Private Pay or Insurance Clients: What Works Best for You?

One of the more simple ways to get people talking on a private practice forum or platform is to discuss whether you should see private pay or insurance clients. Often, possibly for simplicity sake, the évocateur will come out one way or the other, without any gray area.

In truth, that’s not the reality of how it works.

There’s no doubt that a private pay client comes with the most advantage, from a simple dollar-and-cents perspective. You get the entire fee and you’re able to charge what you want.

But the reality is, as soon as you go private pay, you cannot expect clients to immediately rush to your website or calendar. Instead it takes time.

Private pay or insurance Clients? Here’s how to break it down.

That’s why I break down the experience differently when working with clients. Instead, I focus on what they want to earn, how much time they have in a year and what’s the impact of additional clients.

With that in mind, they’re able to place the insurance panels within the right framework, ensuring they’re serving your long-term goals – not just answering a forum question. Below is how I break this dynamic down.

Begin with Your Income

In order to determine the client mix that works well for you, first figure out your income goals.

Why?

This allows you to evaluate the different fee structures in how they’re helping you reach your other life goals, like paying down debt, increasing investments and saving for the future.

If you make $100,000 a year from private pay clients, but you need $150,000 to reach your goals, how will you make up that $50,000?

While it might be a mix of private pay and insurance clients, it places each extra client within the framework of guiding you to your private practice goals.

Determine the Hours You Have to Work

We don’t work in a vacuum, so don’t estimate your income without placing hours behind your efforts.

Typically, I’ll use the estimate of working four hours a week, for eight hours a day, for 48 weeks out of the year. I choose four days, since most therapists work four days a week. I choose 48 weeks because I want to make sure we build in vacation time from the beginning for all of this.

Using those hours, then you have 1,536 hours (4X8X48) of work available to you in a year.

Here’s the breakdown of going 100% private Pay.

If you want $150,000 in pure private pay clientele, then you have 750 hours of sessions, at $200/hour. Also add in an approximate of 240 hours for administrative and marketing work, and you’re left with 546 additional hours to either increase your income further, focus on other goals, or take more vacation – you pick.

Where Do Insurance Panels Fit

While the above highlights reaching $150,000 with solely private pay clients, it’s not always possible to immediately have the clientele.

How do you make up the shortfall?

Say you can make $120,000 in private pay clients, then that’s 600 hours at $200/hour.

Then, say, the $30,000 is made up of insurance clients at $100/hour. That would be 300 hours. Add that to the 600 hours, plus 240 for marketing and admin, you’re still left with nearly 400 hours available to you.

Here’s the breakdown, when mixing in insurance CLients.

That’s key, because you’re still finding time to invest in increasing your private pay clients, in this case. But it’s not taking so much time, where you’re working day or night.

With the numbers by your side, you can feel confident and comfortable exploring your additional clientele however you see fit.

It doesn’t mean that by using the insurance panels now, you will do so forever. But it can provide you with the stepping stone to reach your private pay client goals.