In a recent post on LinkedIn, I asked why it is so hard to find contractors for private practice. This comment came to me: "Working as a contractor in existing practices is not such a good deal. When I was starting out, I interviewed with a few practices looking for contractors, all with an arrangement to take 40% of my earnings. I would have had little control over who I treated or how my schedule would run. Due to the fact that GPs will usually refer to individual psychologists rather than a practice (and word-of-mouth referrals also tend to be therapist-specific), there's not much benefit in terms of referrals often either. In fact, there can be an expectation that contractors would build their own caseload within the practice, which they could do out on their own. Psychologists make a better income on their own, there is more flexibility in terms of hours, and they can control their work environment and the experience completely for their clients. The benefits of working as a contractor for someone in terms of administration and supervision are also minimal. Psychologists can pay for private supervision and often form peer groups where they can engage in their own peer supervision and support. It is not difficult to rent a room, set up an online booking/invoicing system, do a little marketing, and start."
This conversation consistently comes up with practices. Why should a contractor pay the practice any percent when they have to "do it all themselves." Recruiting is difficult in and of it self, it then becomes more complicated when contractors and principals aren't sure why they have the fee split set at the specific rate.
This is where we continue to tell practice owners how important it is to understand your business analytics. (Check our our webinar for more information around business analytics). When recruiting, we always suggest starting at 50/50 fee share.
This allows for both the practice and the clinician start on an even playing field. What needs to happen next is for the practice to understand that eventually that fee split will change.
It should change. As the practitioner starts to build a reputation in the community (or if they bring clients and referral sources with them) the business analytics are used to determine what each of the fair shares are.
If the practice is drawing in most of the referrals for the practitioner, the fee share can stay the same. But when you have a review in 3 months, if the contractor is pulling their weight and driving their own referrals, it doesn't cost you as much to keep that contractor on board. You must be willing to negotiate their rates.
Other items of negotiation are client attendance, retention, billable hour, session fee and clinician experience.
If your practice is not able to fill the practitioner's diary, you should negotiate a pay rate commensurate to the practitioner assisting you with referrals.
If the contractor is not able to maintain client attendance and has a very high drop out rate of clients, then you should be able to leave the fee split as it is.
In order to understand the ability to negotiate this, it's vital to understand your business analytics. These analytics should have an overview of the practice and then by individual practitioner. For each practitioner, their modality of treatment and therapeutic style should be taken into account for any of the month to month statistics. It is not advisable to compare clinicians to one another.
If you are unsure, as a contractor or a principal, how to go about having these conversations, please don't hesitate to contact us and let us help you during the interview phase or the restructure of the practice. Join our waitlist for our Contractor Conversations Course, here.
