How to start a private therapy practice

Private practice therapy business licenses

Regulations vary by state and local municipalities regarding business licenses. Research your state and local laws regarding operating a business to best understand what you need to do. 

Private practice therapy insurance

A private therapy practice needs several different types of insurance coverage. 

The policies may be available from one company or you may need to find separate companies. 

• Malpractice (also referred to as liability): Provides coverage for the therapy services provided
• Cyber Liability: Provides coverage for any breach of electronically stored information
• General Liability: Provides coverage for any injuries or damage to visitors to your office

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Money Matters

Most therapists do not want to start a private therapy practice because they love numbers, finances, and accounting. The financial components of a practice can be daunting, stressful, and confusing. However, gaining control of your business finances is a necessity for running a successful private therapy practice. It may help to consult with a business counselor, coach, and tax professional while creating your budget and learning about the financial aspects of your business. 

Private practice therapy fees and payments

Therapists can operate their practice with various different fee structures. Some therapists decide to take referrals from insurance companies. They get credentialed with a variety of insurance companies and accept contracts with set fee schedules. Other therapists prefer to not work with insurance companies. They set a fee that works for them.

It is a very personal choice and you can read much about the advantages and disadvantages of each style of private therapy practice. Making this decision is an important step to take as part of establishing your budget and financial plan. It can help you to gain a better understanding on planning for the income portion of your budget. 

Private practice therapy credentialing

If you decide to accept insurance, then you need to get credentialed with insurance companies. You can approach insurance credentialing by hiring a company that does most of the work involved with credentialing. You can also choose to contact insurance companies and work through the steps needed to complete the credentialing process. For many insurance companies, the process can be tedious and take several months to complete.

Private practice therapy fees

If you decide not to accept insurance in your private therapy practice, then you’ll need to determine your fee per session and if you will offer any sliding scale slots in your practice. 

Private practice therapy budgets

Financial decisions will be guided by your budget. Your budget will likely change for several months in the beginning of planning and implementing your business practices. That’s OK. Running a private therapy practice is a learning experience and you will most likely accrue unexpected expenses. It can help you to have a time set aside each month for a budget review to make adjustments, add in new expenses, and remove or eliminate any expenses. 

Some common expenses to consider include:

• Office rent
• Practice management system
• Billing software or billing company
• Phones
• Internet
• Bookkeeping and accounting expenses
• Website related expenses
• Marketing expenses
• Office supplies
• Domain registration 
• Liability insurance
• Payroll fees
• Continuing education
• Licensure (professional and business licenses)
• HIPAA compliant software packages (ex: email, telehealth, cloud services)

As you work through your budget, the information you learn will help to make some other important decisions such as how much rent can you afford? How many hours will you need to see clients to earn your desired income?

Time To Open An Office

So now you have created the building blocks for your business. It’s time to work on opening your private therapy practice office and seeing clients. 

Private practice therapy office locations

Selecting the location of your office is a big decision. It can also be a fun and exciting decision. It may help to first do some market research regarding therapists in your area who provide similar services. This information can help to guide your decision on the best location for your office. 

Once you narrow down your choices for a physical location, then it’s time to begin looking at properties within the price range you determined in your budget. 

Some important things to consider when selecting the exact office are:

• Secure, private, confidential space for your sessions (also needed for virtual sessions)
• Waiting area for clients
• Handicap accessibility
• Accessible to public transportation
• Parking availability
• Location of bathrooms
• Internet accessibility
• Extra charges to consider (ex: coffee/tea service, fax service, cleaning service)

Co-working spaces have become popular options in many communities. Keep in mind that you need a private, secure, and confidential space to see your clients. Many co-working spaces do not offer such options or charge a premium rate for it.

Decorating your office can be a fun and expensive project. The decorating style in your office space sets the tone for your clients so take some time to consider the style and atmosphere you want to create.

It’s also important to keep in mind the furnishings and decorations should be appropriate for the clients you expect to see in your private therapy practice. For example, if you will be working with children and families you will need to have appropriate seating, therapy tools, etc. 

Practice Management Necessities

There are important puzzle pieces that each practice needs to run smoothly and effectively.

