Why Many Private Practices Fail – Part One

Great clinical skills aren’t enough to create a successful practice. You also need business skills, including consistent enforcement of payment policies. In this post, I will discuss the negative effects of uncollected balances from clients.

Clients have many reasons for not being able to pay for sessions, some more valid than others. Because therapists are taught to be empathic, they often put the needs of the client ahead of the needs of the business. Therefore they often have trouble establishing or maintaining boundaries about payment. The results are uncollected balances and ultimately a loss of income.

This is a bad strategy that has many negative effects that could contribute to the failure of your practice.

Although it may be tempting to allow the client to defer payment, it is generally poor business practice. Deferred balances from clients can create cash flow problems for your practice, which can cause you stress because you still have to pay your bills. Further, Since most balances are never paid, each dollar the client owes you is ultimately one less dollar in your paycheck. In addition to reducing your profits, these uncollected balances can lead to resentment toward the client.

Uncollected balances can also impact the client negatively. First, it can increase the power differential because it literally puts the client in your debt; the client not only experiences you as the “expert” but as a creditor as well. Not only can this cause them to be more guarded in session, but it may also inhibit their independent thinking and insight. Secondly, it does not reinforce client responsibility, which can send the unintended message that the client is incapable. This can negatively impact their self esteem.

Therefore, there are many reasons to prevent uncollected balances. If you are having trouble establishing or implementing your payment policies, it’s time to take a closer look at why. Perhaps consultation with a colleague or supervisor may be helpful.

In my next post, I will discuss ideas for how to keep client balances current.

Yours in the Joy of Knowledge,

Dr. Barb LoFrisco