Graduate students in health service psychology gain tremendous training and experience to prepare to practice, but most don't get much education on the nuts and bolts of starting a business. The Monitor spoke with several successful private practitioners about the little-known business and marketing insights that are essential to opening a practice.

1. Spell out your vision. Write down your core values, why you want to be in private practice and what you want your practice to stand for, says Jeff Zimmerman, PhD, co-founder of the Practice Institute, which offers resources and consultation for psychologists. For example, he says, the mission of Southeast Psych, a group practice with offices in Charlotte, North Carolina, and Brentwood, Tennessee, is to put psychology in the hands of as many people as possible to enhance their lives. To that end, they take part in community events and host weekly public webinars on popular mental health topics. "It's about putting into words why you're doing what you're doing," says Zimmerman, who has run his own private practice for more than 30 years. "Once you have the why in place, it becomes easier to make all the other decisions with regard to your practice."

2. Get experience. The best way to establish your own private practice is to work in someone else's for at least a year to get a front-seat look at the reality of practice before taking on all its risk and responsibility, says Larry Beer, EdD, founder and director of Child and Family Psychological Services, a 40-clinician private practice in Kalamazoo, Michigan. A stint working with someone else also offers an opportunity to learn about a particular business model and what you like or dislike about it, so that you can adapt it to your own style. For example, is a solo practice for you? Or would you prefer to be part of a group practice? Even within those categories, there are a variety of options, such as solo practitioners who share office space with others but run their own independent practices, or who lease space within another medical practice. Among group practice models, practitioners can share ownership among all partners, or have a mix of partners and associates. Working in groups has the added advantage of giving you more people to help brainstorm ways of marketing the practice and sharing the financial burden, Zimmerman says.

3. Build a team of advisers. Early on, seek consultation from attorneys and accountants, as well as risk-management, clinical and ethical experts, Zimmerman says. A business attorney can help you determine whether it makes more sense for you to structure your practice as a sole proprietorship or limited liability company (LLC). A corporate accountant can talk you through how to set fees and the pros and cons of accepting third-party payments. When it comes to leasing office space, you'll need the services of an experienced real estate attorney. And if you're hiring employees, you'll want an employment attorney to draft a hiring contract and establish employee disciplinary policies.

Finding a good risk-management company to recommend the best malpractice insurance for the size of your practice is also key.

To find these professionals, word-of-mouth is often your best bet, Zimmerman says. "Ask colleagues who've gone through the process already or post on psychology listservs to get recommendations on experienced advisers," he says. "It's also important to use other mental health professionals as mentors and consultants—people who have been there and done that."

4. Choose your niche. Identify the specialty areas that you want to work with in terms of population and presenting issues, says Lindsey Buckman, PsyD. She runs a solo private practice in Phoenix that caters to lesbian, gay, bisexual and transgender clients, as well as people with chronic illnesses. To help identify the areas that best spark your interests, ask yourself:

  • What areas or populations am I passionate about?
  • Do I have the training I need to serve them well?
  • Is there a market for this kind of practice? Where are the service gaps in my area?

To help answer that last question, scan the psychologist locator in your area and ask your colleagues. "APA divisions are also great for this kind of information," Buckman says, "as is keeping up with the latest trends in practice via the APA Practice Organization and APA Monitor."

Another important way to zoom in on a practice niche is to provide a service or perk that no one else does, such as offering Sunday or early morning hours. "You don't have to do what everybody else is doing," Zimmerman says.

5. Find a great location. Be sure to find a location that will be convenient for your clients. For example, because Buckman works with clients who have chronic illnesses, she knew she needed to be near the city's hospital and accessible by public transportation. A practitioner who serves children may want to find an office near schools. Buckman says she used a realtor to find her office space because she had very specific criteria for location, space and noise. "I wanted to make sure that the area I selected was not already saturated by other psychologists and therapists, and I wanted my office to be within 15 minutes of my home," she says. "The space needed to have the right character and feel, and that took a good bit of looking to find what I wanted."

Consider whether you want a waiting room, a private bathroom and a closet for files, she says. "I also wanted a quiet environment with close access to parking because I didn't want to create another barrier for clients to reach their appointments on time or increase their stress in trying to make their appointments," she says. 

Selecting an office in a safe neighborhood was also important to Buckman. "The clients I see have often felt unsafe in their lives, and I certainly want to be sensitive about the environment I am creating," she says. "Also, as a woman in solo practice, it is important for me to feel safe."

Of course, determining whether you can realistically afford the location is critical as well, Zimmerman says. "An office space may be beautiful, but if it's too rich for your wallet starting out, it's important to find a space that fits your budget a bit better," he says.

6. Do the math. As you meet with your accountant, create a simple spreadsheet listing your monthly business costs, including rent, office supplies, licenses, phone/internet and annual costs spread out over 12 months, like insurance. Once you have identified all of your expenses, decide how much you'd like to pay yourself annually, and how many client hours a week you need to take on and at what amount, to get yourself there. "Then you can determine if that's realistic or not," Zimmerman says. "Many of us don't do the math and instead go off our gut feelings, which are often wrong."

When establishing fees, look at what other professionals who have similar training and experience are charging, says Chris Stout, PsyD, author of the book "Getting Started in Private Practice." If you plan to apply to insurance panels, research the fees you'd likely be contracted for with each company.

Knowing how your first year might look financially will also help you determine if you need to supplement your income—perhaps by renting out your office space on days you don't have clients, or finding a clinician who wants to split the space. At the end of the day, your business needs to turn a profit, Stout says.

"A lot of times psychologists feel funny about making a profit because it feels mercenary, but if you're not making a profit, you're not able to keep your practice sustainable and continue helping your clients."

7. Promote your services. When Beer launched his private practice, he imagined clients would line up at his door—but they didn't. "It takes time and patience, and sometimes that's hard," he says. That's why it's critical to get the word out about your services. One way to promote your practice is to give free talks about mental health concerns at community organizations or the library. "I once gave a PowerPoint presentation, and 12 years later, someone who had been in the audience remembered me and came to see me for therapy," Beer says. Also, connect with local physicians and other health-care professionals who can refer clients to you and vice versa. Buckman calls professionals to say, "I see you're working in this area—I also work in this area; let me give you my information, or take you out to lunch."

Psychologists who do not accept insurance for payment are likely going to spend more time and resources on advertising than those on insurance panels or who are co-located with a referral source, Buckman notes. "Advertising can take many shapes and forms, from being on a psychologist locator site to hosting regular blogs and videos on social media," she says. "But all practices can benefit from a marketing strategy, developed with audience, goals, outcomes and budget in mind."

Additional reading

The Practice Institute

Getting Started in Private Practice: The Complete Guide to Building Your Mental Health Practice
Stout, C., & Cope Grand, L.

Getting Better at Private Practice
Stout, C. (Ed.)

Financial Success in Mental Health Practice: Essential Tools and Strategies for Practitioners
Walfish, S., & Barnett, J.

Handbook of Private Practice: Keys to Success for Mental Health Practitioners
Walfish, S., Barnett, J.E., & Zimmerman, J. (Eds.)

How We Built Our Dream Practice: Innovative Ideas for Building Yours
Verhaagen, D., & Gaskill, F.