Ask Joe: How To Transition To Private Pay? | POP 599

Image of Joe Sanok. On this therapist podcast, podcaster, consultant and author, talks about how How to transition to private pay in your private practice.

Are you thinking about transitioning from insurance to private pay? How do you work out what to charge for the value of your sessions? How does considering the client’s standpoint help you decide?

In this podcast episode, Joe Sanok speaks about how to transition to private pay.

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In This Podcast

  • Consider the client standpoint
  • Look at your income numbers
  • Compare prices
  • Marketing and networking

Consider the client standpoint

If you are wanting to transition from insurance to private pay, consider your client’s reaction: it would not be a great feeling if one day your doctor suddenly stopped taking your insurance.

Complete a stocktake of your client base; what are the percentages of each client group that pays you through one of the big insurance companies?

This helps you have an idea of your numbers and which companies you will need to transition away from into private pay.

Make sure you are looking at the [insurance] contracts and studying to see when you can opt-out if there is a period of time and you have to give 30 days or 90 days. (Joe Sanok)

Look at your income numbers

You can also be strategic about transitioning out of insurance into private pay by looking at your income numbers and evaluating which insurance company is best for you.

Look at how close it is to what your private pay would be because sometimes with the number of clients that you are seeing if it’s an easy enough insurance to be on if they pay on time … it might be worth it to keep some insurances strategically. (Joe Sanok)

While you make the transition from majority insurance to majority cash, consider keeping one or two of your best insurance companies on board so that you will still have some reliable income until your private pay is more set up.

Compare prices

Look at what other clinicians are charging in your area for private pay. Depending on the state or the city, some places are more lucrative for private pay than others.

Therefore, you want to make sure what kind of area you are in before you make your final choice: does your area use more insurance, or private pay?

Not only is it about prices, but it is also about how you price your services under the value of your work.

Marketing and networking

Your website should really show this transformation. It really should show the outcomes of therapy [with you]. (Joe Sanok)

Update your social media and your website to align with the value of your work, and to show your clients that private pay is an investment in themselves.

When clients phone your practice, make sure that your assistant is well-trained in explaining the processes of private pay to the client. Be transparent with your clients about why you offer private pay and the different kinds of benefits that they can enjoy when they pay cash versus on insurance.

Books mentioned in this episode:

Image of the book Thursday Is The New Friday written by Joe Sanok. Author Joe Sanok offers the exercises, tools, and training that have helped thousands of professionals create the schedule they want, resulting in less work, greater income, and more time for what they most desire.

Useful Links mentioned in this episode:

Check out these additional resources:

Meet Joe Sanok

A photo of Joe Sanok is displayed. Joe, private practice consultant, offers helpful advice for group practice owners to grow their private practice. His therapist podcast, Practice of the Practice, offers this advice.

Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.

Thanks For Listening!

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Podcast Transcription

[JOE SANOK] Taking care of employees has never been more important for years. Gusto has been helping more than a hundred thousand small businesses run payroll, offer benefits, onboard new employees, and more. They call it the people platform. And it doesn’t just look nice. It works. Your payroll taxes are filed, deductions are calculated and your team gets paid. You can even offer health insurance and 401ks. Get three months free after your first payroll when you go to That’s

This is the Practice of the Practice podcast with Joe Sanok, session number 599.

Well, welcome. I am Joe Sanok, your host. I am so glad that you are here today. Every Wednesday for a while, I’ve been doing these “Ask Joe’s” and I am so excited about today’s question from Emma Cobble from Denver, Colorado. Emma wants to know about how to transition into private pay. So I’m really excited about this because my entire practice was private pay before I sold it in 2019, when we were at our peak. We had teen clinicians and we were all private pay. So private pay, I think, has a number of advantages. You don’t have to worry about insurance claims. Oftentimes you might do a courtesy bill or things like that but you have a lot of autonomy in regards to what you’re going to charge, how you’re going to charge, what you’re going to do. So a lot of people will add private pay as part of their equation or all of their equation.

So with this question that Emma asks how to transition, I’m assuming that Emma’s practice already is a insurance-based practice. So let’s just start with that. So you have all these people, they’re building their insurance, and let’s just think from a client standpoint, what you would want. Well, I mean, I personally wouldn’t like it if my doctor, all of a sudden didn’t take my insurance. So I would first start looking if you’re transitioning at looking at your actual caseload, what percentage are taking, say, Blue Cross, what percentage do you take of Priority Health or Aetna or any of those other major players so that you just have an idea of the numbers and impact? I would also look at those individual contracts because each contract can be different. I had one consulting client and we were working through this transition to go from insurance-based private pay.

I said, make sure you look at those contracts and contact them right away and between our two consulting calls that month, her contract automatically renewed and per the contract, she couldn’t get out of it. She had to take that insurance for another year, even though she really didn’t want to take that insurance. So make sure you’re looking at the contracts, that you’re studying to see when you can opt out, if there’s a period of time, if you have to give ’em 30 days or 90 days. Also look at the numbers of what you’re being paid. Look at how close it is to what your private pay would be, because sometimes for the amount of clients you’re seeing, if it’s a easy enough insurance to be on, if they pay on time, if it’s pretty streamlined, it might be worth it to keep some insurances strategically. Now, if you have a handful of people or hardly anyone that is on one particular insurance, it may be worth it to leave, especially if that’s a lower cost one as well.

