Episode 125 | Common Mistakes Practice Owners Make When Starting Up with Carrie Nichols
WITH MAUREEN WERRBACH
- Episode 125 | Common Mistakes Practice Owners Make When Starting Up with Carrie Nichols 00:00
Hi Group Practice Listeners! In this episode, I’m talking with Carrie Nichols all about common mistakes group practice owners make when they’re just starting out.
In this episode we cover:
- Seeking legal counsel
- Hiring a bookkeeper
- Hiring your ideal clinician
- Getting clear on your goals and values
This episode is sponsored by TherapyNotes. TherapyNotes is an EHR software that helps behavioral health professionals manage their practice with confidence and efficiency. I use TherapyNotes in my own group practice and love its amazing support team, billing features, and scheduling capabilities. It serves us well as a large group practice owner.
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Hey, everyone, welcome to another episode of the Group Practice Exchange Podcast. I’m really excited. I have a coaching session today and I’m on with Carrie Nichols and we’re gonna be talking about common mistakes group practice owners make when they start their practice. Hi, Carrie, how are you? How are things going in your practice? Tell everyone a little bit about where your practices is at obviously, you’re somewhere in the startup phase since our topic is on common mistakes that practice owners make when they start their groups. So a little bit about you.
Absolutely. So my name is Carrie and I’m the owner of Cedar Counseling and Wellness. We’re located in Annapolis, Maryland. And I actually originally was planning on starting, I’m just solo practice for a little bit. So I launched my practice in June. And I just quickly felt like it was time to grow. I had already maxed out my own personal clients. I just had so many ideas that I was excited about. And I knew that ultimately, I love the team environment. So I didn’t want to be solo practice forever. And I put some feelers out there on Indeed, to see if I could find people that I thought would be a great fit. And I did. So I decided to just dive in.
And so you’re just a couple months into solo, right? Yea. You’re you sound a lot like me. Starting off. I went, I think four or five months before I put my feelers out. And I hired my first person when I was probably in the six month mark.
So super similar, really similar.
Yeah. So you said you found a few people so far?
Yeah. So actually, the first hire was a dietician. She’s fantastic. She specializes in eating disorders. And I felt like it was such a natural, like complimentary relationship between a therapist and her work.
That’s awesome. So I kind of was thinking of some of the common mistakes that group owners make. And I figure it we can go through some of those and then talk about where you’re at in that process or what your thoughts are about some of these mistakes that I that I see a lot that happen a lot for owners.
That sounds fantastic.
All right. So my first one, which I think is a huge one is not seeking legal counsel.
Especially in the age of having Facebook and having a lot of information at your fingertips. In these Facebook groups especially, I see a lot of not even just group practice startups but even established groups who look for legal support, whether it’s through contracts or offer letters, or what they should do if a clinician that they have on their team is doing X, Y or Z asking those kind of questions in the group versus having someone an attorney that’s whether it’s an employment attorney, if it’s an employment related matter, or a business attorney if it relates to like their entity or their structure and asking they’re obviously because of for financial reasons.
Practice owners I see are seeking out that feedback for free inside a Facebook groups among you know their peers, which obviously can lead to some misinformation especially when each state can have different laws around employment and such. So that I feel like is the biggest one.
The biggest takeaway, especially for startups, even if you want to be frugal with your money, or be really conscious about how you’re spending one area to not be thrifty, and it doesn’t mean that you can’t find an attorney who’s really quality who’s not $600 an hour. But really just knowing that part of the startup phase is going to be spending money on having attorneys and just ensure that what you’re doing is above board, when it comes to compensation, when it comes to deciding whether to have contractors or employees, when it comes to what your contracts or offer letters look like, etc. That kind of thing.
I know that sounds great. When I was starting up, I found I think this is how I found you, Maureen was checklists that you created for group practices. And one of the big things that that was on that checklist that I hadn’t thought about was getting legal counsel. So I asked around in the area, what other therapists had found a lawyer that they worked with, specialized in like business. And so that was one of the first things that I did, and it’s been really helpful and very eye opening, I am glad I did that.
