Psychotherapists' Corner

Compare Your Fee

by

Peggy Avent, PhD

The following article appeared in the Texas Mental Health Counselor's Association (TMHCA) newsletter:

Type of Expense or Activity Usually Paid by Employer (in other types of businesses)
Estimated Cost Adjusted Hourly Rate

Typical hourly compensation from managed care contracts.

$50.00

Business Costs:

Rent

Secretary (including time for redundant and unnecessary paperwork for managed care)

Billing expense, collection services electronic billing fees

Office equipment (computers, copiers, software, FAX, etc.)

Telephone, beeper, answering service, cell phone, long distance, etc.

Business supplies, stationary, business cards, stamps, etc.

Furniture

Mileage and depreciation on your car if you travel from agency to agency to hospital, etc.

Office space with most of these services provided generally runs $15 to $25 per therapy hour. Those who rent their own space can save if their practice is full, but if their caseload is low, private office space can be costly. We will estimate on the low side and deduct $15 for each therapy hour.

After subtracting $15 expenses per therapy hour, this leaves only $35.00 per hour income.

TIME: For each therapy hour, most therapists spend another hour in unpaid activities which would be paid for by a full time employer.

Phone calls to clients, resources, professionals, phone tag, etc.

Letters

Case management with managed care and/or other supervision

Continuing education time

Record keeping time (including many hours of redundant and unnecessary paperwork for managed care)

Reading professional organizations (time to attend or serve)

Free or low cost therapy for charity

Business contacts with hospitals and agencies

Travel to appointments/meetings outside the office

Filling out and updating managed care applications

Speaking engagements (including preparation

Instead of $50 per hour, this means that we are paid $50 for every two hours of work, a 50% reduction.

When we figure per-hour and not per session, the actual rate is reduced by 50% to $17.50.

Professional Fees:

Professional licenses

Liability coverage

Continuing education costs

Membership in professionals organizations

Professional books, journals

Since these costs are per-year, not per-hour, the % of each hourly fee varies according to the volume of the practice. Professional fees will take a bigger bite out of a small practice. We will estimate about 10% of income goes to professional fees.

In order to keep the numbers simple we will round off resulting in an hourly fee of $16.00

Benefits: In full time employment, most expect benefits to include:

Vacation pay

Health and dental insurance

Sick leave

Retirement plan

Overtime, holiday, and evening pay

If we compare our income with full time employment, these benefits must be figured in. Most employers estimate that a good benefit packages is about 35% of the cost of employment.

With benefits figured in, and the numbers rounded off, the hourly rate compared to a full time job is reduced to $10.00 per hour. So, this person with an advanced degree is making approximately $20,000.00 per year!

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Type of Expense or Activity Usually Paid by Employer (in other types of businesses)	Estimated Cost	Adjusted Hourly Rate
Typical hourly compensation from managed care contracts.		$50.00
Business Costs: Rent Secretary (including time for redundant and unnecessary paperwork for managed care) Billing expense, collection services electronic billing fees Office equipment (computers, copiers, software, FAX, etc.) Telephone, beeper, answering service, cell phone, long distance, etc. Business supplies, stationary, business cards, stamps, etc. Furniture Mileage and depreciation on your car if you travel from agency to agency to hospital, etc.	Office space with most of these services provided generally runs $15 to $25 per therapy hour. Those who rent their own space can save if their practice is full, but if their caseload is low, private office space can be costly. We will estimate on the low side and deduct $15 for each therapy hour.	After subtracting $15 expenses per therapy hour, this leaves only $35.00 per hour income.
TIME: For each therapy hour, most therapists spend another hour in unpaid activities which would be paid for by a full time employer. Phone calls to clients, resources, professionals, phone tag, etc. Letters Case management with managed care and/or other supervision Continuing education time Record keeping time (including many hours of redundant and unnecessary paperwork for managed care) Reading professional organizations (time to attend or serve) Free or low cost therapy for charity Business contacts with hospitals and agencies Travel to appointments/meetings outside the office Filling out and updating managed care applications Speaking engagements (including preparation	Instead of $50 per hour, this means that we are paid $50 for every two hours of work, a 50% reduction.	When we figure per-hour and not per session, the actual rate is reduced by 50% to $17.50.
Professional Fees: Professional licenses Liability coverage Continuing education costs Membership in professionals organizations Professional books, journals	Since these costs are per-year, not per-hour, the % of each hourly fee varies according to the volume of the practice. Professional fees will take a bigger bite out of a small practice. We will estimate about 10% of income goes to professional fees.	In order to keep the numbers simple we will round off resulting in an hourly fee of $16.00
Benefits: In full time employment, most expect benefits to include: Vacation pay Health and dental insurance Sick leave Retirement plan Overtime, holiday, and evening pay	If we compare our income with full time employment, these benefits must be figured in. Most employers estimate that a good benefit packages is about 35% of the cost of employment.	With benefits figured in, and the numbers rounded off, the hourly rate compared to a full time job is reduced to $10.00 per hour. So, this person with an advanced degree is making approximately $20,000.00 per year!