Private practice therapy contact Information

In today’s world, people may contact your private therapy practice in a variety of different ways. It’s important to decide how you would like for clients, prospective clients, and other business contacts to communicate with you. 

Phone

It’s best practice to have a separate business phone number for your private therapy  practice. A mobile phone is basically a computer that we carry around wherever we go, so you must follow HIPAA guidelines regarding your phone. 

Some important suggestions to keep in mind regarding your phone and HIPAA are:

• Keep your phone password protected and locked at all times.
• Do not let anyone else use your phone (including your family).
• Do not keep client contact information stored in your phone.

Taking a HIPAA training course for a private therapy practice can help to provide you with necessary information regarding practices for all sorts of components of your practice, including phone usage.

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Fax

Some therapists may find it helpful to have a fax line. Some insurance companies still communicate by fax. They may send authorizations by fax, request claim forms by fax, or send requests for documentation by fax. If you decide to use an electronic fax service, it must be a HIPAA compliant service that offers a Business Associate Agreement. 

Email

You should have a separate email address for your practice. For marketing purposes you may want to consider having an email address associated with your domain name. This way, your email serves as another way to communicate about your private therapy practice and connect the recipient to your website. 

When sending emails, you need to follow HIPAA guidelines. Make sure the email provider you choose offers you the opportunity to sign a Business Associate Agreement.

Private practice therapy management systems

A practice management system, such as Theraplatform, is a computer program that automates different processes of your private therapy  practice into one streamlined platform. A practice management system can save you a lot of time and a lot of money. Of course, your practice management system must be HIPAA compliant and offer a Business Associate Agreement. 

Some of  the functions of a practice management system include:

• Documentation
• A secure way for clients to complete and sign paperwork
• A place to safely and securely store credit card information 
• Process credit card transactions
• Process insurance claims
• Create invoices and super bills 
• Calendar function that can securely sync with your website or other calendars
• Securely message with clients
• Automated appointment reminders
• HIPAA compliant telehealth platform

Some practice management systems offer other benefits such as webinars, blogs, worksheets, and community forums.

Paperwork

Not many therapists enter private therapy practice because they love paperwork. It is a necessary and critical part of private therapy practice. The role of paperwork begins at intake and continues through discharge. A practice management system can help to streamline your paperwork and documentation processes. Most of them will offer some standard forms and also allow you to create your own templates to use.

Private practice therapy intake forms

The intake process for clients should include certain forms. You may want to consult with an attorney regarding necessary information to collect at intake, provide to the client, and what signatures to gather. There are several companies that put together paperwork packages for private therapy practices that you can buy. 

Some of the important forms to include in your intake packet are:

• Informed consent
• Cancellation policy
• Financial agreement
• Telehealth consent
• Social media policy
• Electronic communication policy
• Release of Information
• Privacy practices

Based on your scope of private therapy practice, they may be other necessary and important forms that you should have clients review and sign.

Initial Assessment

Your initial assessment begins your treatment process with new clients. You can also conduct assessments annually or other critical points in treatment. The information you gather during the assessment will help you to develop the treatment plan and guide your treatment process. You may also want to include some common assessment questionnaires like a PHQ-9, GAD-7, or other assessments appropriate for your private therapy practice.

Progress Notes and Treatment Plans

The dreaded progress note and treatment plan duo! Both are necessities in the documentation standards for a private therapy practice. The practice management system should help to make documentation a less stressful process by integrating checklists, interventions, etc. 

Private practice therapy policies and procedures

Just like any business, you will need to create a policy and procedure manual for your practice. Even if you are a sole practitioner, it is an important part of your business operations. The policies give you a standard of practice to follow, may offer you some liability protection when you follow them, and communicate to your clients important policies.

You can do some research online and find some example policies and procedures to individualize and create for your private therapy practice. You can also find some available for purchase from various companies. Make sure that anything you use as a guideline or purchase is specific to your industry practice as well as to your state. 

Some policies and procedures to consider for your private therapy practice are:

• Missed appointments
• Late cancellations
• Court appearance policy
• Fees for other services
• HIPAA
• Communications policy
• Therapist availability
• Social media policy
• Therapist sick policy
• Suicidal client procedures 
• Violent or homicidal client procedures

Of course, you will likely see a need for other types of policies and procedures based on your scope of private therapy practice, size of your practice, and services you offer.