I know there’s so many things you learn and I am in contact with my employment attorney, probably on a monthly basis just for random little questions that I have. And I’m surprised to consistently learn something new about employment law that relates to you know, something that’s going on in my practice. So, a really good thing to have in your back back pocket is an attorney that you trust. And you did it the right way, asking locally and getting referrals for a trade. And this goes for anything referral wise is asking group owners locally to you, you’re going to get the best resources that way.
Absolutely. I found in everything, I kind of want someone who knows how to work with therapists in particular, because we have special unique needs and situations.
I agree. The second one, which I think closely relates to the first one is having an accountant. I this is one of the mistakes I actually made, I sought legal counsel from the beginning. And I see that not happening often. But I did not have–actually I shouldn’t say that. I had an accountant, but they just did my taxes yearly, the first year. And I learned really quickly that having an accountant who can really have a pulse on your business is equally as important as having legal counsel.
So I kind of evolved and learned that at the end of the day, having someone who’s doing your bookkeeping–there’s a lot of accountants that do can do bookkeeping as well–is really important, because then they have a full grasp of your financials in your group practice.
It can help you shift gears or pivot before things financially get to disastrous.
So I started by having an accountant that just did the end of your books the first year, and learn quickly that I owed more in taxes, obviously, than I had saved. And it was like, Oh, I need to have I need to be more prepared, I need someone who can check with me. And no, you know, every quarter, this person then started doing it quarterly, the second year, and I learned that they’re able to have a little bit of a better pulse than yearly obviously.
But at the end of the day when you have so many moving parts–and this is true even for a small group practice–having someone that can be on top of the financials on a monthly basis where you can see trends that are going up or down and shift even more quickly than on a quarterly basis is so important. And so that would be kind of my related to the first point. Second point.
No, I’m really glad you said that. That’s actually something that I need to do. And I similarly, just was planning on having someone do my yearly taxes, and I think that would have worked okay, if I’d been solo, but I’m realizing now that finances are so much more complicated as I am like rolling out to an expanding. So I will put that on my list to do this week to finally connect with my accountant and let her know that we need to adjust those expectations.
One of the things I was going to say is, you know, ask your accountant, if they also do bookkeeping. There are so many accountants who do both and that’s really the piece that I find important is that both of those things are able to be done. And bookkeeping is something that tends to be done on a monthly basis. And then you know what’s nice then is you can talk with that person and this is what I do with my accountant. I use Julie at Green Oak Accounting, and they specialize in doing accounting for solo and group practices, mental health practices, and we meet every…I think we have our meeting tomorrow. And we talk about, you know, she lets me know what she’s seeing.
So I essentially have a financial dashboard that looks like little gears on, like behind the dashboard in a car that are red, yellow, and green.
Each section, from operating expenses to my pay to payroll to taxes, each have their own gear that says, If I’m in the green, the yellow or the red, obviously, the red being either I’m usually means that you’re overspending in that category. It’s nice, because without digging too deep myself, I can just click on it, look at it and see the health, the financial health of my business in a few seconds, and then have that conversation with her about what what do I need to do to shift those gears a little bit, whichever, you know, gear needs to be shifted.
And that’s where I really think that the benefit financially, financially comes in to having an accountant slash bookkeeper is that they can action plan with you not just track the metrics and the data, but also say, what things can you do as, as a business to shift some of these metrics into a better direction.
I really love that. I think that would be really great to have somebody who’s more actively working with me instead of just tracking all of my expenses and talking to me about taxes. So that sounds good.
Yeah, and I think, you know, this is something that’s starting practices feel like is a longer term goal, something that they do as they get a little bit larger. But I find that so many mistakes that come with, and I’ll be bringing this up is, you know, future, one of my points here is how they pay their teams, they often find that they they’re either overpaying their staff, or under paying in taxes. And so what is really nice about having someone that is really on top of the bookkeeping aspect and action planning with you on a month to month basis, is that they can help you avoid making a financial mistake, you know, before it even happens.
