The PROS of Starting an OT Private Pay Practice
What you should know before starting your Occupational Therapy Private Pay Practice.
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Starting an Occupational Therapy Private Pay Practice is absolutely exciting but also nerve-racking. While there can be some drawbacks, it is absolutely rewarding both personally and professionally.
In this video I share with you 3 different pros we have encountered since starting our Occupational Therapy Private Pay Practice back in 2014.
This video is not intended as professional or legal advice. Be sure to seek the services of a professional and understand the risks you are undertaking.
Transcript of Video:
You're not going to be able to work forever, right? There is going to become a point in time, either through what you think, or your interests are going to change. And you want to change into a different career. You're going to be physically unable to work. You're going to become mentally unable to work. It runs the gamut. It's just physically impossible for you to work forever.
So what does that mean? It means you have to have the ability to support yourself when you're not working. And the only way to be able to have that ability is to become financially independent. If you do not become financially independent, then that means when you get to the point of not being able to work, you actually become a burden on someone else. They have to take care of you financially. And I have never met an OT in my life who wants to become a burden to somebody else.
If you don't know me, my name is Doug Vestal and I help OTs just like you start and grow thriving, private pay practices. And I make these videos so that you can learn from the mistakes that we made when we started our OT practice, so that you can become successful more quickly. And today I want to talk about all about the pros of starting and running your own private pay practice.
So I'm not going to cover everything, it's not an exhaustive list, but these are really the top three that my wife and I have found from owning our own OT private pay practice for close to the last decade.
And the first thing I'm going to start with is this idea of occupational choice. So let's think about why you became an OT to begin with. Most likely you're like all the other OTs that we've met, which is that you are a giver.
So you found OT to be a calling and I've never met a profession really that continues to reinvest from a continuing education perspective, into different modalities, different ways of treating, different ways of doing motivational interviewing, different ways of connecting with your clients so that you can get them better. And a lot of times you're spending your heard earned dollars to do those things. You're spending, you know, time away from your family to go on continuing education trips over the weekend to learn from the best.
And so every OT that we've met has been so incredibly passionate about the work they do. But then often what we found is that they get into the hospital or they get into the clinic and they realize one critical thing, which is healthcare is a business. And because it's a business, many times it's ran by people who don't actually see the client.
And so there's this huge administrative overhead and burden that gets placed on OTs. And so from documentation to insurance approvals, to ever changing standards of care, to a large caseload work that piles up even outside of your client sessions, a lot of OTs become burned out and they become kind of disingenuous about the care that they're given, because what turns out to be what they thought OT was going to be, is actually different from what they experience in practice in many hospital based settings. And so they can kind of be, become a little bit disillusioned. And when you couple this with wanting to be a human outside of the clinic, you know, wanting to have time for hobbies, wanting to have time for your spouse or partner wanting to have time for your kids, it can be really, really challenging to manage all of these things.
And this was the dilemma that my wife and I faced when we were starting our own private pay practice in New York city. So we had a one and a half year old at home. We had, my wife was I think, six months pregnant. And we know we wanted to do something. We know we wanted to do something on our own. It wasn't a foregone conclusion yet that we wanted to do private pay, but we started listing down the things that were important to us. And the things that were important to us was obviously first and foremost, like providing a really high standard of care to clients, being able to be in charge of designing the treatment for the clients, being able to be in charge of deciding how long we wanted to see the clients and things outside of the clinic, like being able to take off a Thursday to go on a field trip with our kids, being able to have the time to become class parent, right?
Like your life, you have a life outside of the clinic. And so we started to think through these things and we realized that private pay was the choice for us because it gave us all of those things. And it gave us certainty around reimbursements and rates.
We were able to have a little bit more certainty around if we saw a client for an hour, what was that client going to pay us? We didn't have to deal with any third parties. And so OTs, you know, love to talk about you know, occupations with their clients, but really thinking about your own occupational choice, about being able to see your client where you want, when you want, for as long as you want and how you want, becomes really critical in our mind to delivering the highest standard of care that we want to for our OT clients, which is really kind of the reason that a lot of OTs go into it to begin with. They don't go into it, because they're excited about the paperwork around the approval process.
They just want to get in, see their clients, be fully 100% present with the clients and provide the best standard of care. And we found private pay is the business model that gives us that ability to do that and gives us the occupational choice that we so wanted.