Marketing 

Your marketing message is how you will bring new clients to your practice.  Through marketing efforts, you will create your unique message about your private therapy practice that will help you find your clients and then engage with them to maintain an effective relationship. 

As you begin the marketing process, create a marketing plan for your practice. The plan should be fluid and allow you to make changes as you learn more about your private therapy practice, marketing strategies, and where your strengths lie.

Private practice therapy branding

Branding helps to set your practice apart from other businesses. 

It should define more about your private therapy practice and should be clear and consistent across all your marketing platforms. Branding can incorporate a:

• Color palette
• Logo
• Slogan, phrase, tagline, hash tag

Some therapists may hire a professional such as a graphic designer to help to create the branding for their practice. Other therapists may choose to use different software available and develop their branding independently. Whichever option you choose, branding can always change as your private therapy practice grows or your vision changes.

The Digital Space

Your marketing plan should incorporate online marketing strategies related to a website and social media. This online space can help to target clients related to your niche and then engage with them to help build your private therapy practice. It gives you the opportunity to speak directly with potential clients, current clients, and other people in the community about your unique services and how you can address their needs.

Websites

Your website should clearly represent your practice to the public. It communicates the message about your services, who you are as a therapist, and how you can help people. It should incorporate your branding and speak directly to the public with your unique voice. 

Your website should also provide visitors with additional opportunities to connect with you and further develop a relationship with you. You can create this opportunity by adding relevant blog posts and resources that are consistent with your private therapy practice. Your website can also offer accessible features for clients such as online scheduling.

Social Media

Social media gives you the opportunity to speak directly with followers interested in your service.  It should be an integral part of your marketing plan. Different client populations hang out on different social media platforms. Doing some market research on the niche you serve in your practice can give you some insight into where you should focus your time and money with social media.

Using social media most effectively can be a learning process. You may want to consider doing some research, attending training courses, or consulting with a social media manager. As with websites, you may choose to manage your social media on your own or contract it out to another professional who can manage your social media on your behalf.

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Networking

In-person networking remains a highly effective way of marketing your private therapy practice. Networking involves attending events where you have the opportunity to interact with other professionals and talk about your practice. Networking can happen at an industry-specific level (ex: therapy related conferences, meetings, or workshops) or a more general level (ex: larger networking groups, chambers of commerce meetings, serving on boards). Networking gives you the opportunity to build your business and learn about other resources that you can offer your clients.

There is much to learn about when opening a private therapy practice. 

Fortunately, the private therapy practice community offers many opportunities for learning, support, and consulting. Some important trainings you might want to consider include:

• HIPAA
• Basic bookkeeping
• Documentation
• Time management
• Marketing
• Social media
• Website

As you work through the business and practice building processes, you will familiarize yourself with new information and face some challenges. Don’t give up! If you continue to learn, work through the challenges, and make changes, you can reach your dream of building a successful private therapy practice. 

"So, never worry about failure. It's GONNA happen. But that's okay – go ahead, take chances … and you might just find that what feels like failure isn't failure at all. It’s what inspires you to dream even bigger."

Kermit The Frog

Sources

Centers For Medicare and Medicaid Services. “NPI: What You Need to Know.” March 2022. Accessed August 10, 2022.

"Find Your Mental Health Niche to Supercharge Practice Growth." Brighter Vision. Accessed August 8, 2022.

Internal Revenue Service. “EIN Assistant.” Accessed August 9, 2022.

US Small Business Administration. “10 Steps to Start Your Business.” Accessed August 9, 2022.

More resources 

• Therapy resources and worksheets
• Therapy private practice courses
• Ultimate teletherapy ebook
• The Ultimate Insurance Billing Guide for Therapists
• The Ultimate Guide to Starting a Private Therapy Practice

Free video classes

• Free mini video lessons to enhance your private practice
• 9 Admin tasks to automate in your private practice

Information in this guide serves as helpful guidance in building your private therapy practice. It is not legal or business advice. It is recommended that you consult an attorney and tax preparer when appropriate or necessary.