So when you’re bringing on your first person to say, I’m thinking of going, you know, the IC route independent contractor, and I’m thinking of giving 60%, let’s say they’re going to ask questions around the numbers, what does 60% look like in $1 term? Are you planning on offering anything else? And so forth.
And they can paint a picture of what that looks like, in the future.
What I see often happening with practice owners, who really have like such beautiful visions for when they bring on their first few people, of paying them really well and, and then finding out along the road as they bring more people on that it’s not a sustainable amount, and then having to have the conversation of restructuring the compensation, which is obviously a hard conversation to have. And so that’s one of the big reasons why if I’m having an accountant, who does bookkeeping as well, they’re able to see, you know, what you’re planning to do on the financial aspect and say, hey, this doesn’t look like it’s going to be feasible in the long term.
If you look at this, you know, data that I’ve put together, you know, when you get to three or four clinicians, you’re going to notice that you have to pay more admin costs, and that’s going to eat up, you know, what profits you have, I suggest starting out, you know, $5, less or 5% less.
So, some that makes perfect sense. No, that’s really helpful.
And then related to that. I mean, they’re all sort of related to each other is talking about, you know, bringing on your first people. The other mistake that I see is people bringing on contractors initially. And not that bringing on contractors is in and of itself a mistake, because there are businesses that can do it, and they do it well. Where I see it being a mistake is that they, for practices that bring them on either in states where the contractor status is really just impossible. There’s some states that have more strict laws than the IRS does, around what constitutes a contractor or an employee.
As an example, California is one and so practice owners bring on people as contractors because it feels like the easier choice to make. And obviously, starting a business is really hard. Just the thought of bringing on a new person or having clinicians or a team of clinicians can feel overwhelming from a business perspective.
And so a mistake I see is a lot of group practice owners who start out by bringing on contractors because they feel like it makes all of the decisions and all of everything that’s happening just slightly easier, or at least it feels that way. Then they quickly notice that they need to transition them to W2s, either because it doesn’t work legally in their state, or it doesn’t work for how they want to run their business. And that’s obviously not the easiest shift to make.
And it’s a shift I made. I had contractors for probably six, my first six months or so, until I talked with my employment attorney. And she was like, like I said, you need to have W2s you want to provide supervision, you want to have a cohesive team feel you want to be able to oversee things is not possible with a contractor status. And I ended up having to make that shift probably six months into having clinicians. This was something I bring up a lot is being really intentional about having contractors or having employees and making sure that you run your business in a way that can align with the contractor status. If that’s what you’re wanting to do.
Now, that’s really helpful. And I guess that goes along with what you said about making sure that you get an attorney right, so they can kind of help.
Yeah, have you thought about what your–
Yeah, so my attorney actually recommended the IC. So independent contractors, and I kind of need to talk to her more and maybe have her educate me on like, why that was her why that was her inclination. So and it would be nice to know sort of what we’re thinking long term?
Yes. Let’s see. That’s the thing too. And it’s really hard, especially as you’re starting off to even think what does your business look like in the future? And that’s not to say that you can’t shift if, if that’s the way it has to go in the future to W2s, you know, like I said, I’ve done it, and so many of us have had to do it. But one of the things I would do is when I’m talking to my attorney, is to say, you know, what is it and this is where having a business plan and writing one out, even if it’s just a sort of a half baked one can be helpful, because it gives your attorney a general sense of where you see your business going in the next couple of years.
And that can help guide decisions for practice owners.
Because oftentimes, practitioners, clinicians who bring on their first one or two clinicians have this notion that they’re going to be sort of hands off, like, I just want to bring someone on and let them be them. And I’m going to provide them all of these things so that they can do their best work, but I don’t want to control them, I don’t want to do it. There’s the sense because essentially, you know, most of us haven’t been, you know, some of us have been solo practitioners, but we haven’t been entrepreneurs who have had to manage a team. And so it feels very daunting to do that.
