Having a difficult time setting my fees as a new professional
June 14, 2021 2:02 PM   Subscribe

I am a newly minted psychiatrist in a major city with a large market for cash-pay mental health services. I can't figure out how to set my fees for private practice and actually go through with it because market rate seems so exorbitant.

I know the market rates for the full fees in my area are in the neighborhood of $350-800 for an intake and $250-500 for a follow-up appointment by a MD psychiatrist. The vast majority of MD psychiatrists here do not accept insurance, and the handful that do are in group practices that can likely negotiate higher rates with insurance panels, as opposed to solo practice. The recent graduates from my program, considered among the best programs in the country, all charge market rate and, based on conversations I've had from reaching out to alumni, have absolutely no problem filling their practices with cash-paying patients.

I just can't bring myself to charge that much. Like, I can't even tell my patients that this is my fee with a straight face because it feels like an insane amount to charge for healthcare. The people in my personal life who I discussed this with, who are not mental health providers but are immigrants and/or POC, imagine that the people willing to pay these rates must be really miserable in their lives, to the point of desperation, to pony up so much cash for treatments that often take months, if not years, to take effect, and are sometimes unsuccessful. I've talked to other physician (non-psychiatrist) friends who have similar backgrounds as I do, who have point blank told me that they think that these rates are unethical. I know my own family members would not be able to afford this and would also likely not value mental healthcare to the extent that they would pay these rates- this is common among immigrant and POC communities.

In the process of learning how to set up a private practice, I realize there are actually a number of overhead costs I never thought of as a patient - things like paying for supervision, office rent + equipment, malpractice, liability insurance, licenses/DEA, CME, EMR, HIPAA-compliant phone and fax lines, paying an attorney and accountant, covering my admin time, covering for the patients who may shirk their bill, saving for my own retirement and benefits, etc. - not to mention all the time, effort, and expense I've put into training. Intellectually, I understand why I need to charge this much. Clinically, I also understand that it is important for both me and my patients to value my time and work and to take care of my own needs, and part of that involves maintaining the therapeutic frame by charging a fair price for my services. But I'm still like, what? Who in the world would pay that much? I wouldn't pay even a fraction of that - I remember back when my copay was $30 as a student, and it already felt like so much money - like, a week's worth of groceries. I've always gone through insurance to seek out my own mental healthcare (my program had a discounted fee arrangement for trainees) so I have not had the personal experience of paying these rates for mental healthcare. The only possibly redeeming thing is that I have had a year of therapy that I found to be invaluable and I know that if I could pay now to have a similarly meaningful and life-changing experience, I would. (Am I really offering that kind of service to people, though? I feel like finding a good psychiatrist can be a bit hit or miss, and a lot to do with finding a good fit.)

I am in an area with many young adults - which is a great stage in life to get mental healthcare - and it almost feels unfair to charge that much because I guess I perceive and have personally experienced (or am actively experiencing) that stage in life as a financially lean time. On the other hand, I also know that many young adults in my city have very high-paying jobs or wealthy parents - and maybe this is my own baggage from not growing up with that background. I mean, it's also their money, so they can choose how they want to use it, and maybe I'm overthinking all of this and being paternalistic.

I can already see myself sliding my fee for everyone who walks into my office and I know I can't do that. What do I need to do to get on board with valuing myself, my time, and my craft? Has anybody who works as a mental health professional in a similar type of market also successfully made this leap?
posted by anonymous to Work & Money (26 answers total) 10 users marked this as a favorite
What I would do is reach out to other psychiatrists in your city, and ask if they'd be willing to sit down with you to talk through the economics of their practice. That might help you understand whether they are personally making a ton of money (in which case, you can decide whether you're willing to take home less to make your practice more affordable for patients), or whether the various other costs and overheads make it so that there isn't actually very much room to reduce prices without bankrupting the practice.
posted by kickingtheground at 2:15 PM on June 14 [22 favorites]

