Guide to Starting a Psychiatry Private Practice
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Is starting a private practice in psychiatry right for you? This article and the free downloadable eBook included contain the essential tips for starting a psychiatry private practice.
You may have many different reasons for making this bold move, and now you may be wondering where to begin. The first thing to do is to make sure that this is the right time in your career to take this step.
Initially, you may need to take on more expenses until your caseload is full. And, it’s essential to be aware that it can take time to become profitable.
Depending on your location and specific market, it could take months to fill your practice with patients. Therefore, you’ll need to think about how you can make ends meet in the short term. Consider maintaining a part-time role in a clinic or group practice while starting your private practice on the side, in order to allow plenty of time and runway to grow your practice.
In starting a psychiatry private practice myself, one mistake I made was not utilizing available resources, and instead, trying to figure out everything myself by trial and error.
There’s no need to reinvent the wheel when you can follow the process that others have followed before you. There are numerous resources available, such as online courses, Facebook groups, and mentors.
In this article and the starting a psychiatry private practice eBook, I’ll share what I’ve learned about how to open a private psychiatry practice, including the steps required for starting a private practice in psychiatry, the associated costs, pros, cons, and more.
Steps for starting a private practice in psychiatry
Psychiatry and behavioral health practices are very similar in many respects. Although psychiatry practices are started by physicians and behavioral health practices are started by therapists and counselors, the business structure and goals may mirror each other.
Both types of private practices require very little equipment in the office to function effectively. You can also decide to start off virtually, seeing patients via telehealth, and then transition to an in-person practice at a later time.
Generally, there are three main steps to starting a psychiatry private practice:
1. Creating the business entity
You will need to determine the legal and tax structures of your business, and find professionals who will advise you appropriately. You’ll also need a business name and address.
2. Starting your marketing strategy
Developing a logo and HIPAA-compliant website can be fun, and you’ll want to put extra time into both to make sure you won’t need to change them in the future. It may take some time to get the word out that you’re opening your doors, so start marketing your practice early.
3. Physical space and technology
If you’re offering in-person psychiatry services, there are many factors you will need to consider, like location, signage, parking, accessibility, and space. Your practice will also need an electronic health record (EHR), phone and voicemail system, and HIPAA-compliant email or messaging system.
How much does it cost to start a psychiatry private practice?
The first year after starting a psychiatry private practice can be relatively unpredictable. Therefore, I recommend that you keep your expenses as low as possible at first. As your practice grows and you get more patients, you may decide to spend more.
The cost of starting a psychiatry private practice ranges widely.
For example, if you decide to hire a web development company to create your website, you could spend in excess of $10,000. On the other end of the spectrum, you could hire a web designer from a for-hire service for a couple hundred dollars, or use a website builder that’s integrated into your EHR. Virtually every aspect of starting a private practice has a similar cost range.
Be sure to carefully consider and choose your EHR system based on the features you actually need. Getting stuck in an expensive contract with very little revenue can be an added expense you later regret.
Here are some general ranges to expect when starting a psychiatry private practice:
- Business entity: Filing articles, obtaining a registered agent, and obtaining a virtual address can range from $200 to $400.
- Accounting: If you plan on hiring a bookkeeper, a payroll service, and/or an accountant, these services can cost you anywhere between $200 and $400 per month.
- Technology services: Obtaining an email, phone and fax number, EHR, and billing clearinghouse can be $200 to $400 per month.
- Advising services: Working with a lawyer, accountant, or coach can range from $200 to $600 per hour—requiring approximately two to six hours of service during the first month. And depending on how long you retain their services, or how much help you need, it could cost you more.
- Marketing services: Developing professional graphics and creating and hosting a website can range from $100 to $2,000.
This private practice budget template can help you track your spending and guide your decision-making.
How to start a telepsychiatry practice
If you’re wondering how to start a private practice that offers telepsychiatry, rather than in-person appointments, there are various aspects you need to consider.
One advantage to starting a telepsychiatry practice is that it can bring the initial capital investment within reach for many psychiatrists. You don’t need to worry about an expensive down payment or lease, and there’s no need to purchase decor and furnishings—which can add up quickly.
In-person offices also have other added expenses, such as:
- Property taxes
- Office condo association dues
- Cleaning services
- Incidental expenses, such as supplies
- Utilities
It may be wise to consider starting virtually to keep expenses low. Then, as you are feeling more stable in your practice, you can obtain office space if you feel that is the best decision for you. If you’re planning on starting a group practice, or leasing an office in a building with other private practitioners, you may find the in-person company and support of other clinicians beneficial. Or, perhaps you just find practicing in person more satisfying.
To start a telepsychiatry practice, start to familiarize yourself with the state laws regarding requirements for telehealth practice. You should know your state’s definition of a telehealth visit, since there are subtle differences among states.
If video communication is the mainstay of your practice, you should research and select a video-hosting platform that is well-known, stable, and reliable. This can save you time, money, and headaches down the road—and your patients will be more satisfied too.
The pros and cons of starting a psychiatry private practice
Starting a private practice in psychiatry is not for everyone. You need to be self-motivated and relatively comfortable with uncertainty and a lack of structure.
There will not be a separate department for IT or HR to rely on for technical or staffing advice. Instead, you will need to reach out to a mentor or business coach, and rely on your best judgment.
You will need to make the most of the resources you have available to you—like a malpractice provider, or colleague that has experience with their own practice.
Despite your best efforts, there may be factors beyond your control at play—related to insurance reimbursement or other market factors.
Not every private practice is successful, so you may spend considerable effort, only to find it was not quite what you expected.
There will be unforeseen challenges that may take some creative thinking to solve.
It may be difficult to decide whether it is worth it for you to open a private practice, work for a clinic, or join a group practice that takes care of administrative headaches.
If you’re successful, however, you could have an incredibly rewarding journey starting a private practice in psychiatry and continuing to build it over the years.
You will have much more flexibility in your schedule and will not need to ask anyone for time off or to cut back your hours. Instead, you can set your own hours and create the exact culture and environment that is compatible with your personal guiding philosophy and techniques for patient healing.
Building your practice can be a creative outlet and an opportunity for a major leadership position in your community. As your practice grows, word will spread in your community and you may receive referrals from professionals around you, further expanding your network and impact.
Choosing an EHR for psychiatrists
Some EHR systems can cater to the needs of psychiatrists specifically, so it’s important to choose an EHR for psychiatrists that also meets your particular practice’s needs.
As physicians, psychiatrists require features such as note writing, a client portal, billing, and e-prescribe.
Here are some additional features of EHRs that are specific to psychiatrists:
- Group therapy note writing
- Use of the DSM-5 in a diagnostic database
- Physical exam templates with mental status exam terminology
- Prioritization of psychiatric medications in a prescription database
- Optimization of a telehealth workflow for visits and payment collection
- Customizable intake forms, treatment plans, and assessments
Practice management software for psychiatrists
SimplePractice is HIPAA-compliant practice management software with everything you need to run your psychiatry practice built into the platform—from booking and scheduling to insurance and client billing.
Make the most of every day with an all-in-one practice management software for psychiatry. Our integrated tools help you grow your business and care for others along the way.
- Easily prescribe and authorize patient medication with ePrescribe.
- Streamline time-consuming tasks with calendar features, snippets, and more.
- Eliminate barriers to care with our HIPAA-compliant Client Portal.
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