The Practice of Therapy

Gordon: Well, hello everyone. And welcome again to the podcast. And I'm looking forward to you hearing from Carla Titus. Welcome Carla. Thank you for having me. Yes. Carla and Carla is located in I believe you said Portland, Oregon. Yes. Good, good, good. So as I, as I start with everyone, why don't you tell folks a little bit more about yourself and how you've landed where you've landed?
Carla: Yeah, my journey starts with a mom who's an accountant and me knowing that I didn't want to be one so but I was good with numbers. So I decided to go into business and obviously in business finance is the profession I chose. I like money. I was good with numbers. So I figured might as well. And leverage those strengths.
And I started working in corporate about 11 years ago, doing all the finance roles from, you know, financial analyst all the way to senior finance manager and controller. And I found that it was very rewarding to be able to help businesses understand the financial side of what was happening of the decisions they were making and the impact that that might have.
And so I decided to bring that same Corporate financial tools to a small business owner because I realized how much of an impact it could have to those small businesses that don't normally get access to this level of expertise, the support around the finances. Honestly, finances are not even talked about much.
In the world of business is really more about accounting or bookkeeping. And we kind of forget about this forward looking forward planning function that is so critical and important in driving the business to the goals that they want to achieve the growth that they want to see and ultimately the profitability that we need to have to stay in business long term.
Gordon: Yeah, yeah. Well, you brought up something that's interesting that I think maybe our audience might like to hear the distinction. I know, even in my own mind, when I think of finance, I automatically think of accounting and bookkeeping and all of that sort of thing. So how do you distinguish between, you know, thinking about finances versus thinking about accounting and bookkeeping?
Carla: Yeah, that's a great question. And I will say it all starts with a solid foundation. And that's why I bring up bookkeeping and accounting, because you cannot do well with finance if you don't have the right set of numbers to start with. So having a good bookkeeper in your team, having a good accountant for the tax strategy side of it, it's going to be critical pieces and the foundation we build finance on.
And so if we don't start by having that solid foundation, You know, you can't really build a house on top of crumbling foundation. So we want to start with that. But the finance function is really a proactive forward looking, a proactive planning approach, a starting to craft what could be in the future and also put solid plan of action to execute towards those future goals that you've outlined.
I think often what I see is CFOs are putting numbers out there, but they don't really know how you're going to be able to achieve them. They're not telling you how, and you're just sitting here. Thinking, I don't know if I can achieve those goals. Those seem really unrealistic. But if I give you a 10 actions to take that would help us get into the direction of achieving those goals, once we define them, now you're more likely to take action and execute.
And even if you don't hit those goals, you'll most likely be better off than you were before because you proactively address and plan for your business success.
Gordon: Right. Yeah. So with your approach, how do you, how do you begin to do that with, with the people you work with?
Carla: Yeah, so with clients, we start with what we call a strategic financial plan.
And it's really outlining what is the next 12 months going to look like for your business. If you don't have any kind of goals, you don't know what you can achieve. We'll start by looking at what have you done so far, and then start to get some data points on what could be possible. Sometimes what I find is when looking at numbers for clients in the past year, they had some really good months.
And they had no idea because they never looked at it. They then we asked the question, what do you do differently on those months to achieve those higher goals? And then they'll say, oh, yeah, I did this marketing strategy. I went on network. I did this, this and that. And we're like, why are we not doing that?
Again, and not trying to reinvent the wheel, trying the next new latest thing, investing in a new venture, which is totally fine. And we want to do some of that as well. But let's do what was working. Why work harder, like, let's work smarter. And your numbers will tell you when that happened and why. So if we can start by looking at what we've been able to accomplish, if you are yeah.
a new practice and you maybe haven't gone through a cycle yet we would just make some assumptions. We will make some educated guesses of what's possible. Obviously, we have experience working with businesses, so we know the pace of growth that you might be able to achieve in the first year and things that you might want to consider as you're going into business that makes it more realistic.
I find business owners can be very positive and well intended and a little bit ambitious beyond what may be realistic. So we bring that financial perspective and, you know, realistic approach to the assumptions that we put together so that we know it's something they can attain as far as it goes, you know, with their revenue goals or their expense structure, and ultimately really focusing on that bottom line profitability.
Gordon: Right, right. Yeah, I think you know, one of the things when we think about profitability. I think sometimes. We don't really know about how, how that plays into what we pay ourselves and all of that sort of thing. And so why don't you say more about you know, one question, I guess, that comes to mind for me in your experience of working with mental health practices, what is a good amount of profit percentage wise for people to be thinking about that is realistic?
Carla: Yeah, so we'd like to really set some what we say benchmark or average type of goals and then we obviously always want to throw in a little stretch goal there for those practices are feeling a little more ambitious and maybe you want to, you know, strive for the max profit they can get. But really, realistically speaking, if a practice is scaling year over year, you're going to see somewhere between 5 and 15 percent profit.