My mental health professionals have all offered a sliding scale rate proportionate to income. Wealthy clients provide the bulk of their earnings, and once their target financial goal is met they offer slots to low income clients & other populations they feel passionate about helping. I think everything you've said is true— the pricing system is both deeply unfair and also necessary for your survival. Under capitalism there's no good answer really, just the one you can live with. So, draw up a budget and go from there.
posted by lloquat at 2:18 PM on June 14 [24 favorites]

kickingtheground has a great suggestion.

i'd also suggest setting your rate at whatever market is, accepting the couple of patients who can and will pay that outrageous fee, and then sliding your rate for everyone else based on income. if you're setting up as a solo practitioner you are free to do that.

fees like that are absolutely why i couldn't get help for so long, and if your goal is to "do good and help people" that is super admirable, but you do still need to be able to do all the necessaries you list.
posted by misanthropicsarah at 2:19 PM on June 14 [2 favorites]

The reason your colleagues charge the rates they do is because they get paid those rates.

Though they may, in some cases, be anchoring with a high number to allow themselves to come down in negotiating special circumstances. Some high-paid professionals do pro-bono work, sliding scales, and other special scenarios.

The conversation you're having with yourself about this may be a money mindset issue more than anything else. For some people, money is a morality issue. For some, it's a flow of energy.
You've already pointed out that people who can't or won't pay those rates are able to find psychiatric support in other places.

Keep in mind that the skill of psychiatry is not the same as the skill of running a business. It might be helpful to join a group for awhile to see how it's done and understand how rates are set - the group would likely set your rate for you.
posted by jander03 at 2:44 PM on June 14 [2 favorites]

You might also seek out psychiatrists in your area who are cash only but use a different model. My psychiatrist has a practice that is primarily medication management. He charges a flat fee per quarter, and brief follow up appointments fall under this fee. Things that take up more time may garner an additional fee, but it’s still usually on the affordable side. He’s able to have an extremely large roster of patients, so he can keep the fees low.

I get the feeling that he never was much interested in the talk therapy side of things, but you could possibly build a practice where you have some percentage that are purely medical management, with this sort of retainer model, and that volume could allow you to charge more affordable rates for a subset of patients for whom you want to do additional modalities of treatment.
posted by ocherdraco at 2:45 PM on June 14 [6 favorites]

I am not a professional in your industry, though I receive services from one, in one of the most expensive cities in the country. I'm actually looking for a new psychiatrist right now, and in my search I've noticed rates tend to be slightly slower for group practices, I assume because then all the stuff like rent and a website and maybe even marketing and administrative assistance is covered. Is joining a group practice an option for you?

I'm also a (volunteer) mental health advocate who helps people navigate finding care, and I can tell you that at least from that perspective, it would be a great service to patients to accept insurance. I acknowledge both the clusterfuck that is working with health insurance carriers, and the fact that not everyone has insurance. But accepting insurance makes your services accessible to more than just folks who can pay $450/hr out-of-pocket.
posted by rhiannonstone at 2:54 PM on June 14 [11 favorites]

One of the herbalism and other related stuff folks I read, Alexis J. Cunningfolk, has had some great comments on sliding scale and implications (here's a post of recent updates about thoughts on this, which links to a lot of other material) . They do a great job poking at the intersection of 'what's sustainable' and 'what about this is inside my head about money', and 'what makes things meaningfully accessible'.

They're mostly talking in the context of courses (where X seats at $Y, A seats at $Y-20, etc. is doable), but you could choose to do the same thing. Figure out what the actual raw costs of providing the office space and related logistical needs are (including 'paying back any student loans'), and then a moderate number for your time as the lowest amount, then figure out what your general rate is (closer to other practitioners), and maybe somewhere in the middle. Figure out how many of the lowest rate you can offer and meet your needs and financial obligations, and then work up from there.

The other thing is to consider offering sliding scale to people who can fill in gaps in your schedule, whatever that looks like for you. About a decade ago I was seeing a Feldenkrais practitioner after a major health crisis, when I was unemployed for about a year (so money was really tight).

