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Monday, November 26, 2012


I plan to write about this story because I think a big part of the problem is believing that somehow we therapists have to find a better brand, rather than look at some other factors in play, like the role of insurance -- there is no third party payment for life coaching for example, yet in the article that is presented as an option, so why must we accept that therapy must be paid by insurance?

One thing the linked-to article didn't seem to mention in much depth is pricing. Would an otherwise competent but client-poor therapist get more clients if he or she charged, say, $30 an hour rather than the $100 an hour (which prevails in some markets)? I realize there are a lot of overhead costs and that the $100 per hour is not a "net" profit and that the 50-minute "hour" does not necessarily reflect all the prep-time and post-session time the therapist puts in. But at the same time, lowering prices might be part of a solution, and it might also prove a boon to those people who do not have insurance that would pay for such things. (I'm too ignorant about how insurance operates here, and maybe if someone accepts insurance, they can't charge lower prices.)


Pricing wasn't mentioned because there are far too many considerations that are truly unique to psychotherapy practice to offer a simple answer, but the simple answer is that price is far less influential than one would think.

Obviously, all other things being equal, a therapist might try to maximize profit by finding the ideal price point at any given time, but... well this would be an interesting investigation for clinical psychologist--economist to undertake because it ain't what you think.

Just for perspective, I'll comment on the two fees you picked. I understand that you're talking about market principles rather than the specific fees you mention, so what I'm going to say here in no way shuts down the fundamental question you're asking about pricing. But for the sake of simply being informative I'll mention that most therapists doing good work would want to limit themselves to about 30 clinical hours or less per week. I know some would say fewer hours than that are their reasonable max.

Here I may get in trouble, but I'll say it: a therapist seeing patients at or near 40 hours per week of therapy is doing crap work. I don't care who you are or if you stop reading my blog. The nature of the work, the nature of the listening and thinking, the frame of mind you must maintain and the thinking you must do beyond the clinical hour, all limit how much session time you can spend per day and still do good work.

There are plenty of other parts of practice and practice-related activities that mean you end up spending much more than 30 hours per week on practice and practice-related activities. If someone told me they need to limit themselves to 20 clinical hours, I wouldn't think they were lazy; I'd think they were an extremely responsible clinician. I would not want to be my therapist's 7th or 8th patient of the day, nor should you want to be that patient.

So, 30 hrs x $30= $900 per week=$45k/year.

About overhead/costs which can vary, but things to consider:

No sick pay, no vacation pay. Two weeks off, any sick days, plus holidays, $45,000 becomes $41-42.

Self-pay health insurance that gets extremely pricey as you age. Unless you're lucky enough to have coverage through a working spouse/partner, take another $6,000-10,000 (it gets more costly as you age) and 41-42k becomes 32-33k.

Taxes: not only income tax and Medicare, but we pay both the employee and the employer contribution to payroll tax. So 14+% payroll and Medicare, a couple percent less while the employee-side reduction in rate continues.

Rent. Easily 700-1000 month full-time in Chicago.

Phone, Charged business rate: c. $90/month, that's with no long distance. This is an ever changing situation with the existence of mobile and voip, but there are more considerations than meets the eye when considering changing your phone set up when running a clinical practice.

Furnishings depending upon rental arrangement.

Clean office yourself or pay someone to clean unless it's included in rent which it may or may not be.

Office supplies.

Pricey software depending on the nature of your practice, i.e., involvement with insurance/medicare, your billing practices, assessment kits, software, scoring and supplies.

Professional License

Malpractice insurance.

Professional education requirements and professional development, depending on state.

Years of supervision while practicing: $500-700 month. Once experienced as a therapist, this can be reduced to occasional consultations.

Responsible therapist, years of own therapy.

Pricey professional books


Marketing costs that are increasingly necessary.

Student loans are the reality these days, payments on $50-$100k not unusual.

The numbers can vary, but fixed overhead and variable expenses add up to a lot of money. Again, this doesn't nullify your basic question about price, but just providing a bit of real world perspective.

The practice world has changed dramatically since I started my career. I wouldn't enter the field if I were just starting out. Instead I'd pursue Social Psychology and take a shot at an academic career, certainly no guarantees there either.

I love my work and consider it a vocation. I care very much about people with whom I work. We form relationships unlike any other relationship one has in this life. I get to ponder and discuss with colleagues endlessly fascinating ideas. A discussion of a movie, tv program or a book is informed by ways of thinking that that make everything more interesting for me. The last thing it's about is the money, but the money is necessary and the realities of getting a practice going today make it something I wouldn't want to take up from scratch.

Thanks for your thoughtful response. I of course knew there were extra costs, but (also "of course") didn't know the ends and outs as you've outlined them.

I do think therapy as a practice has a reputation of being only for those affluent enough to pay the rates, the "worried well" (as you mentioned in one post) who are also the "worried rich." And I also suspect it's easy for clients to assume out of existence the very real overhead costs you mention, as well as prep time, which you might not have mentioned specifically but that I assume takes a lot of preparation. That (what I take to be) common reputation is probably unwarranted, at least inasmuch as it's meant as a criticism of therapy instead of as a statement of the market costs.

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