The Practice of Therapy

Hi there, I'm Julie Herres. I'm an accountant who specializes in working with therapists in private practice. I own Green Oak Accounting and all we do over there is work with therapists and help them start to grow and scale their practices.
Well, hello everyone and welcome to the podcast and I'm so glad and excited to have my dear friend Julie Herres back on the podcast. Welcome Julie.
Gordon, it's so good to see you again. I'm happy to be back here. I feel like I'm a repeat repeat visitor.
Well, you're a pro. I mean, that's all there is to it.
And Julie has a podcast therapy for your money, and she's part of the psych craft network along with this podcast. And Julie's been a long a dear friend of mine, and we've done a lot of collaborating over the years. But Julie, as I start with everyone for folks that might not know you, which would be hard for me to believe, but for folks that might not know you, tell them a little bit more about yourself and how you've landed where you've landed.
Yeah. So I'm first and foremost, an accountant lover of numbers. Numbers are my jam. I like to say that my superpower is seeing the story in the numbers, like the numbers tell me something. And I love, I love looking at that. So I am the founder of Green Oak Accounting, an accounting firm that specializes in working with therapists and private professionals.
private practice. I'm an author. My book is Profit First for Therapists, where I talk about this amazing cash flow management system, and I've customized it for therapists in private practice at every stage, and I host the Therapy for Your Money podcast. I do a lot of speaking in between all of those things, so you might see me out and about at a
I think Julie and I are both going to be at the wise practice summit in, in October coming up probably when this episode, those listening probably in just a few weeks.
So yeah. So, but yeah. We're to
seeing in there and grabbing. All right.
Yeah, so, you know, Julie and I were talking before we before we started recording and just one of the things that she does a lot of work with with helping therapists, particularly group practice owners, is figuring out how to compensate They're therapists.
And I know that in Julie's book, Prophet First for Therapists, she used one of the stories that I had, and we can maybe retell that story about a mistake I made early on around compensation of just, you know, Being picking something too random thinking, well, this sounds good without really looking at my numbers or understanding that.
So, Julie, tell folks maybe, I guess, maybe a good place to start, or what are the things people need to take into consideration when they're thinking about compensating? Yeah.
It's so interesting to me that in group practice, compensation can literally make or break your business, right? Because in most group practices, well, almost all of them, compensation is going to be the single largest expense in the business, right?
And the only times that's not the case is at the very, very beginning of group practice. If you're hiring one part time clinician, right? That might not be the biggest expense, but if you've got a group practice with five, 10, 50 clinicians. 100 percent always it's going to be the single largest expense.
And yet there's not always a lot of thought that's put into that really, really big decision of how much am I going to spend on this and how am I going to set an intentional compensation model. And I love that you, you shared this story for the book, which is the early stages of your group practice, right?
Where you set. compensation models for, I think you had three team members and it was just kind of like, Oh yeah, this sounds about right. This is what someone across town is doing. Let's, this is going to be our compensation model. And That's often how that decision is made, right? It's like asking a Facebook forum, like how much are you guys paying?
Or I heard, you know, this person I interviewed got offered this much money for competing practice and that's all well and good, but one of the cornerstones of any small business and a private practice is a small business. Is that it has to make money. That's not optional, right? For those of us living in the real world who need to make an income, right?
Which is almost all of us where you're working because you need money to live. You're doing something that you love, but you need money to put food on the table, put gas in the car, right? All of those things, a profitable business means that you have a business that can survive, can grow, can continue to serve your clients and thrive when there's no money in.
private practice when you're not making a profit that often leads to a business closing because it's not sustainable. And so one of the big things that I preach is that First, a business has to be profitable. And then second your, your team members, your clinicians have to create a profit for the practice.
In my mind, there is no other way. It's black and white. There has to be profit for every single clinician, every session, or else it doesn't make sense. The, the math doesn't, doesn't make sense.
Right. Right. Yeah. And to of course, I would encourage people to get your book profit first for therapists because Julie does such a great job of breaking down the minutia of all of this in terms of just understanding, you know, not only compensation, but just.