The way we worked it was that I got his cheapest sliding scale rate, but I also filled in a gap in his schedule (usually middle of the day on a Tuesday) that would otherwise have been empty for him, and he could have other times free for people who were paying at the high end of his scale when they were more likely to be interested and available. There were some times he had to bump me, and that was also fine. It got me through a really hard year in a way that was manageable financially.

A lot of young adults may not have the flexibility, but some will, and it may allow you to have a more sustainable baseline overall in order to support the rest of the practice.
posted by jenettsilver at 3:17 PM on June 14 [2 favorites]

I feel like this should all come under the heading of "How to run a business" and you should take a class in it. I would think the first step in setting up a business is making a list of your expenses, figure out how much you need to bring in to keep the lights on, and how much on top of that you need to make for your salary, and then whatever your fee is comes out of that.
posted by bleep at 3:32 PM on June 14 [7 favorites]

I don't live in this city (which is probably NYC or in California), but the exorbitant price of therapy in specific cities is part of why I could not live in those cities, or would have to do telemedicine instead. I'm in an academic Psychology program but have chatted about this topic with a few other people, and honestly I think the cash prices in those particular cities are ridiculous. I think it's sort of a historical thing, where generally the most prestigious psychiatrists were in coastal cities, never took insurance, and tended to focus on high earning clients which pushed up the rates for everyone else. This article has a good discussion of rates in different cities, but those numbers include all sorts of therapy services instead of just cash-only Psychiatrists.

You absolutely don't need to charge this much if you don't want to, and it is my impression that Psychiatrists in these cities tend to make a lot more than in other cities even with the expenses. If you want to try and set a more reasonable base rate, you can take a rate standard in a different City (like Seattle), and adjust for the cost of living difference (which would not be much as Seattle is very expensive but has much cheaper therapy). Then from that base rate, you can adjust it as others mention. But your initial instinct is correct, the rates for Psychiatrists in your city are unreasonably high
posted by JZig at 3:40 PM on June 14 [2 favorites]

I had a recent conversation with a friend who is an independent health-care provider. They mentioned that last year, after office expenses, insurance, licensing fees, etc. etc., that they made less than $20K. Covid, but... make sure you don't end up in the same boat.
posted by kate4914 at 3:47 PM on June 14

I don't find this paternalistic.

Would it be possible for you to set a base rate with circumstantial adjustments, eg. sliding scale for LGBTQ+/Black/trans/those who deserve a catalyst/etc. and collect a base rate from clients/patients established within themselves financially? I've found many stable patients appreciate this method, and it allows for advertisement as an ethical/sustainable source.

I am not a psych but I do this with clients in an attempt to smooth over income gaps. It works well, and if I pick up a sliding scale client, sometimes I try to pickup a level client or two to even the scales. Mental wellness is for everyone.
posted by firstdaffodils at 3:53 PM on June 14

About mindset...

"Money is velocity to change" is a phrase that has really helped me, as someone who believes hoarding wealth is immoral, places little value in security, has an abundance mindset despite scarce resources, and is struggling to become financially solvent.

As a member of a helping profession, it's important to hold a stable space for your clients. How can you do that if you're preoccupied with survival? Secure your time, money and energy so you don't burn out. It's not just for you, it's for them too.
posted by lloquat at 4:09 PM on June 14 [1 favorite]

I can't help but wonder if the non-psychiatrist physician friends actually have any direct experience with medical billing and managing overhead expenses. Most solo-practitioner professional services practices -- medicine, legal, engineering, etc -- have hourly rates that seem obscene on the surface, but typically they are not collecting 40 hours/week at that rate. It takes time and money to run a business, and when it's just yourself, you do not get the economies of scale that come from a group practice. And sometimes even the billable hours are not collectible due to something that happened on the client-side. So you spend some amount of your work hours on the non-billable administrative side of things. Maybe you need to figure out a way to accept insurance, so that you can accept a wider variety of patients. Maybe solo practice is not for you, and you'd be better off in a group practice that serves the kind of patient population you want to serve. Or maybe split your time between private-pay clients at your own practice, and some small amount of hours in another practice. I agree with the suggestion above that you get a better handle on the details of running a solo practice before you head into it.
posted by stowaway at 4:22 PM on June 14 [4 favorites]

Someone close to me was laid off and is seriously mentally ill in a very expensive city. They have Medicaid coverage but are on a waiting list and have been. So they have paid thousands out of pocket (credit cards) - tens if you want to talk both psychiatry and psychotherapy - over the pandemic.