And so the, the best step we take as practice owners, or we think we’re taking, right when we bring on people is to say we’ll be we’re going to sort of be hands off, we’re going to bring someone on, we’re gonna let them do their own thing. You know, I don’t want to control too much, because it feels like the safest way of bringing someone on. And then you quickly realize, for a lot of us that it’s really hard to manage a lot of aspects of the practice when you can’t control it.
And so that’s where I asked practice owners to really think, is it that you’re wanting contractors right now.
Because and I hear this a lot owners will say, you know, I want contractors for now. But in a year or two, I’ll probably switch to W2. And I always ask why, why do you know this already? And if you do know this, why are you not starting off with w2s because you’re going to give yourself a harder obstacle, or you’re going to give yourself an obstacle later when you want to transition people from contractors to W2.
So, you know, that’s something to think about is, isthis like a placeholder position? Having contractors? And is there a plan in the future for you to switch? If that’s the case, I would think seriously about why that’s happening? And is it related to a fear of really, truly owning the business and owning the decisions and having a little bit of control? If that’s the case, you know, there’s things you can do to work around that.
Or do you truly envision your business being like a hub for independent clinicians who own their own solo practices to kind of connect inside of a common space as contractors? And is that kind of like this longer term vision that you have? So that’s something to think about?
Yeah, definitely food for thought. I really appreciate that. And I’m going to be thinking about it!
So going along with the idea of ICS, or w2s, a mistake I see is owners not knowing who their ideal clinician is. And I have a worksheet. If anyone Google’s ideal clinician, the group practice exchange, it’ll be the top thing that shows up.
But essentially, and is, is that when we are first starting out, bringing on our first few clinicians, for most of us, we’ve probably never hired someone before. We’ve likely never worked in a place where we were doing the hiring. Obviously just not 100% the case but most of us haven’t. And so the idea of the process of recruiting and hiring a clinician is going to be new.
So for most of us, as practice owners, we go off of our gut instincts we go off of our feelings. And sometimes we also go off of, we bring people on, when we like the way the conversations going, but not necessarily what that specialty is for the clinician, or the hours that that clinician can work, or the license that that clinician has. We are more likely to let go of some of the things that we were hoping for, because we had a good interview, and that person was easy to talk to, and they seem to be someone who would be nice to be around.
And that in the long term, can sometimes cause issues.
Once that person is on boarded and working there, your goals, and vision don’t align with theirs. And so the idea of really knowing who just like we have ideal clients, knowing who our ideal clinicians are, is really important and things like, you know, personality, specialty hours, that they can work days that they can work, whether they align with your practices, culture and values as a whole. Maybe some things that you are requiring outside of seeing clients, whether it’s requiring marketing or requiring them to do speaking engagements or trainings, really knowing that whether you want someone fully licensed or not this app, this is something that happens often is, you know, provisionally licensed therapists will apply to positions that say you need to be fully licensed.
And I’ve seen this time and again, where group owners, especially new group owners, will be like, you know what I don’t, I don’t mind, you know, I am getting so many provisionally licensed therapists applying and I’m not really getting any fully licensed therapist, and they get a little afraid that they’re not going to find a fully licensed therapist.
So they bring the provisionally licensed therapist, when they haven’t really fully thought out if having a provisionally licensed therapist aligns with their long term plans, there’s a lot that goes into it. There’s supervision, there’s a lot of time commitments on the supervisors and which usually is a group owner in the beginning. And there’s a different way to market when you have someone who’s provisionally licensed. So really knowing who your ideal clinician is, is helpful, because then it keeps you kind of on the straight and narrow with it so that you don’t veer off too far when the interviewing process comes in.
Yeah, that’s super helpful. I actually am. I’m glad you said that. And I did. I used your ideal clinician worksheet and your interview questions and those that helped so much make sure that whoever I was speaking with I was being intentional about what I want to bring on. I think my worst fear is hiring out of desperation, like because I need to hire. And so I wanted to make sure that, like I’m hiring someone, mindfully and intentionally, like making sure that they they align with my goals.
