I want to give you a heads up that today’s episode is great, but next week’s episode, the one that comes out on February 5th, I will have two announcement opportunities for The Testing Psychologist podcast listeners and The Testing Psychologist Facebook group members that I am excited about. Two things that I’ve been working on for months now. I am going to be rolling them out during this podcast episode. So enjoy the episode today. I hope to see you next week as well.
Hello everybody, welcome back to another episode of The Testing Psychologist podcast. [00:01:00] I’m Jeremy Sharp. It’s great to be with you today. I hope everybody’s doing well. I hope everybody is, like I said last time, staying warm. I know I’ve said that a lot but this is important where I’m at right now. Colorado has been pretty cold lately. We still have snow on the ground from a snow about a week ago I know. It’s not as bad as some parts of the country, but it is tough.
Nonetheless, we get in this pattern where it’ll snow, then it’ll melt a little bit because it gets warm, but then it freezes overnight, and then we get this dangerous sheet of ice over a lot of the streets and sidewalks and such that could last for 3 or 4 months sometimes. I think I’m particularly prone or sensitive to it now because I, for the very first time in 15 years of living here in Colorado, had a minor accident last week when it snowed. I slid on some ice and ran into a [00:02:00] curb and bent some of the steering mechanism in my car. Anyway, kind of a bummer. Hope y’all are doing okay though, and the weather is being nice to you.
Let’s see. We got a lot to talk about today. I’m going to chat with y’all about money. I’m going to chat with you about three ways that you are losing money and hopefully offer some ideas about what to do about that.
We’ve had a lot of discussion in the Facebook group lately about how much to charge, when to charge it, and how to make sure people pay. On the flip side, a lot of folks in the group are having trouble collecting on what they’re billing or they’re not billing enough, or somehow they’re losing money on their practices. I’ve seen some comments around it’s not worth it to do a testing practice. It’s not sustainable.
[00:03:00] That’s the saddest thing ever to me because I feel like the whole mission of this podcast and the Facebook group is to spread the word that it’s doable. And so that’s what I’m going to try to do.So three ways that you’re losing money and what to do about it. Let’s dive into that.
The first way, and I will say, let me back up. I will say that all of these things are coming from my personal experience. I think sometimes, especially when I listen to podcasts or maybe when y’all listen to podcasts, it can be easy to think that whoever is doing the podcast is someone who has it all together or is a business master or business-minded or something like that. I want to tell you straight up that that is not the case.
Each of these things that I’m going to talk about are things that have been problems here in my practice over the years and things that I think I can say have largely [00:04:00] worked through and gotten to a good place with at this point, but this is years down the road. I’m going on 10 years in practice at this point. So all these things are things that I’ve struggled with and I have no trouble sharing that with you. I hope that you don’t see this as an expert talking to you from on high or anything like that.
The first thing that I think we lose money with, this has come up a lot in the Facebook group, is not charging for the work that you do. I’ve seen a lot of comments about how people are underbilling for the hours that they work, not charging for certain things that they do, or underpricing themselves. In a testing practice, I think this is a really dangerous approach. Now, some people charge a flat fee and give a discount for services, which I think is reasonable as long as that [00:05:00] discount is reasonable.
What I’m hearing a lot of, and what has happened to me in the past, honestly, is being afraid to tell people the full fee for fear that they’re going to walk away or not want to pay that, and then you end up doing a ton of work and not charging what it’s worth. That’s what I’m talking about. I’m not talking about setting a flat fee and giving a little bit of a discount for the flat fee or for a cash client or something like that. I’m talking about putting in hours and hours of work that you’re not charging for.
A lot of people do this. Like I said, I’ve done it. Let’s not do that anymore because testing is a very specialized service. For one, for the most part, you have to be a psychologist, which means you have to have doctoral training. I know there are some exceptions to that in certain states, and that’s totally cool. Either way, a lot of us have [00:06:00] doctorates. If we don’t have doctorates, we have pre-specialized training in assessment, and this is a skill set that not many people have, period. So it’s worth it. It is totally worth it.
Here are some things that you can maybe think about doing to make sure you’re not undercharging for the work that you’re putting in.
