. Like, money means something when we do that. Otherwise, it’s just like, okay, gotta do this spreadsheet, or, you know, it’s tax time and ****. Like, what do I do? But if we have something we want. For me, it’s my dream bathroom. I talk about it all the time on here because that is something I’m working towards financially, that’s trying to meet that financial goal. Goal. Reviewing it regularly is important. So a lot of times, well, like, I’m going to do the finances and the budget, and we think of tax time, but we don’t think about, like, progress monitoring or really looking at that again, am I reaching that goal? And it’s not. Especially using, like, quickbooks. I can kind of quickly get on there, even if I haven’t looked at it in a couple months. I can, like, do my transactions in a few minutes and then look and see where I am. So reviewing that regularly is really important because it helps you make really informed decisions. For example, if you wanted to start groups or start doing something else, like speaking or other streams of income, you can kind of look at your numbers to see, okay, this choice is actually financially profitable or, you know, doing this contract with the school has been profitable in a lot of ways like I’m not as burnt out and it’s, you know, this many hours and it’s really working for me that can give you some good financial data to see if that’s something you want to do in your practice. As always, you know, certainly seek professional help in assistance from a financial advisor. I’m going to have one on who specializes in working with therapists later in the month, so you can listen into that call in about two weeks. So I’m going to go over those money mistakes that I just talked about. Number one, we’re not keeping the money that we earn. So we’re struggling with cancellations, no shows and really not maximizing the money we actually on copays and things of that nature. So at the end of my practice I did have someone that helped me do all that. That helped me with recouping co pays and things of that, which was really, really cool. Number two, not charging enough for your services. So it sounds fancy to charge more. I get it. It sounds so easy. But in practice, I think therapists need some support to do it. And that comes from number three, calculating your numbers. And I think it’s really starting with. So if I were to say what is the first thing to do? Calculate your personal finances of what you actually need to support your. Why? Like what is the thing you’re working? I have like a million dollars in my retirement account. Says no one ever. That’s more like I’m fearing not having that security net. But I think for most people, like my, for my partner, for him it’s vacations. He wants to take really fun vacations with their family. And I could be like, you, you know what, we could just do a staycation thing and just kind of be bop around and it’s fine. I don’t really care that much about it. I mean, I like to go places, but it probably isn’t one of my money dials that I need to have. But having my home be a certain way is definitely one of those. So thinking about for you what’s important to me and how do I, how do I use what I’m doing to meet that goal? And the good thing with private practice is that we actually have a lot of options. If you’re going to stay in private practice and if you’re not, then looking for a job on the market. I mean, right now is a good time to think about that. I am even thinking about going back into private practice for therapists only. I’ll let you know when that’s happening for sure. But I’m thinking about launching a small private practice in the fall because, number one, I do miss some therapy. Number two, I think I really want to support therapists in this way. I’m EMDR certified therapists, and I know that vicarious trauma and those things really do affect therapists as well. And you were some of my favorite clients. Number three, some of my favorite clients. Right. So I also want to do like a meta. I’m restarting this private practice. And for therapists that are thinking about that, like, what would I. I’ve thought a lot of this about a lot about this. I’m getting excited. If I could do it all over again, what would I do? And so for me, it’s kind of an exercise in trusting myself. I’ve been saying I want to do therapy again for a while. It’s, you know, over a year, and I feel like I’m good at therapy, but I just couldn’t do it in the way of doing it. And so I want to try doing it in a new way and with the clients that I feel like I could really serve, which is therapists and first responders and health professionals. So I will kind of branch out a little bit and probably not advertise all that stuff on my podcast, but just for therapists here. But I have passion and helping in that way with that population. So I think part of it is trusting myself that you’ve been thinking about this for a while, and this is another way you could earn money and really help someone. So why not? So stay tuned as I’m going to think about private practice 2.0 in the fall. Stay tuned for that one because I think it’ll be good for those of you who are like, maybe I do want a small private practice. I really want to maximize my practice. I’m just not sure how to do it. But I still want to do other things. And so I’m not going to have that be my main income stream, but it’s going to be something on the side. So tune for that. I’m excited to share more about it. All right, well, I hope you’ve gotten some value out of this episode. I just want to encourage you. Don’t get scared by numbers. Just use a tool. Use a piece of paper, sketch something out briefly so you can really get some illumination here. Okay. Grab my guide. It’ll be in the show notes. And really look forward to that upcoming episode, which is coming in two weeks with a financial advisor, Ryan Dressau. I think I’m saying that correctly where we’re kind of dive into, from his perspective, what therapists need to look at. All right, have a good one.

Speaker A: Thank you for listening to the joy after Burnout podcast. Be the first to hear new episodes by by following the podcast in your podcast player. This is an informational podcast only. Any information expressed by the host or guest is not a substitute for legal, medical, or financial advice.


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