It’s unlikely their mental health was improved by this financial burden.

If you can do something sliding, do that.
posted by OrangeVelour at 4:34 PM on June 14 [10 favorites]

In the insurance industry this is known (probably offensively) as the "Arab Sheikh" problem. God forbid you let a patient who can afford almost anything get by with paying less. But if all your colleagues are charging a high top-line rate, then it's not high, is it? Take patients on a sliding scale, donate your time, donate your money. It's great that you are aware of this situation.
posted by wnissen at 5:05 PM on June 14 [2 favorites]

Addendum: additionally, I've found changing the phrasing for 'sliding scale,' can help slightly. In an area like mental health, sometimes people are inherently humiliated or bewildered. Terms like, "financially selective," or "circumstantial pricing." can plant seeds to change mindset.

It allows the patient or client more integrity, it also implies even with the veil of a class barrier, it's most likely not the person's fault they're in the position they are in.

Best of all, it allows care for people who deserve care in a system inherently dysfunctional. You probably already know you're likely to necessitate concessions in your profession for this "system."

Happy to see you asking the good questions.
posted by firstdaffodils at 5:37 PM on June 14 [3 favorites]

The most dysfunctional patients have no hope of getting needed care in many systems, that’s absolutely true and not something you should ever lose sight of. It can be tempting to rationalize this in all kinds of ways, but that’s the bald truth.

I think compartmentalizing your practice is a good idea, with X% of the wealthy worried well subsidizing Y% of people who desperately need medication management (either through a group practice or in a hospital setting if that’s possible).
posted by cotton dress sock at 6:55 PM on June 14 [3 favorites]

Consider offering telehealth appointments through a platform like Teladoc. They handle the insurance paperwork for you, telehealth allows people to have an appointment on a break from work rather than having to take time off, and you can steer IRL clients there for follow ups as well.
posted by jessica fletcher did it at 4:11 AM on June 15

I work in mental health but I'm not a prescriber. What I have done is set up a cash pay practice charging market rates, and paneled with a couple of larger insurance companies that have a reputation of being easier to work with. I also keep a set number of slots for reduced rate clients. I get mine through Open Path but there's probably something similar for psychiatry.

If access and social determinants of health are important to you from a values perspective, not accepting any insurance isn't really compatible with that mindset. Deciding to have x percentage of your caseload be insurance or sliding scale based on income is a way to account for both the realities of how much goes into this work and the realities that not everyone has the privilege to pay out of pocket for quality care.
posted by crunchy potato at 8:07 AM on June 15 [6 favorites]

I would argue that if your colleagues are able to charge high fees and people are willing to pay, then that is what your services are worth. Of course not everyone can pay those amounts and if you can, it is wonderful to accept some clients on a sliding scale. BUT! The problem here is not what clinicians are charging. The problem is that insurance companies will not reimburse clinicians at rates anywhere near the value and cost of their work. And on top of that, it can be hours of extra work to actually get them to pay you, which makes their rates even more pitiful.
posted by Viola Swamp at 9:14 AM on June 15 [1 favorite]

Sounds like you’ll need some time in the profession to value yourself and your knowledge at that rate. Money is an energy exchange. If I do five sessions at $200 but for $1000 total my life is vastly improved then it’s worth it.

Consider also that your schooling was expen$ive.
posted by St. Peepsburg at 9:17 AM on June 15

Don't own the ills of capitalism and don't sacrifice yourself to them.

Meaning: the rates are horrific, access to quality care is a crisis, and also these are not yours to solve or shoulder.

