How to Grow Your Private Practice Series: Essential Financial Tips for Mental Health Professionals

Are you looking to grow your behavioral health business? As a behavioral health practice owner, achieving sustainable growth involves more than just expanding your client base. 

Effective financial planning is crucial to ensure that your practice remains profitable, manageable, and able to adapt to changing demands. Here’s how you can strategically plan for financial growth and set your practice up for long-term success!

1. You Need a Good Budget

A well-structured budget is the foundation of financial planning. Start by detailing all your practice's income sources and expenses. Include:

• Fixed Costs: Rent, utilities, salaries, insurance, and other recurring expenses.

• Variable Costs: Office supplies, marketing, training, and other fluctuating expenses.

• Unexpected Costs: Set aside a contingency fund for emergencies or unforeseen expenses.

Regularly review and adjust your budget based on actual performance and changing needs.

2. Forecast Future Revenue

Accurate revenue forecasting helps you anticipate growth opportunities and challenges. Analyze historical data, current trends, and market conditions to project future income. Consider:

• Seasonal Variations: Account for fluctuations in client volume throughout the year.

• Service Expansion: Estimate the impact of introducing new services or treatments on revenue.

• Client Retention: Incorporate projected client retention rates and new client acquisition.

Use these forecasts to plan investments, hiring, and other growth strategies.

3. Invest in Technology

Investing in the right technology can enhance efficiency and support growth. Consider:

• Secure Email or Communication Software: You’ll need a good way to communicate and ideally if it’s a secure medium you can collect important information from clients without risking PHI (even with a consent): 

• Practice Management Software: Automate scheduling, billing, and client records to streamline operations. (We know a good one!)

• Telehealth Platforms: Expand your reach by offering remote services, which can attract new clients and provide additional revenue streams.

4. Optimize Revenue Cycle Management

Effective revenue cycle management (RCM) ensures that your practice gets paid efficiently and accurately. Key strategies include:

• Accurate Coding and Billing: Ensure that claims are correctly coded and submitted to minimize denials and delays. Your software can help, but a smooth revenue cycle  and dealing with insurance issues takes work. That’s where BreezyBilling comes in.

• Follow-Up Procedures: Implement systematic follow-up procedures for unpaid claims and outstanding balances. BreezyBilling’s team will handle this for you.

• Collect Payments for Balances Due Before Seeing the Client: This can be a hard one, but sticking to this policy ensures balances don’t get out of control.

• Client Payment Plans: Offer flexible payment options for clients to improve collections and reduce bad debt.

• Sliding Fee Schedule: have a sliding fee schedule/policy and apply it universally.

5. Plan for Staff Development and Expansion

As your practice grows, so will your need for additional staff and professional development. Plan for:

• Hiring: Budget for recruitment, training, and salaries for new team members. It takes quite a bit of work to find the staff that fit your mold.

• Training: Invest in ongoing training for your staff to ensure they are up-to-date with best practices and compliance requirements.

• Employee Benefits: Consider offering competitive benefits to attract and retain top talent.

6. Explore Funding Options

If you need additional capital for expansion or major investments, explore funding options such as:

• Bank Loans: Traditional loans for larger investments or working capital.

• Grants and Subsidies: Look for grants or subsidies specific to behavioral health practices.

• Investor Funding: Seek out investors who are interested in supporting the growth of your practice.

7. Monitor Financial Performance Regularly

Regularly reviewing your financial performance helps you stay on track and make necessary adjustments. Implement:

• Monthly Financial Reviews: Analyze income statements, balance sheets, and cash flow statements.

• Key Performance Indicators (KPIs): Track metrics like revenue per client, expense ratios, and profit margins.

• Benchmarking: Compare your performance against industry standards and peers to gauge your practice’s financial health.

8. Adjust Your Strategies as Needed

Be prepared to adjust your financial strategies based on performance data and external factors. Stay flexible and responsive to market changes, client needs, and operational challenges.

9. Get Help When you Don’t Have Time

You can’t do it all. You wouldn’t expect a CFO to be a great therapist (sure there might be outliers). By the same token, most therapists wouldn’t make great CFOs (I know a few!). Even if you’re shooting for a small-to-mid-sized practice, you might want to consider hiring out the ‘stuff’ you’re not interested in or strong at. That can ensure the stuff that’s not your focus will still get done and done right at a fraction of the cost of hiring a full-timer.

Conclusion

Effective financial planning not only supports your practice’s growth, but also enhances your ability to provide high-quality care to your clients. It is an ongoing process that requires careful management and regular review. Starting with our financial tips can get your behavioral health practice on a path to sustainable growth and long-term success.

If you want to discuss growing your practice by optimizing your billing or other operational processes, contact us at BreezyBilling today!