You know, especially if you're getting bigger as a practice and multiple millions of dollars, that profit might, you know, percentage might be smaller, but absolute dollars are bigger. So then it still works. And I think that's something that maybe we don't talk enough about as you grow the number, you know, the top is much larger.
So that percentage might be smaller, but it's still pretty good. And then when you want to strive for maybe. Beyond what's average 20 percent profitability in some of the practices that we work with is not unheard of. It takes very cautious control of costs in appropriate lean operating structure for you to be able to achieve that and making sure that you're not staffing too highly on the admin side and that you're not You know, hiring too many clinicians that are not performing at capacity and really keeping an eye on all those metrics very tightly in order for that to be realistic.
Gordon: Right, right. What sort of ways do you recommend that people kind of track all of that? Of course, what comes to mind for me immediately is the, what I use is QuickBooks for the, you know, bookkeeping part. And are there other tools that people use that you see that they find maybe most helpful?
Carla: Yeah, we've seen different tools depending on the clients that we work with.
Everybody kind of has their preference But we definitely do work with QuickBooks online for the most part. It is the industry standard tool whether we love it or hate it That's besides the point and we have a lot to say about it But you know, it is what's best for the size of businesses that we work with in the mental health sector space.
And that is just the starting point. That's going to give you your three financial statements, your profit and loss statement of casual imbalance sheet, which ultimately will be needed at tax time. So we want to make sure that you're keeping with that every month for consulting, categorizing things on the bookkeeping side so that you don't get behind and have to catch up.
As far as beyond your accounting tools, there's obviously a plethora of. Key performance indicators. KPI said we could be tracking as a practice. One of them could be your weekly capacity. Are your clinicians, you know, billing the hours they need to be billing, hitting the minimums that you've assigned to them?
And if not, what can we do about coaching them and helping them achieve those goals? And if you're seeing some trends. You know, for certain people that are struggling, you know, it's time to step in and really help guide them and share your experience on how to best improve on those metrics and a lot of the other leading indicators that maybe we don't talk enough about is really inquiry calls conversion to first appointments.
Making sure you understand how long does that take? Are we getting enough inquiries? Because that is the starting point on how you will eventually generate revenue with clinical billable hours. And if you're not looking at those metrics, and you all of a sudden realize you do not have enough intakes happening, then you need to go fix that first.
Because that is where it all
Gordon: starts. Yeah. Yes. I'm reminded of my friend Casey Compton, who wrote a book called fix this next for mental health mental health providers. And she talks about that as figure figuring out what are your, what are your KPIs and where are the leaks as, as you like, as I like to call it.
And just where, where are you missing money that could be potentially brought in that you're missing.
Carla: Absolutely. And another aspect of this whole cost structure that you want to be looking at, too, is how you compensate your clinicians. Are you doing in salary for a minimum number of hours, and they're not meeting those minimums, then now you're paying out more than what you're generating from a given clinician.
In short term, that happens because everybody has to get up to speed. And maybe if they're new, they're ramping up, and it takes two, three months. But over time, They should be producing more than they're costing you. And if you're not looking at that and you're feeling really strapped for cash, or you're feeling like you're not making ends meet in your practice, that could be an area that you could start to do further research if you need to switch them to hourly or some other model that might work.
better for both that clinician as well as the practice, because at the end of the day, we do want to return, retain clinicians and we want to make sure we have a healthy practice to be able to continue to employ clinicians
Gordon: longterm. Right. Right. Yeah. And I think that's a, you know, that's a common mistake that, and then this one that I made early on is when you've got bring on clinicians, you can end up paying them too much that in, in, in a way that's not sustainable and I know that was a big mistake I made in that when I kind of arbitrarily picked what I was going to pay them without really thinking as much about, okay, is this sustainable and is this going to be profitable?
Carla: Absolutely. And I think that's why when we meet before we make those decisions, it's really key that we run the numbers and do some scenario planning around. What can we afford to pay people? Maybe we can only afford to bring associates at this level, because we just can't afford to hefty salaries of an experienced hire.
And that is sometimes the reality of a lot of the practices, but they're not looking at that decision, they're just making it without the numbers and the data. And then later dealing with the consequences of having, you know, a lack of Workload for those clinicians and then just seeing the consequences of their cash disappearing.
And they're like, not sure why that's happening. And again, we go back to the numbers to be able to find the answers.
Gordon: Right, right. Yeah. So other than tracking Tracking the number of referrals you're getting and clinician caseload. What are some other essential KPIs or key performance indicators that you recommend that people track?
Yeah.
Carla: If you're on insurance based practices, making sure that you're looking at your average reimbursement rate, that's going to be another key indicator. If you're healthy or not, is that going up over time? Is that being cut down because insurance companies are not paying as much or are they giving you the appropriate increases?
You asking for the appropriating increases every year and making sure that you also on the private pay side, your fee structure is changing and you're updating those prices over them. Because as you know, everything is more expensive. Labor is more expensive and all services and costs are going up.
Therefore, your practice should be revisiting pricing every year just to make sure that you have enough margin. In your practice to afford all the things you need to afford that are just now more expensive. All
Gordon: right. Right. Yeah. And again, that's something I've kind of learned the hard way is, is that I, I probably held off on increasing my prices a little too long.