One, do a search of the market prices in your area. Check out what is the average hourly rate for assessment, or the average flat fee for different types of assessment. If you are not there, raise your fees immediately. Now, do it in a kind way, warn your clients. The cool thing about doing assessment is that you don’t usually have to make a big deal about raising your fees because you don’t typically have ongoing clients. You can just raise your fees and then the next person that comes in the door for an assessment gets the new fee. So check it out. See if your fees match.
If there’s no one in your area doing assessments, then check out the therapy [00:07:00] rates for people with your level of training, expertise, experience, and go with that.
The next way that you can hopefully cut down on undercharging is to sit down and do an honest assessment of how much time it takes to complete your typical evaluations. I’m not talking about in a perfect world. For those optimists of you out there of which I am one, don’t be optimistic here. Don’t calculate the time based on a good day or if everything goes according to plan or what a lot of us will call an uncomplicated evaluation. Do a real assessment that includes absolutely everything you would put into your typical evaluation and be honest with yourself.
Things that I would often not charge for that end up adding up to at least an hour or two for each evaluation are things like collateral interviews with other providers or [00:08:00] family members, scoring, certainly report writing, school observations, record review, emails back and forth with the client or the parent. All of those things count. So do a real assessment of what time it’s going to take you to do your typical evaluation.
Maybe you do a few, maybe you do a brief eval for adult ADHD, and then maybe you do a full battery for more complicated issues. So you can set two different tiers for your evaluations, but whatever you do, just be honest about the amount of time that you put into it.
Now, if you want to do a flat fee, then you can use that info to determine a flat fee that’s reasonable. It’s easy. I don’t think I have to do the math for y’all, but multiply however many hours it takes realistically by your hourly rate. A lot of people that discount for a flat fee for [00:09:00] the eval, especially if you’re charging out of pocket or cash rates that I think is pretty reasonable.
Now, in this process, you might consider something called value-based pricing. If you’re in very high demand, if you live in an area where there aren’t many services available, if the demand is really high, then you can consider value-based pricing where you upcharge beyond the typical hourly rate simply because you offer a very specialized service that you are good at.
Sometimes people are like, how can you bill more than is actually reasonable?
Well, the way that you can do that is because my argument is that I don’t think we should get penalized and make less money because we become more knowledgeable and more efficient at writing reports. For example, if you, let’s say [00:10:00] get good at doing learning disorder evals. You’ve pared down your battery, you have a report template, you’re doing a lot of the things that we talk about on this podcast in terms of saving yourself time and you get efficient at writing those reports.
Well, if you’re running a cash-based practice where you don’t have to necessarily bill by the hour, so to speak, I don’t think you should be penalized for being more efficient and better at what you do. So that’s where you might consider value-based pricing because otherwise, you would be charging less because you’d be billing less hours because you’ve gotten faster and more knowledgeable and it just comes easier. I don’t know that that’s fair. So, that’s something to throw out there. Consider value-based pricing if that’s an appropriate option for you.
Going back to that honest assessment. If you are not doing a flat fee, revisit your billing software or talk to your billing person if you have billing software or a billing person, we’ll talk about that later, [00:11:00] and make sure that you’re actually charging for all of those hours. What I would end up doing is I would do these emails or phone calls or a little extra scoring, a little extra writing, a couple of revisions and before you know it, that again adds up to another hour, two hours, and it doesn’t necessarily go into the billing software and thereby it doesn’t get submitted to insurance or even not to insurance, you just don’t bill for that.
So if you’re not using an EHR, I think this is a great argument to use an EHR because many of them force you to, or at least remind you to document all of the time that you’re actually spending on an evaluation. So, revisit your billing software and billing person and make sure that you are accounting for all the time that you spend.
Now, if insurance is limiting you, there is, I think, an option that you can pursue that many folks do and that option is to put together or craft a [00:12:00] balance billing form specifying that clients are responsible for anything not covered by insurance. Now there’s a little bit of debate and I think this is a gray area in terms of billing. So make sure to check with your insurance providers, your insurance panels, make sure to check with them and be very explicit and say, am I allowed to bill a client for non-covered services? And if so, what form do I need to have the client sign to make it legal and ethical?