Next, what you’re going to want to do is you’re going to want to look at what other people in your area are charging for private pay. There are some areas that it’s very lucrative. So in parts of California or New York or larger cities, you can be private pay very easily, but then in other areas that are more rural, oftentimes private pay can be harder. Even if you’re doing courtesy billing and doing all those extra things, you want to make sure that you have an idea of your area before you dive into private pay. So unless you’ve done this research, you’ve left a couple insurances that don’t pay very well, that’s a great start for being able to set yourself up.

So then let’s think about why someone would want to pay out of pocket instead of using their insurance, or if they didn’t take, maybe you didn’t take their insurance, why wouldn’t they just go to somebody else? Well, there is a number of different reasons. So if you’re in the military, if you’re wanting an FAA or some levels of scuba diving licenses you need to have a clean mental health record. They don’t look kindly upon top secret clearance type things. So some people may want to just pay out of pocket because, I know here in Northern Michigan we have a maritime academy and unfortunately when you want to be in the maritime industry you can’t have a number of mental health issues even if it’s just something really healthy, like working on your marriage or working on yourself.

And, so people would want to pay because of that. Others might want to just pay out of pure confidentiality, that they really don’t want to have anything on any of their medical records that say anything about mental health. I have a number of CEOs or top level people that when I had my private pay practice would want to see me or someone from my practice and they just said, “I just want to be able to give you cash. I don’t want it to even have a credit card statement that comes through here. Don’t even give me a receipt.” So I would keep that in the file in case they ever changed their mind. So there’s a variety of reasons other people might want to do it.

The third big reason is for the qualifications of the clinician. If you are really good, or if you have training in a particular area, or if their friends or family have said, “Oh, my word, you have to work with this person.” I know that the marriage counselor, before I was getting divorced, which is kind of funny to say she was highly recommended. She had worked with a number of people and she was really good. Despite how things ended up for me and Christina it’s one of those things that you want to maybe have a certain quality of care. I even think about doing tutoring. My daughter Lucia who’s 10, we gave her some extra reading, tutoring. We did that whole episode with Fit Learning on here about how good that was. We had to pay out of pocket for that. So if someone’s good at what they do, people will pay for it.

And that’s what I really want to focus on today in this show is that you want to be able to articulate your value more than that you’re just competing with other therapists that take insurance. Because if you can compete on value and what you’re doing, that’s much different. I remember I had a consulting client in the Washington DC area who was really good at working with people that were having trouble sleeping and then having some narcolepsy and things like that. And usually within six to eight sessions, she could pretty much cure them through the methodology she was trained in. And she was having a hard time, I think, jumping from 150 to 200 hundred dollars a session. So we looked at some of the numbers and said, okay, does this person usually come to the office, this was in-person, it wasn’t online, come to the office with someone or do they come alone? And she said, almost always they’re with somebody because they could fall asleep at the wheel or they just weren’t always safe.

So then we said, so how long does it usually take in your area to get from their place of work to your office? And they would come during the day. She said at least half an hour. So we’re talking half an hour there, half an hour back. So an hour for the client, an hour for the person coming, plus the hour in therapy. So we’re talking three hours. So then we said, well, how long do you think the average clinician, how many sessions they would have to do? We looked at, I think, 20 some sessions. So we looked at that as well. We looked at parking costs and all those things that if she can cure it in eight sessions versus someone else taking 20 plus sessions, how much should she be charging per session to make up that difference of coming three hours that you’re wasting every single for 20 sessions versus only eight. And when we ran those numbers, her average should have been around $800 per session. So that’s really important to be able to know those numbers so you can feel confident in your abilities to charge privately.

Also, we want to really think about the marketing side of things. That your website should really show this transformation. It really should show the outcomes of therapy. The pictures should show the outcomes of therapy. And then the last component is how you talk about taking private pay. So when someone calls your office, when you, or your assistant answers the phone and says, “I am sorry, but Emma does not take your insurance. What that means is you’re going to pay privately.” And then explaining that, making sure that you have that really down well. Frequently what we’ll say is, when I had my practice was that Joe does not accept that insurance. He does a private pay model, meaning that you pay and you have the potential for reimbursement.

So you would then submit that to your insurance or your flexible spending or your health savings account and then talking with them about FSAs and HSAs to reimburse themselves through that even if their insurance doesn’t, to at least get some of those tax benefits. While saying that we’re not accountants or attorneys. Make sure you consult your own. So being able to chat through with a client about why you take them privately, why you don’t work with insurances, what kind of extra confidentiality they get and to make sure that the client really understands why you don’t take insurance and how that’s going to affect them. Some people will do courtesy billing or out-of-network billing on behalf of folks. So sometimes your insurance billing company can help with that and do that billing as well.

So there’s a number of ways that you can do it, but the marketing side and the networking and the value proposition is where you’re going to put more of your time. Whereas when you take just insurance, you’re going to be putting most of your time into the acquisition of clients in regards to the systems and the billings. So that’s the best stuff I’ve got for you. We also, if you are a Next Level Practice member we have a whole unit on transitioning into private pay. So make sure you do that too as well.

Well, as you know Gusto is our sponsor today. Gusto is the best payroll management system. It’s what I personally use to make sure all the taxes and everything are pulled out. Make sure you go over to When you use that promo code, you’re going to get three months for free of Gusto to test it out and make sure that that payroll solution is perfect for you.

Thanks so much for letting me into your ears and into your brain. Have an amazing week by special. Bye .

Special thanks to the band Silence is Sexy for your intro music. We really like it. And this podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. This is given with the understanding that neither the host, the publisher, or the guests are rendering legal, accounting, clinical, or other professional information. If you want a professional, you should find one.

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