And I think if you are starting off that way, you’re going to be in a better position than, you know, 75% of other practice owners who are starting off because that’s not the perspective that they’re coming from initially. Oftentimes, practice owners end up hiring out of a either of desperation or fear that there isn’t going to be a better therapist that’s going to come along. So they just accept what comes. And that’s, that’s detrimental to the to the group practices, growth and its values and how it’s seen in the community. So I’m glad it’s something that you’re thinking about.
And what goes along with that is, is this mistake of hiring too fast and firing too slow?
Like I said, owners make bad hires. And 90% of the time. It’s not because the therapist is actually bad. It’s because the interviewing process wasn’t done well enough. The the person who was interviewing was not clear enough. They say like, was it 80% of people who leave leave because of bad leadership, which can be kind of it can kind of hurt or burn for us group practice owners who are the leaders. But I find it to be like almost inspirational to know that because then it holds us accountable to making sure that we’re doing our best as owners.
And so when they say that, you know, most people who do leave a business lead because of bad leadership.
That could mean a lack of leadership because the owners are also seeing 100 clients and trying to, you know, get the clinician filled up, but they don’t have enough time to onboard them or accurately train them. It could be that the group owner or whoever that person is that’s bringing people on is bringing the wrong fit people in and so those people who come in, don’t connect to the business the way they should. Which is on us, you know, the people that we bring on if they’re not a good fit at the end of the day is usually on us.
Obviously, there’s a small portion of people who are amazing at their interview, and then are very different when they come in. But for the most part, if you follow, and I we use this in our business is the ideal team player book, the idea of hungry, humble and smart. I don’t know if you know about that.
No, I haven’t heard of.
Look that up. Yeah. If you and I did the training a couple think was last month training. And onboarding people and questions to ask, and one set of questions is based off of that book. And essentially, they say the ideal team player in a business, in any business are employees who are humble, hungry, and smart. Not smart like brain smarts, but like smart in terms of interpersonal communication, being able to Now navigate relationships within a within a workplace, that kind of smart.
And so there’s questions around how humble are they? How hungry are they to you know, because especially in the group practice industry, a lot of things that are expected are, you know, a minimum amount of clients being seen, right, we expect, you know, if when they get hired, they need to see 10 clients, or 20 clients a week. And if someone isn’t hungry, they’re gonna always fall short. There’s gonna be a person, you’re constantly going to have to go back to and say, hey, I keep giving you clients, you’re not seeing them more than one or two sessions, what’s going on here, or, you know, you’re always three clients short, even though we have more referring clients out.
And so that’s going to tie into hungry, someone who’s lacking in humble might, you know, not jive well with other clinicians in the practice, or might, you know, have issues with you as a leader and have authority issues? Or in the smart category might be someone who’s completely oblivious to the culture of the practice.
And so I really, you know, aside from the common questions that we ask related to clinical skills, and all that other stuff, is this hungry, humble and smart? If you if you bring someone on who meets all three of those, you’re more likely to have someone who fits in with the values of your business.
Wow, that’s really cool. And definitely gonna read the book.
Yes, it’s a good one. Great. Yeah. And then my last one, is doing all the things the group practice owners who do all the things, and this is so common, obviously, as your as a person who starts off in group practice, they tend to be wearing all the hats. And although it’s something that might be happening, initially, it needs to be something that’s on the forefront of every group owners minds when they’re starting off is, how can I delegate, how can I either eliminate something that’s not important for me to do, simplify a process that I’m making overly complicated and spending too much time on, or, you know, delegate to someone else, so that I can do what my area of strength is.
I see so many group owners who go a year or two not taking any time off, still seeing the full their full caseload and not delegating anything answering the phones, scheduling the appointments for their client clinicians doing the billing still, and that’s just a recipe for burnout.
So the clinicians or the group owners who find spaces to you know either eliminate or simplify processes so that they’re spending less time doing those and delegating some things out fair much better than those that are doing it all themselves.
I feel like you called me out in a good way. I feel like you see my life a little bit yeah it’s been it’s been non stop and I can already catch myself needing like I need to I need to slow down I’m constantly foot on the gas.
