Private Practice Profitability Calculator

Things to consider as a solo practitioner:

• There are only 8 working hours in a day.
• How you split up your time will determine how many patients you can realistically see in a day.
• Will you offer one-hour sessions or 30-minute sessions?
• Always consider work-life balance when planning your schedule.
• Most successful solo practitioners see 15-25 patients per week.

Pricing is important to the patient:

• Have you checked to see what the going rate is for your services?
• What demographic of the population will you be addressing? This will impact your earning power
• Therapy sessions typically range from $80-200 per hour depending on location and specialty

Work-life balance is crucial:

• Most solo practitioners work 3-5 days per week
• Consider burnout prevention and personal time
• Factor in time for documentation and administrative tasks
• You may want to start part-time and scale up

Don't forget vacation and sick time:

• 52 weeks - vacation time - sick days - holidays
• Most professionals take 2-4 weeks vacation per year
• Account for continuing education time
• Consider seasonal practice variations

No-shows are a reality in healthcare:

• Typical no-show rates range from 15-25%
• New practices often see higher rates initially
• Good scheduling systems and policies can reduce this
• Consider implementing a cancellation policy

Payment source affects your actual revenue:

• Insurance typically pays less than cash rates
• Cash-pay practices can charge full rates but have smaller patient pools
• Insurance provides steady referrals but involves paperwork
• Consider your target demographic and accessibility goals

Not all billed services get paid:

• Typical collection rates range from 85-95%
• Insurance denials, patient non-payment, and billing errors reduce collections
• Good billing practices and follow-up improve collection rates
• Consider hiring a billing service for better results

Initial investment required:

• Computers, furniture, clinical equipment
• Office setup, deposits, minor renovations
• Security deposits for rent and utilities
• Initial marketing materials and website
• Typical range: $10,000 - $30,000 for a basic setup

If you are not working from a spare room in your house:

• Have you looked for co-location space to start out?
• How many square feet do you need for an inviting office?
• What is the going rate for office space in your area?
• Will you be able to afford this if you only see 5 patients a day?
• Consider shared office spaces or subleasing initially

Don't forget the lights:

• Electricity, water, gas, internet, phone, etc.
• What is the going rate for utilities in your area?
• Tip: take your home bills and double it
• Include high-speed internet for telehealth capabilities

Electronic Health Records are essential:

• Essential for modern practice management and compliance
• Most EHRs range from $100-400 per month per provider
• Look for systems that include practice management features
• Consider implementation and training costs

Administrative services are often necessary:

• Virtual assistant for scheduling and follow-up
• Billing service (typically 4-8% of collections)
• Receptionist or answering service
• Consider the cost vs. your time investment

Marketing is essential for growth:

• How will you get the word out?
• Psychology Today ($30-40/month)
• Zocdoc (commission-based)
• Google Ads, Facebook Ads, website maintenance
• Budget 5-10% of target revenue for marketing

Ongoing supplies add up:

• Clinical forms, assessments, and materials
• Office supplies (paper, pens, folders)
• Cleaning supplies and maintenance items
• Patient comfort items (tissues, water, etc.)

Payment processing is necessary:

• Most patients pay by credit card
• Typical rates range from 2.5-3.5% of transactions
• Factor this into your pricing strategy
• Square, Stripe, and practice-specific processors available

Malpractice insurance is legally required:

• Shop around for this essential coverage
• Therapists typically pay $400-800 per year
• Medical specialists may pay $10,000-50,000+ annually
• Required by law - don't open without it!

Business insurance protects your practice:

• General liability policy ($500-1,500 annually)
• Business owner's policy (BOP) for comprehensive coverage
• Cyber liability insurance for data breaches
• Property insurance if you own equipment

Professional licensing and memberships:

• State licensing fees ($200-500 annually)
• DEA registration if prescribing ($731 every 3 years)
• Professional memberships (APA, ACA, NASW, AAMFT)
• Board certifications and specialty credentials

Continuing education is mandatory:

• Required CE hours vary by state and profession
• Conferences, workshops, and online courses
• Travel expenses for in-person training
• Books, journals, and educational materials

Professional services are important:

• Accountant for tax preparation and business advice
• Lawyer for contracts and business formation
• Bookkeeper for ongoing financial management
• Consider the cost vs. DIY complexity

Federal taxes are unavoidable:

• 2024 tax brackets: 12%, 22%, 24%, 32%, 35%, 37%
• Your rate depends on total taxable income
• Business expenses reduce your taxable income
• Consult a tax professional for accurate planning

State taxes vary widely:

• Nine states have no income tax: AK, FL, NV, NH, SD, TN, TX, WA, WY
• Other states range from 1% to 13.3%
• Look up your specific state's tax rate
• Some cities also have local income taxes