Psychologists in the Marketplace

Setting Fees
Koocher and Kieth-Spiegel note that fees for services vary greatly by degree and area of the country, and some studies show by school of psychotherapy. Psychodynamic therapists charge more, while cognitive-behavioral therapists charge less. What constitutes a unit of therapy (45 minutes, 50 minutes, or an hour) varies as well, with some providing 50 minutes of therapy and doing 10 minutes of paperwork for each session. Note that some insurance companies have different codes for 60 minute hours and 50 minute hours, and to bill 60 minutes and give 50 minutes is unethical. Some therapists offer sliding scales, or charge less for clients having more sessions per week. Some also require the client to pay and collect reimbursement for fees. I have found that insurance companies may take three months to pay me, but my clients say their reimbursement takes a month.

Billing Clients
They also discuss low-pressure and high-pressure selling tactics, and the unethical aspect of this. Statements like, “You’re going to end up divorced if you don’t come to therapy,” or “You can come up with the money if you really were motivated to see me and get better” are clearly using your position of power over a client to gain from them. On the other hand, someone with substance abuse problems who can come up with $100 a week for drugs can likely afford some kind of help. Setting reasonable fees takes a bit of work.

They also discuss “creaming and dumping” patients, which is clearly unethical. The text presents an example of a psychologist who clearly knew the limits to insurance coverage, saw the client for as many sessions as the insurance company would cover (“creaming”), then referred them to a mental health center and ended therapy abruptly (“dumping”). There is a difference, however, between this and working with a client for several months who has a sudden and unexpected financial setback. You could work toward termination over several sessions, and make a referral to help them end with you and then start with another therapist, providing records and consulting with that therapist as needed. Alternately, I have reduced my fee for clients who lost their job or got divorced, with the agreement that it would go back up when they became employed again. I’ve also renegotiated my fee to a lower amount in some cases to help a young adult dependent on parents to start paying for his or her own therapy.

I will point out, however, that you have to pay your bills too, so turning away clients who can’t afford you is not unethical (unless you have already accepted them for therapy and worked with them, in which case this can be abandonment). When you see a client, you give them therapy, they give you money. Keeping this straight is part of keeping boundaries straight too. You are less likely to become over-involved with clients, confuse your own needs with theirs, or get burned out and resentful of client demands if you see the lines clearly and stick with them. Clients are likely to feel the same.

Keith-Spiegel and Koocher suggest you discuss all of this at the outset and make billing, insurance coverage, and expectations of times and amounts of payment clear at the outset of therapy. I’ll add acceptance of checks, credit cards, cash, charges for bounced checks, etc… must be clear too. Likewise, reasons for upping the fee, or policies on charging for missed sessions must be made clear too. It should go without saying, but we’ll say it anyway, that charging an insurance company or agency for missed sessions, when your contract says you don’t, is unethical.

It’s not that charging for missed sessions is unethical, it’s that the contract you signed contained a clause on this. Some insurance companies might say that you can bill the client, those most specifically forbid billing them for it because it is asking the insurance company to pay for services that were never rendered. The issue is adhering to the contract you signed. I am somewhat lenient on this myself; at least 12 hours notice will generally be sufficient, with emergencies being exceptions. I don’t charge for a missed first session, however, since we haven’t had the chance to sit down and talk this through, giving the client a chance to ask questions and clarify as needed.

Fee Splitting
Fee Splitting refers to splitting the fee for services you provide with someone else who does not provide any services. Fee Splitting (note the capital letters) is not the same thing as splitting your fees. I was technically a consultant to my former practice. I saw clients and split the fee with the group in an agreed upon percentage. Part was for me, part was for the group practice to pay for electricity, secretarial services, a voicemail system, fax and xerox machines, billing services, business cards and stationary, marketing, office furniture…. Plus, my practice conducted group supervision and consultation, and we marketed for the practice to benefit everyone. None of this is unethical, so long as the percentage that went to the practice actually did cover the costs of what the practice provided. Likewise, renting office space for a percentage of the therapy fee is not unethical, nor is having a portion of the fees you collect withheld by the agency to pay your supervisor (you can’t pay your own supervisor and have the hours count toward your licensing requirements). In many group practices, starting therapists are paid less, given supervision (as required by law), and then make more when they are licensed. (Ethical point: If you are supervised, the client must know the name of your supervisor and some contact information). Likewise, referral to colleagues you know and trust (or even to your own therapist) is not unethical so long as there is no financial compensation for it. All of these kinds of fee splitting are fine.

What kind of Fee Splitting is not fine? Suppose I charge you 10% of your therapy fee because I simply refer a case to you. I do not conduct an intake appointment to screen the client and assess their needs. I do not provide ongoing consultation or supervision for the case. I do not provide emergency coverage for you after hours. I simply gave the person your phone number and suggested they call you. In this case, I would be expecting you to split your fee with me without actually providing any service to earn that payment. This is what is unethical.

Why is the “business” of therapy such a big deal?
Therapy is about helping people first and foremost, but it is a business too. If you support yourself with it, it is more like other kinds of businesses, and issues such as setting fees, collecting them, and making “business decisions” will come into play. Consider this…

You finish your degree owing $100,000 in student loans after deferments, capitalization of interest, etc… That will end up being about $1000 a month in student loan payments (with more due each month if consolidated over 10 years, less over 30 years). If you charge $50 an hour for therapy, giving $25 to the company that provides office space, furniture, phones, fax/xerox machines, file space, billing and marketing services, secretarial services, emergency coverage, etc… (which is a deal for $25 a client), that’s really $25 an hour in your pocket.

To pay your monthly loan payment, you have to generate $1000 a month ($12,000/year), and then pay taxes at about 30% as a self-employed consultant, which is another $428 a month ($5136/year). Add malpractice insurance, APA dues, one workshop a year and books and journals for continuing education… and it’s easily another $1200 a year (that’s all tax deductible so we won’t compute taxes for it). Say you want to live on $20,000 a year ($1667 a month for your rent and expenses); that’s $20,000 for you and $8571 in taxes.

So, you have to make $46,907 a year at $25 an hour. That’s 1876.28 hours, sliced into 50 weeks is 37.53 hours per week of therapy, or 38 patients a week. Of course, if you charged $80 an hour, it’s only 24 patients a week;$100 an hour, it’s 19 patients a week.

Going further, my former practice paid about $3000 a month in rent. That’s $125 a day at 24 days (Mon through Sat) a month. If four people see clients every day/night, then the first $31.25 each person collects each day/night for the practice simply pays their portion of the rent for that day/night.

Say you pay the secretary $20,000. That’s $385 a week, divided by 10 clinicians is $38.50 a week. So, if you work three days a week doing therapy, that means $12.83 a day of what you generate for the practice goes to the secretary. Thus, most of what you collect for the practice for the first six clients you see in three days is already spent for rent and secretary salary. No utilities, insurance, equipment, testing or office supplies, or any kind of savings are produced.

Some people can generate sufficient referrals to keep 38 patients a week, and actually see them and keep their lives and issues straight. Personally, I couldn’t do that with 19 patients a week. Clearly, it doesn’t look like you can make a living on therapy alone at $50 an hour (but imagine you charged $150 an hour…). However, if even half your professional time is spent on therapy, you can see how financial pressures could compromise your motivations.

On the other hand, if you don’t see therapy as your primary means of supporting yourself, this becomes less of an issue. You can reduce fees to $25/hour for students, see a client who pays out of pocket for $50/session, write off some charges to avoid sending a client to collections, and allow a client in crises to continue seeing you without being able to pay every week. You can also see, however, that your other activities had better be profitable to make ends meet.