So what’s something that you can just in a sort of holding you accountable sort of way here where everyone can hear it and we can call you out later and see how you do it on it. Is there something that comes to mind right away when thinking about this topic that you can?
I think that the three that really came to my mind are: number one social media. I’m like burning out big time on that. Number two, the accountant & how you said that they can do bookkeeping as well. That would be really nice. And then I’ve contemplated getting a virtual assistant to do like scheduling and taking calls and that might be really, really helpful right now.
That for me, that was my biggest stress reliever. Getting someone to answer and schedule the phones. For me, it was a weird dynamic that I had with myself is when the phone would ring I would be simultaneously excited because it means that we’re doing something right that the phones are ringing, and that I can potentially fill a clinicians caseload. But also, at the same time, I would have like, my stomach would drop, and I would have dread when I wasn’t at work. And the phone was ringing when I was with my kids, or when I was in the car, and I was like, Oh, my God, no, I don’t have a computer open. Then I just had this like dread of together and leave a voicemail, and then they’re going to move on and go to the next person.
And it just was this. I don’t know, I had this simultaneous dread and excitement that just was driving me crazy.
So when I decided to bring someone on super, super part time, to just take that away from me, not only were they able to better schedule appointments, because clients weren’t trying to schedule with me, and I was the one answering the phone saying, yep, no, I don’t have any availability. But it also freed up. Not only you know, when you’re starting off, you’re not spending that much time on the phone every week.
So it freed up a little bit of time, but it freed up a ton of mental space of me, like just needing to feel like I’m always on, you know, because even when I’m at home, I was like, Well, I’m not working, but I need my phone by me in case the phone rings, because I don’t want to let that call go to someone else. Because people typically go down the line.
And exactly right, exactly. That’s exactly my fear that if I don’t answer or don’t get back to them immediately that will know will lose potentially a great client for our practice, right.
And so that’s why I had this dread, because I was like, if I was in the office, it was fine. But anytime It was a weekend or it was like nighttime, and I was driving to target I remember pulling over, I had two phones, so I could pull up therapy notes on one phone and answer on the other. And it just was like all to just have this client not go move on to someone else. It was too stressful.
And so that shift actually created the most peace of mind for me, even though it wasn’t taking away and an ordinate amount of time from me. But I also found that I had made a good hire with that. And I was able to see the return on investment really quickly, even from a financial perspective, because they were actually transition converting people, from potential clients to clients, better than I was because they were able to answer most calls as they were coming in.
Oh, that sounds so good.
So I think that should be the thing that you take away from this specifically is, is, is delegating at least one of those things in the next couple of months. I don’t think you need to be jumping into all three of those right away that can be overwhelming, although I know people who can do that. But I get from a person who likes to kind of be in control that it can be hard to let go.
So even if you can think of one of those things to shift to someone else you’ll get you’ll get a good big relief. And it sounds like for whatever reason the social media one is is creates more anxiety for you than the other two. I don’t know if I was getting the feeling offer or whatnot. But I felt like you you said the biggest thing was the social media. So maybe that needs to be the thing to go.
Yeah, there might be I feel so tied to it. That it just takes it’s more time consuming than I realized it would be.
Because you gotta think about what to post and what image you want to go with it and what content you want to write with the post. If you’re tagging things if you’re hashtagging, if you’re, you know, time of day that you’re going to put it up and then responding to comments and sharing it to other places. Yeah, it’s a lot. Yeah. So well, thank you for coming on.
Thanks so much for having me. It was really, really helpful and I appreciate it.
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Thanks for listening to the group practice exchange podcast. Like what you heard? Give us five stars on whatever platform you’re listening from. Need extra suppor? Join The Exchange, a membership community just for group practice owners with monthly office hours, live webinars, and a library of trainings ready for you to dive into visit www dot members dot the group practice exchange dot com forward slash exchange. See you next week.
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Maureen Werrbach is a psychotherapist, group practice owner and group practice coach. Learn more about her coaching services here:
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