What happens is many times, for those of you who take insurance know insurance will only reimburse maybe 6 hours, maybe 8 hours, maybe 10 hours for an evaluation. And then what a lot of people end up doing is just eating the extra time and just throwing up your hands and saying, well, I guess I can’t get paid for the rest of that time. I would argue that that is not the case.
Put together a balance billing form. You will still have to submit those charges to insurance. But what will [00:13:00] likely happen is the insurance company will come back and deny a certain number of hours saying that they were not medically necessary. They were for exploratory testing, any number of reasons, but many insurance plans allow you to charge the client for those hours if it’s a non-covered service. So check that out.
The second place where you’re losing money is not collecting on what you’ve actually billed. Collections was a huge problem in my practice for, I would say, at least the first three years. One of those reasons is because I was trying to do everything myself which I will talk about just in a bit. But collecting is the other side of billing, of course. Your fees can be as high as you want them to be but if you’re not collecting on what you’ve billed, you’re going to be in trouble.
I think there are a lot of factors that go into this. One of those factors [00:14:00] is that clients are shocked or maybe just unprepared for what testing is going to cost. And then when the bill comes through either through insurance or as a flat rate, clients bulk at that and then they end up avoiding or not paying. There’s no way to get around it. We are charging large sums of money all at once and that is different than therapy. I think clients have a harder time with that sometimes.
I think there are a few things that you can do to counter that. One of those things you can do is inform them right up front. I’m as big a fan of doing it as early as possible. We do it on the initial phone call when someone’s calling to request an evaluation. As soon as we get some sense of what they’re asking for, we can say, okay given your [00:15:00] presenting concern and insurance situation, here’s what we would guess the evaluation will cost.
I’m pretty informal about it and I’ll just joke with people and say, the worst case scenario here is that you’re going to end up owing $2000 out of pocket if insurance doesn’t cover anything. That way, people are at least prepared and they can start to wrap their minds around, okay, this is an investment. This is something that we need to budget for. And this is what to expect.
Now, people do this in different ways. Not everybody does it on that initial phone call. Some people will do it at the first session. So when you do the intake with parents or with the client or whomever you might interview first, I think it is imperative that you talk about costs right up front. If you prefer to do it at the end of the intake, when you have a good idea of what kind of testing you might do with the client, I think that’s fine as long as you are being very upfront. So [00:16:00] that’s one thing to just to sow the seeds for collecting on the hours that you’re going to bill.
Now you can see this as all building on itself. So you can’t tell clients what to expect unless you know exactly what you’re charging and you don’t know exactly what you’re charging unless you sit down and do a real assessment of the amount of time you’re going to put in. So keep that in mind.
Now, one of the other things that a lot of folks do is find some means of ensuring that you’re going to get paid something. Now, there are two ways that you can go about this. One of those is to take a deposit of sorts. You can do this at the initial interview. We do it at the testing appointment, which is the second appointment in the evaluation process.
I always talk with folks at the initial interview. What we do is we ask for half of the estimated total for the eval at your next appointment, at the testing appointment. [00:17:00] I write it down on an information sheet that I give them that gives information just generally about the testing day. But there’s a little spot there that says, please remember to bring your payment of blank. So you write it down. I talk to them about it and just make sure that they’re aware that they are asked to pay half of that for testing.
In some very rare cases, we bill a lot of insurance, but in some rare cases we’ve overestimated that amount and I have to issue a refund. I can count on one hand the number of times that’s happened in the past five years probably. So, if you’re worried about that, I would not worry about that. And if you’re a cash practice, then that’s not a concern at all. So, take a deposit at the interview or the testing day. It’s a lot easier to order to give a refund than to try to collect on an unpaid balance.
The other way that you can do this is to have a credit [00:18:00] card requirement for any evaluation clients. We do this as well. This is just part of our intake paperwork. Folks have to fill out a credit card form. We’re very explicit. We’re not trying to be sneaky by any means. But it’s spelled out right there on the form that their credit card will be charged for any balances that are unpaid. They can specify if they want to bill ongoing charges or if they want to do a larger amount, a one-time payment right then. We give some options on that form, but having a credit card on file gives you some backup for being able to get paid for unpaid bills if clients do not pay them.