But you know, once you, once you did make those, even if it's an incremental increase really doesn't create a problem for clients or that sort of thing. And it increases the profitability.
Carla: Yeah, and we always give advance notice anyways, as you know, and clients get to choose. You don't have to choose for them what they can or cannot afford and how their budget is going to work out.
If they find that it's valuable for them to see their therapist, they will prioritize it. And if they can't afford to, they will find someone else. Make sure you're competitive for your area. Of course, you don't want to be priced out of the market. And also, it's very common that every year there is minimum, you know, increase expected.
And if you can at least set that expectation with clients year over year, there will be no surprise because they know to expect it. Even if it's five or 10 a session, it could really add up times the number of sessions you have times in the number of clinicians in your practice, it really can make a huge difference.
So make sure that you're looking at those metrics. And then on the insurance side, make sure you're following up with claims. If you have denials, if you have rejected claims, if you know the codes you're building are not the right ones, like checking with an experienced builder that can tell you, you know, this is how you maybe properly bill this type of claims to get the maximum refund that you can from the insurance companies to make sure we're not leaving money on the table.
I see sometimes. Practices are not billing high enough, and they're just not getting reimbursed what they should be fully. And we look at that very carefully to ensure we're not leaving money with insurance company.
Gordon: Right, right. And one, one tip I'll add in there is, is always bill for your full rate rather than Putting on the, on the claim, just your contract, right?
Because things can change with the insurance company. And if you're, they're only going to pay what you put on the claim.
Carla: Yeah. They're not coming knocking on your door to say, Hey, I think we owe you a little bit more money. Do you want to bill us higher? They're in business as well. They're not going to come do you that favor, unfortunately.
So it's up to you to make sure that you're ahead of that.
Gordon: Yes. Very true. Very true. Well, Carla, tell us a little more about your company and how it got started and what all, you know, a little more detail about what you all do.
Carla: Yeah. So we are a fractional CFO firm. We started in business about six years ago, consulting for all sides of businesses in different industries.
And we really specialize in mental health group practices that are growing and need additional support. We come on their team as their leadership. Position as a fractional CFO that is driving really all the finance function as well as managing the bookkeeping team and accounting team if needed to make sure that it's all working together towards the same goals that we have goals for the year that we have a financial plan in place and that we're also monitoring and tracking financial performance month over month, making sure those reviews actually happen.
As you know, we're busy business owners and mhm. It's really hard for a practice owner to be doing everything themselves, especially if they're growing and scaling and hiring and dealing with the day to day. So bringing in some help to outsource that financial side while still keeping an eye on the numbers and a pulse on what's happening because those monthly reviews are really helping them see.
And review and make decisions around the financial side, as well as strategic meetings where we're making decisions for the longer term and where we want to see the practice go really helps drive that function and takes this off the plate of the owner, you know, again, not the accountability of it. We still want the owner involved on a partner.
They're really looking at things. We're not advocating decision making, but we're really augmenting by having an additional, you know, leaders in the team that's helping drive that function more actively. Sure,
Gordon: sure. Yeah. Well Carla, I've got to be respectful of your time. And you know, this is always an important topic, just thinking about profitability.
And you know, I think, I think most of the listeners understand that if they're not making a profit, they're going to. Not going to be able to stay in business. And so you, it's such a real important thing. And I think this has been a good, good refresher in the things that we need to keep our eyes on any parting thoughts about about this topic.
Carla: If you struggle with your numbers and shy away from looking at them, just remember, it's not a reflection of you as a person, this is just your business. You can improve it, but you need to know your starting point so that you know whether or not you're making progress towards a desired goal. So. Make sure you take a look at that PNL if you haven't for a while, at least do it monthly, because it's going to reveal a lot of things that maybe you could be doing differently to help steer the company in the right direction financially.
Gordon: Right. Right. And, and, and it might even be a happy surprise. You might be doing better than you think you
Carla: are. You know, sometimes that happens and they're like, well, I'm so glad I looked at it. And now they, you know, they got their day going and they're really excited about what's happening. And if it's not what you expected.
That's okay. Guess what? You get another chance at it next month to improve on it. As long as you're looking at it and know what's happening.
Gordon: Right. Right. Well, Carla, tell folks how they can get in touch with you. If they want to learn more from you and that sort of thing. Yeah.
Carla: Make sure that you go to our website, wealthworthwithin.
com. You in the contact page, you're able to set up a free call. If you're ready to hire a fractional CFO, if you're not ready for that, but I want to stay in touch and see what we're up to, you can subscribe to our newsletter. And we always share free educational content on all of our social media at wealth worth within to make sure that business owners are taking control of their finances, feel more empowered and really start to have, you know, better feelings around their money.
And, you know, take some of that action to really improve on what they're working on financially.
Gordon: Yes, that's great. Well, Carla, it was great to talk with you and I hope that maybe we can have another conversation here in the future.