You are also a person existing in capitalism who needs to pay your bills. You spent a lot of money on your education and lost opportunity cost for all those years you weren't working. The cost (both financial and emotional) of running a private practice is high and needs to be covered off. Your field of work is draining and you need flexibility to pull back, work less as needed in order to avoid longer term burnout.

Personally, as someone who grew up poor/on welfare, has no generational wealth or financial support, and graduated my professional program with lots of debt, I plan on charging full market rate until my debt is paid off and I'm at a place in my life where I have the breathing room, financially and emotionally, to offer sliding scale/pro bono services.

Consider also that helping professions often are expected to provide labour for free/cheap, when no one expects this of, for example, a lawyer, or realtor, or mechanic. Is it a sexism thing, given helping professions are historically women's work? Maybe.

There will be many burdens on your shoulders and in your heart through the course of your career. Because you are a compassionate and caring person. That compassion and care is at risk if you burn yourself out. And if you are struggling financially or not getting paid the full value of your worth you are far more likely to burn out, where you'll be helpful to no one.

Take care of yourself, protect your heart and compassion fiercely, and recognize that a sad part of doing that within capitalism means you're not going to be able to help everyone who needs it.
posted by EarnestDeer at 10:32 AM on June 15 [4 favorites]

I was one of my psychiatrist’s first patients in his solo practice, and what made it doable for me to pay his NYC level rates was:

-when he first opened the practice, he charged ~ 20% less than the “going rate” in our city. I was one of his very first patients and he never raised my rate.
-he didn’t take insurance, but he made it very easy to submit claims as out of network by providing me with all the necessary paperwork for my specific insurer.

He did not do sliding scale, but my therapist did and I think it’s a wonderful thing if you can swing it.
posted by nancynickerson at 11:12 AM on June 15 [2 favorites]

I agree with others that you have to pay your bills. You're also a trained professional and you deserve to be compensated appropriately.

That said, when I first started seeking psychiatric services, it was at a rate much lower than what you're describing as standard for your city, and after about a month of talk therapy sessions I found that the extra stress and anxiety of worrying about how I was going to continue to afford to pay for treatment far outweighed the benefits I was getting from the therapy. I don't begrudge my doctor for charging the rates that she needed to charge, but the price itself literally reduced the value of the therapy for me. I really like firstdaffodils' suggestion regarding terminology here: if you find yourself in a position to be able to offer some kind of accommodations for your clients' differing income levels, be careful of a term like "sliding scale" that may be too on-the-nose regarding what you're doing. Despite not really being able to afford my psychiatrist's services, I would have felt extremely undeserving of her charity if I had thought that was what was going on, and even if I had decided to accept it I think it probably would also have undermined the effectiveness of the therapy.

But again, you need to pay your bills. You can't help anyone if you're not financially solvent and comfortable enough that you're not constantly stressed yourself. Get the business side of your practice figured out regarding what you absolutely need to earn, then decide how much flexibility you have in terms of what you'll charge relative to the rest of the market in your area.
posted by biogeo at 5:12 PM on June 15

Therapist here. Started out with the wait whut mindset. Then I factored in taxes, overhead, etc., and I am making it but barely. Mindfully. I accept reliable insurances, which helps a large number of people with jobs. And I take on a certain couple of folks at very very low rates. The well-off folks basically help offset the sliding scale folks. That’s how I view it.
posted by executive_dysfuncti0n at 6:49 PM on June 15

Accountant with professionals as clients. Standard comment at some stage, "When I was learning how to become a professional, I never expected that I would be running a business".

First rule - NO FREE consultations/sessions/enquiries. Extended payment terms can always be arranged and your services are VALUABLE.

Second rule - you need to make a PROFIT. If there is no profit, you cannot continue providing your services and your patients will be in even worse shape.

Sliding scales are all very well - but that is another level of involvement and enquiry with your patients, which is on top of the time that you are actually treating them - so offer a discount as and if you want.
posted by Barbara Spitzer at 10:39 PM on June 21

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