In this episode, Gordon talks with Maureen Werrbach, LCPC about starting a group private practice and how she grown and approached building a large group practice in Chicago, IL. Gordon and Maureen talk about how sharted the Facebook Group, “Group Practice Exchange” and some of the questions that come up for the members of that group. They also talk about the advantages and disadvantages of having 1099 (contractors) vs. W2 (employees).
Meet Maureen Werrbach
Maureen Werrbach, LCPC is a therapist and group practice owner in Chicago. She is also a group practice coach. As a therapist, she helps adults with trauma histories and also individuals improve their relationships personally + professionally. As a coach she helps entrepreneurs/professionals learn to manage the stresses of leadership.
She started a group practice (Urban Wellness) in 2012 and which has grown into a multi-location, 20+ staff. They provide counseling, psychological testing, and medication management. Their mission is to provide care to as many people in my community as possible.
As a group practice coach, Maureen has The Group Practice Exchange. She loves helping solo practice owners start and grow their group practices, as well as helping established group practice owners scale their group practice. Maureen loves talking about marketing, organizational structuring, scaling, leadership, and everything in between.
You can find more about Maureen and find tons of resources on starting and scaling a group practice at www.thegrouppracticeexchange.com.
Why Start A Group Practice
Moving from a solo private practice to owning a group practice is one of the quickest ways to scale your practice. Essentially, by moving from solo to group you are duplicating your efforts and your earning potential. And depending on how you set up the relationship with the people in your group, there is the possibility of creating “passive income” for yourself.
Group practices can take many forms. From a simple “co-op” style practice, in which a group of solo practitioners simply share the cost of running the practice to a full fledge “agency” style practice in which the clinicians are employees of the group.
1099 vs. W2
The terms “1099” and “W2” are simply employment classifications given by the IRS (for those of us operating within the United States). The difference between the two types has everything to do with the relationship you have established with the clinician.
- Group owner has less oversight and supervision
- They provide their own “tools” and methods to what they do
- They set their own schedule and operate independently
- There is, of course, a contract with the clinician with the specifics about how and when they will complete the job they have been hired and how they will be paid.
- The key is, they work independently and are unsupervised
- A way to think about it is if you hired someone to add a room to your house. You would agree on a price and when it was completed, but you would not tell them how to complete the job or supervise how it was done.
- Group owner has oversight and supervises the clinician
- They usually have set hours they work and have to meet minimum wage requirements
- The group owner is responsible for following local, state and federal employment laws.
- The owner has to provide required benefits such as unemployment insurance
- Usually, there is some sort of time off policy and benefits such as sick time, vacation time, etc.
- You could also provide other benefits like health insurance, profit sharing and retirement benefits like a 401(K)
- For the group owner, they have complete oversight as to how the employee does their job
Which Way Is Better?
Maureen talks about some of the things you need to decide when thinking about using 1099’s or W2’s in a group practice. She breaks it down into behavioral, financial and relational.
Behavioral – how much control do you want to have over what your clinicians do. More control means you are treating them more like a W2; less control, more like a 1099.
Financial – has to do with how they are being paid and what things are you providing for them. For example, if you are doing a percentage or fee split vs. a flat rate or salary.
Also for example, if you are doing the marketing and getting referrals for them and you are providing tools like a practice management system, etc, then you are treating them more like a W2.
Relationship – has to do with your agreements about what you provide or do not provide. For example, if you have a contract with them, it is more 1099 “like”. Providing incentives and bonuses is more W2 “like”.
Maureen has set up a free PDF with reflection questions that you can download here:
It is important to consult with an employment attorney familiar with your state and local employment laws. Laws vary across the country. For example, in California, clinicians are not allowed to do a fee split with people in their group. Whereas in other states (like Illinois and Tennessee) you are allowed to do a fee split.
One of the “big ticket” items to determine if you should go 1099 vs. W2 is supervision. If you are supervising someone in their clinical work (ex., licensure supervision), you really do have a W2 relationship.
Also looking at the kind of relationship you want to have with your clinicians will determine how you set things up. Maureen uses the example of having a more “family style” and collaborative practice where everyone is close-knit and interacting a lot. For example, having regular meetings and outings with each other is really much more suited for having W2’s.
Contractors (1099’s), ideally, are much more adjunct and operate completely independently and less integral to your practice. In other words, you are not dependent on them for your practice to operate.
Myths and Misperceptions
Maureen talks about some of the myths and misperceptions about having 1099’s vs. W2’s. One myth is that having a W2 employee is more expensive. It is true that with W2’s you have to pay income tax withholding, workman’s compensation, and unemployment taxes. On the surface, this seems like an added expense. She points out that if set up the right way, the expenses associated with having a W2 person are built-in. In other words, what you collect from clients and what you pay the employee is covered.
Maureen gives an example of how this works using a percentage based compensation system: A 1099 contractor you are paying a 60/40 split (the contractor keeps 60%). If you were to switch to being a W2 employee, a general rule of thumb would be to increase your percentage by 10% to cover the added expense; 50/50 split.
Ultimately you need to take into account the amount of oversight needed to run your practice as you want it to be run. Also you need to have a good understanding of your numbers and know what it costs to run a group practice and pay your employees and contractor.
Finally, Gordon and Maureen talk about the importance and benefits of coaching and mentoring for themselves and others. Both Gordon and Maureen have Mastermind Groups they are starting and facilitating. Mastermind groups are a great way to not only learn from experts but from peers that are in similar phases of their practices.
Maureen’s website: The Group Practice Exchange
Maureen’s podcast: The Group Practice Exchange Podcast
Meet Gordon Brewer, MEd, LMFT
Gordon is the person behind The Practice of Therapy Podcast & Blog.He is also President and Founder of Kingsport Counseling Associates, PLLC. He is a therapist, consultant, business mentor, trainer and writer. PLEASE Subscribe to The Practice of Therapy Podcast on iTunes, Stitcher and Google Play. Follow us on Twitter @therapistlearn and Pinterest “Like” us on Facebook.