Thinking about profit and being very business minded with, with everything, but that kind of the short version of the story we're talking about is, is that when I started my group practice, I originally was just using a con what we refer to as a contractor model. So in other words, I was just paying them a percentage of what they brought in.
And so I just picked up, I thought, well, this would be generous. I can pay, pay them. You know, it was I'll go ahead and talk a little bit of numbers. It was it was a tiered system that started at like 60, 40, and then it went to 70, 30 split, and then 80, 20, which. That was the part that I made a mistake on.
Yeah. Yeah. So, yeah. So I thought, well, you know, if they're bringing, bringing this amount of money, then keeping 20 percent of it. Sure. That's great. But the truth of the matter is as we know, our biggest expense. In private practice, if you're particularly if you're a group practice is what you pay your employees.
And so what I discovered was, is I go and look at my cash flow each month and I'm thinking, golly, I should be making more money than this. And what I was ending up having to do because I did that random kind of split, which I thought was generous and fair and that sort of thing is I was having to pay my employees or my contractors out of what I was making for myself.
And so I was not only. They were not only keeping the lion's share of what they were making, but I was also having to, to pad that with what I was making. So it was, it was spiraling out of control pretty quickly and it wasn't going to be sustainable. So, yeah, I want to
emphasize what you just said that you were working more.
then in solo practice to subsidize the work that your clinicians were doing. Right there. Their work was not covering what you were keeping that 20 percent was not covering overhead expenses. So you were having to work more to offset the law, the nonprofit that they were creating. If you think about it, And that happens every day in so many practices.
But when you take a step back and look at it objectively, if your friend were coming to you and saying, you know, Hey, I hired all these people and they're great. And I love them. And I also doubled my workload to make sure that I can afford them. You would say, wait, that, that doesn't make sense. Like you should be working.
Less because you're now managing them, right? Right. And you're doing more intake, more admin work, more billing, more everything. And seeing more clients yourself.
Right. Bring
money in.
Yeah. Yeah. So, yeah. So, but it, it turned out, you know, it was a, it was a hard lesson to learn, but also I switched from being con, having contractors to having employees, which I, I think, you know, contract, having contractors, at least, On paper, it sounds easier because you're not having to deal with FICA and taxes and all of that sort of thing.
But in the long run, ended up becoming much more profitable by switching to employee model and I did a comparison if we're with the people that I did. I said, okay, this is what you're making as a contractor. And this is what you're having to pay out in your taxes. And this is what you're going to make now with.
With this new compensation plan and they really weren't that much different, but it was the fact that I was, I was really being more more conscious of what the actual numbers were rather than just picking a random number. And so, and, and basically I'm still using the, basically the same kind of compensation plan as I switched to, but I've, you know, I've upped it.
You know, over, over time with us, us going up on our fees and everything.
So are you doing now, did you switch to a fee per session? Like if a dollar a month per session was that? Yes.
Yeah. That, and that's I think for people that are in. Like my practice, we're an insurance based practice. So you have to be very aware of what you're, because you get paid differently from different insurance companies.
And so you need to have a really clear figure of what is your average income per session based on the different, you know, fee amounts that you're You're receiving and so I reworked everything and what I pay my, my therapist now is just a flat, a flat fee per session based on those averages. And also it's an incentive based system in that the more clients they see, the more their fee goes up.
So I worked it out, the math worked out and it's working well.
So you kept the tears, correct?
Yes, I kept the tears and but it's a, It, the tiers are in line with what the actual numbers are. Yes. Yes. And so that's, that's the key. And so. Based in reality. Right. And so my, my, and also in addition to that, I'm able to provide benefits to my therapists.
They've got health insurance that they, they're full time and all of that sort of thing. And the beauty of it is too, is it doesn't matter to me whether they're part time or full time. It covers, it covers everything. So if they only see a few clients, I'm good. I'm still making a profit. They see a bunch of clients.