The second pro that I wanted to talk about is personal development and investing in yourself. There is no way that you can own a successful occupational therapy, private pay practice, and not continually do personal development and business development. Now for us, this is incredibly exciting. There is a double edge to this sword, which is it could become a con for some people. And I did a whole video around the cons for private PA practices. I'll link that in, in the description so that you can watch that if you haven't.
But for us wearing all of the different hats that are needed in a private pay practice was incredibly exciting and rewarding. And so if you think about it, like once you open up a private paid practice, you're not just the clinician anymore. You're not just providing the care for that 30 minutes or an hour or 90 minutes.
You have all of the business stuff. So you have to look at marketing, you have to learn selling. You have to learn how to become per persuasive and be able to influence people because you need to motivate and move your ideal client from doing nothing to actually calling and, and booking with you and staying through your entire case that you've designed for them. You also need to work on your presentation skills, because you're going to be giving community workshops to drum up leads.
So there's a lot of different things that you have to do that are not just specific to providing the care during your client sessions. And for some people that's overwhelming and they don't want do it, but for us, this was incredibly exciting because for us, it really meant we were growing.
I think as humans we are meant to grow, we are meant to acquire new skills. That's what I think makes life exciting. You know, when I think back to when I'm the happiest, it's when I'm showing up and serving people, but I also feel like I'm growing, I'm evolving as an individual, I'm acquiring new skills. And so yes, it can be hard. It can be frustrating, but you get what you put into it. And we always go back to this growth versus fixed mindset. So you probably learned about it in OT school or in your reading.
It's very common, but you know, growth mindset says that skills, intelligence capabilities are something that can be learned in practice. Nobody's born with these things. Whereas a fixed mindset says, you know, you have to be born with those things. It's basically innate and you can't develop those things. And the good news is that all of these things that we were talking about, learning how to market, learning how to price your services, these are all things that can be learned. And we tend to forget this.
So we tend to, you know, apply growth versus fixed mindset to other people. And we can forget that it actually applies to ourselves. So I can meet with incredibly smart and talented occupational therapist who desire to start their own private paid practice. And when I ask them, what's holding them back, they'll say things to me like you know, I don't know how to market I don't know how to, to find my clients.
I don't know how to price my services. And when I hear that that's a little bit of a fixed mindset. So I always coach them, add the word yet to the end of that sentence. So I don't know how to market yet. I don't know how to find my clients yet. I don't know how to price my services yet because adding that yet at the end of the sentence is just one word. It's very simple. But the self-talk you do is, is critical for whether or not you believe you can do it. And when you add that word yet to it, your brain kind of goes into overdrive and says like, okay, this is something I can figure out. This is just a skill I need to learn. And it gets you into that growth mindset so that you say, okay, if I don't know how to do it, how do I find out how to do it?
Or who is the person who can teach me how to acquire those skills? And so for us, we've gotten so much personal fulfillment out of developing these skills of putting ourselves out there of trying to market to clients, interacting with clients on our own accord, pricing our services, understanding the whole psychology that makes people purchase, makes people adhere to their treatment plan, adhere to their exercise protocols. And that has been incredibly fulfilling for us.
So the last one I'm going to mention is number three, and that is money. Now I know money is a very controversial topic within OT. And here's the thing. I know you didn't become an OT because the only thing you cared about was money, right? You, as I said, in the beginning of the video, you became an OT because you're a giver, you were called to serve.
If you wanted a lot of money, you probably would've chosen a different career. You would've gone into anesthesiology or radiology or become a plastic surgeon. So I know money is not a huge focus, but that doesn't mean money isn't important, right? So you need money to pay off your student loans. You need money to buy your kids' braces. You need money to care for an elderly parent. You need money to buy that car. So you can get to work. You need the money to put the down payment on a house and to pay off your mortgage. And most importantly, you need money to save for retirement. And this is absolutely huge and it often gets missed.
So people think about money just in terms of what they can pay. I think about money in terms of what can we save? What can we give back and how can we set ourselves up to become financially free? And if you think about it, you're not going to be able to work forever, right? There is going to become a point in time, either through what you think or your interests are going to change. And you want to change into a different career. You're going to be physically unable to work.