I'm still making a profit. So it's all about making sure that they are paying for themselves and their own overhead.
Yes, when I think that's something that is often not considered, right? When I've heard this story so many times before from a practice owner that says, well, I'm hiring. And I want to, you know, I have felt taken advantage of before at a group practice.
So I want to offer as much as I possibly can. Right. And so then they're looking at the numbers and saying, well, I mean, if I offer them, you know, 70, 80%, I'll still be making some money. I'm not selfish. I just want to cover my costs here. Right. Something along those lines, it comes from a re a place of true kindness.
It absolutely does. But what is often not considered is that this, this comp model. That can make sense for one single therapist, possibly, right? If you're just looking at additional costs in software, right? It's minimal, minimal overhead. You might need an email license, a software, you know, a couple of different softwares, EHR, that kind of thing.
You're not needing additional space because they're going to share your space. Like the additional cost for one single person. are not that big. But if you're hiring five clinicians, then yeah, you probably do need larger space. You probably need someone to help on the phone with intake. You probably need someone to do billing, right?
And if you haven't left any room to add those things in, then you have set yourself up for failure, unfortunately, right? Because at a certain point, you as the owner can't keep doing all those things. Or if you are, you need to Significantly reduce your caseload to be able to do that. Right. If you're all of a sudden doing intake for five clinicians, that's a, that could be a lot.
That's a lot of scheduling and rescheduling. And the copay didn't go through right. That all of that is just a lot of. Work and someone needs to do it and someone needs to get paid to do it. Whoever, whoever that is. So it's always coming from this beautiful place of kindness, but it's not putting our, our business owner hats on and saying like, okay, okay.
If I keep going down this road, what is it going to take? What will the business need? And, and how are we going to pay for that?
Right. Yeah. Those are
the things that come up.
Yeah. Cause it yeah. And I think to just keeping, keeping a pulse on it all is so important. I mean, if you're not looking at your profit and loss statements or somebody that you designate is looking at it, you You can, you can get down a rabbit hole pretty quickly and find yourself in some trouble.
And I would also argue that you can't abdicate, abdicate that responsibility. So even if you have someone on your team who's keeping an eye on things, you as the business owner still also have to look over their shoulder and keep an eye on things. And I feel that way about accounting. I feel that way about billing, right?
Just because you hire a biller doesn't mean that you just shake your hands and you, you never have to look at it again. Quite the contrary. You definitely need to keep an eye, poke your head in there, make sure everything that's supposed to be happening is happening because I know I've talked to a lot of practice owners over the years who have uncovered big surprises when they finally started looking like, wait, wait a second.
We're only making this much money. How come? What's happening? Oh, these, none of these denials have been worked. What's going on? Like the, you know, there's just, there, you can trust, but verify, right?
Right, right. Yeah, absolutely. Well, Julie, I know you've got I know just on this whole topic of compensation, you've got a webinar coming up and for folks that are listening to this episode, you want to say more about that and just what it teaches.
Yes, so I encounter a lot of practice owners in my, just in the course of business who are thinking about starting a group practice, who are in the early stages of a group practice, and who have a lot of questions around compensation, how to structure things, how to make sure that you are setting the practice up for financial success.
And so I have a free webinar available for you. It is on September 27th at noon. Eastern at 9 a. m. Pacific and a replay is available. That's a question that comes up often. So even if you can't attend that that specific day and time, I encourage you to sign up for the webinar to get access to the replay because in that webinar I cover some of the common mistakes that I have seen practice owners make in starting their group practice so that you can avoid those mistakes.
There are a lot of things that you can do up front, whether you are hiring your very first clinician or you already have a few. There are a lot of things that you can do to set yourself up for financial success, but also success in your relationship with your team members as well. You can treat your team members fairly, but also make more money.
When you're growing a group, usually one of the goals is to make a little bit more money, right? I say one of, because often there are other goals like increasing your impact, serving more clients, right? Those are really great honorable goals, but I also, I'm an accountant, so I think you should make more money as well.
So I want you to build a group practice in a way that. will allow you to make more money down the line as well. And so that webinar completely free September 27th, 12 Eastern noon. And you can go to green oak accounting. com slash Gordon to register for that. Webinar. So I encourage you to go there.
And Gordon, will you put that in the show notes as well? Yes,
we will. Absolutely. Absolutely. It'll be in the show notes for people to find that. And also you know, we mentioned your book. You want to say more about your book for people?
Of course, yes. So the book is profit first for therapists. It is a great resource for implementing profit first.
But also Gordon, as you know, I'm a mom, I have three school aged kids. And so when my kids were little, I would, I would sneak veggies into their food cause they didn't eat a whole lot of veggies. And so I like to think that I snuck some veggies into the first for therapists book. I really thought holistically about.
If a practice owner is picking up this book. What do they need to know about profit first? But what do they also need to know about managing their money in their private practice? So I snuck in a few extras like paying down debt, because a lot of therapists I know have student loan debt. There's a whole chapter on team compensation, because I know that you're probably going to need to know what to do with that.
So I snuck in a few extras that are not really profit first related, but I knew what to do. are going to help practice owners like holistically look at the money in their practice. So all of that is included. The book is available wherever you buy books. I recorded the audio book myself as well, so you can get it on Kindle, on Audible and paperback as well on Audible.
Amazon and a lot of other places too.
It's a, it's an essential book for anybody in private practice as far as I'm concerned. I mean, it's just, yeah, one of the ones, one of the, one of the first things you need to read, I think, particularly if you're starting out. So, yeah. And you'll
read a couple of fun stories about Gordon too.
I love it. Thank you. Thank you for participating. I mean, I interviewed Gordon for the book. I shared a couple of his stories. So if you want, if you want a little behind the scenes about Gordon, go to the book. Yeah.
All right. All right. Thanks, Julie. But well, Julie, we gotta be I guess we need to watch our time and it gotta be respectful of your time.
Again, she mentioned the, the webinar coming up and there'll be links here in the show notes Green Oak Accounting slash Gordon, and that'll get you to the page to sign up for the webinar. I'm looking forward to, to seeing that. And so any other closing thoughts here, Julie?
Yeah, I, I mean, you and I have chatted about this often, but Gordon, I, if I can just step on my soapbox for a second, I really, truly believe that every practice deserves to be profitable and that it is in service to everyone around you.
There, there, this is shifting, but there has been this kind of thought in the, in the mental health industry that you almost have to be a martyr to be a therapist, right? Like you're not going to make any money in this business, or you shouldn't be thinking about money. You should just be helping your clients.
And I think that's lead that that has led us over the last several years to just an incredible amount of burnout in this industry. I think you deserve to get paid, you deserve to get paid well, you deserve to be able to take time off, go on a vacation, have health insurance, contribute to retirement, like all those things are things that you absolutely can and should expect.
To be able to do as a practice owner, you should expect those from your practice and it is doable, right? That's the good news and that I feel like that's what I have to shout from the rooftops. It is possible It's not easy every day, but it absolutely is possible And you can go build the practice. That is your dream.
Not your not your nightmare
Right. And, and, and I would add to that, Julie, one of the things that I think most of us that get into this field do it because we have a passion for helping people and helping them work through things. And if you're not making a profit, you're not going to be able to keep doing that.
And so you have to do, do that. I see people, I see it all the time where people just, they get into this money mindset, which that's a whole other episode we could do just not being able to of really undercutting themselves and not valuing what they're worth in terms of their professional, professional ability and the fact that people want, are willing to pay.
For that help.
Yeah. And even if you are working with clients who are struggling financially, that doesn't mean that you have to be in that same situation. You don't have to put yourself there in a place of struggle. It's okay to be able to pay your bills and to do things that are going to allow you to do that.
You should be able to pay off your student loans and, and just do all the things that are part of life.
Right, right. Well, Julie, we'll have you back and be sure and check out the webinar again, GreenOakAccounting. com slash Gordon and sign up. I hope everybody will do that.