You're going to become mentally unable to work. It runs the gamut. It's just physically impossible for you to work forever. So what does that mean? It means you have to have the ability to support yourself when you're not working. And the only way to be able to have that ability is to become financially independent. If you do not become financially independent, then that means when you get to the point of not being able to work, you actually become a burden on someone else. They have to take care of you financially. And I have never met an OT in my life who wants to become a burden to somebody else. So saving for retirement and having your eye on the prize, making sure that from a personal finance perspective, you are achieving your goals, that you have goals that you're actively working towards them is absolutely huge because the more financially independent you can become the less stress you're going to have in your life and the more choices that you're going to have.
And so what we found is that with only your own private pay practice, your ability to, from a money perspective increases dramatically. And if you really think about it, so private pay gives you two things. One is the ability to give yourself a raise, the ability to earn more. And we're going to talk about that in just a second. And it also gives you the ability to save more for retirement through some structures that are available. So that's attack the first thing, which is that you have the ability to give yourself a raise. So if you think about the hospital based setting or the clinic setting that you're working in, the only way for you to get a raise is to negotiate one with your boss. And they may say, yes, they may say no. Or to start a side gig, right? See somebody per diem on the, on the weekend.
Those are the only two ways you have the ability to get a raise . With private pay, you have at least three different ways to receive a raise. So the first is you can just increase your rate for each session. So if you increase your rate per session by 10%, congratulations, you just gave yourself a 10% raise. You could do that every single year up to a certain point. So when was the last time you received a 10% raise the first year, a 10% raise the second year, a 10% raise the third year? That's assuming that none of your clients drop off. The other thing is you could increase your rates by 10% and have less than 10% of your clients cancel. What does that mean? It means you're still earning the same amount of money, but you're seeing less clients. So you're earning the same amount of money, but your time with clients goes down.
And what do you use with that free time as you see sit. To be the class parent, to chaperone school trips, to prepare for the 5k that you've been wanting to d,o to take that cooking class, to go on a vacation with your spouse, because you can take Fridays off now. So you have a lot, you can either give yourself, you know, a raise in terms of money, or you could give yourself a raise in terms of time, which is huge. And the idea is you are in control of that because you are the business owner and you're setting the rates and you're setting your own schedule.
The third way you could give yourself a raise is you could hire a new person. You could hire another OT, you could hire a PT, you could hire a speech therapist.
And if you are charging per client session, $200 an hour, let's say, and you're paying your employee $85 an hour, then guess what? You have extra money. You can use that money to reinvest in your business. You could use that money to donate. You could use that extra funds to do more pro bono work. Or you could just give yourself a raise, or you could do some combination of all three or four, right? But you have the ability to be in, in control.
And that brings me to the ability to save for retirement. So most people don't know this about 401ks. Most people have a 401k through their employer, and most people know that the maximum amount you can contribute, it changes every single year, but it's around $20,000. Depending on the year.
So that's how much you can contribute as an employee. Now, many people will get an employer match and that employer match may be 3 to 5%. It's generally on the low side. So it's a benefit. Your company is offering you, but many companies want to keep their benefits as low as possible because it's a cost to them. They have to come up with the money. It's not free money. They have to be able to have the cash to put into your retirement account. And so many people, if they're lucky are able to save at a maximum amount, maybe 25,000, $27,000 into their retirement accounts each year. Now the cool thing is, and what isn't talked about a lot, is that actually employers are able to contribute much more than the 3 to 5%. The IRS rules says that employers are allowed to contribute up to 25% of your salary.
Now there's another cap, which is that your employee contribution and your employer contribution has to be less than 61,000 at least than 2022. So that means that your employer, plus you can contribute up to 61,000 as long as your individual stays below the threshold. So think about this. If you own a private pay practice, you can establish your own 401k as the business owner. You're now the employer. And as long as you have the right amount of revenue and income coming in, and you can pay yourself the amount between you and the contribution your company gives you, you could be saving $61,000 in your retirement account. That is absolutely huge. So we always recommend that the next day after incorporating you start your 401k and you start contributing both as an individual and have your company start matching you. Think about how more quickly would you be reaching your financial goals if every single year you were had the ability to save $61,000 pre-tax and have that grow tax free and then start taking it about in retirement. So this is huge to putting you onto the path of financial freedom, reducing your stress, giving you the options that you want and still serve your clients in the best way that you know, possible through the private pay model.