So if you’re someone who struggles with billing, either for one of the reasons that we’ve discussed already or you just have a hard time with money, or you don’t have the time, or you can’t figure it out, or it’s going by the [00:19:00] wayside, then I would consider hiring a billing company. This is the next step. This is one of those things that’s like once I got a billing company for our practice, I have never looked back. You don’t necessarily have to hire a billing company, so to speak, but having a dedicated person to do billing who is knowledgeable in medical billing and can take it over for you, I think is just an incredible move and it leveled up our practice.
So this is a company or an individual who knows exactly how to go about medical billing. Many of them will integrate with your EHR if you have an EHR. If you don’t, that’s okay too. Many will do it without an EHR, but you can expect to pay anywhere between 5% and 10% of the total collected for a billing company. I would highly consider this if you are struggling at all with getting [00:20:00] your collections.
One thing I should throw in here, actually, I should have thrown this in a little bit earlier is, if you don’t know how much you’re collecting, you should go figure that out. So, go back to your accounting system, whatever that might be. However you know how many hours you are actually working versus how much you’re collecting. Go back and check that out. If you’re not above 90% collections for the work you’re doing, you need to make some changes. Back to the back to the present here. A billing company, I think is a huge asset. As I’ve mentioned here on the podcast, we use Practice Solutions. They’re at 5%. They do a fantastic job. I think it’s worth it.
If you think about the math, if you are doing let’s say 5 evaluations a month at $1500 each, you have the potential to make $7500 a month. Now, if you run [00:21:00] into just one of those clients who doesn’t pay for whatever reason or if insurance doesn’t reimburse or whatever it might be, you’re down all of a sudden 20% of your monthly income.
Just for comparison’s sake, 5% of $7500 is $375. When you compare $375 to a loss of $1500 if somebody doesn’t pay, it’s a no-brainer. It’s totally worth it. I think a lot of us bulk at these monthly charges. $375, of course, it’s not a small amount of money, but relative to how much you could lose, it’s not a lot at all. So think about it. Think about a billing company.
Now, the third way that you are likely losing money in your practice and the way that I lost a lot of money in my practice was by doing work that you shouldn’t be doing. You know, if you’ve listened to this podcast, that [00:22:00] I’m a big fan of outsourcing whatever you can.
I think about five years ago, I started thinking about my time in terms of $100 increments. $100 give or take. You can mess around with that, but it came down to when I am working and billing what I should be billing, let’s just say my time is worth $100 an hour, if I’m not working, whatever I’m doing, I need to ask that question, is this worth $100 for this hour? The answer is very few services that you hire out are going to be $100 an hour. For some of you, this might be $200 an hour or $300 an hour. Very few services are as expensive as what we do especially when you’re direct service like that.
So I think that’s an important thing to keep in mind [00:23:00] that you are going to be the most expensive admin assistant, receptionist, web designer, AdWords technician, secretary. I mean, you’re going to be the most expensive any of those. Essentially, you can think of it you’re paying yourself $100, $200, or whatever an hour to answer the phone which is not worth it.
So, think about all those things. Are there any administrative tasks you can get rid of? Is it time for you to outsource answering the phone? Do you need a VA? Do you need to bring on an undergraduate intern? Many universities require undergrads to do internships and they cannot be paid for them, that’s a whole can of worms to open, but they get college credit. They can’t be paid, but they do need to work 10 to 20 hours a week. Do you need to look for an undergrad intern to do some of your admin tasks? [00:24:00] Do you need to hire a receptionist for around $15 an hour? Do you need to outsource your web design? Do you need to pay someone to do AdWords? Do you need to pay someone to answer your emails?
You might be thinking to yourself, well, what in the world? I’m the only one that knows how to do all of these things. I would significantly challenge you on that assumption. My feeling is that unfortunately, we’re just not that special. I had all those feelings before I hired folks and came to find out there is someone out there even here in my town, I come to find out, who can answer the phone and explain our process just as good as I can, and probably a little better. I come to find out there’s someone out there who can build websites much better than I can.
So just think about that. I [00:25:00] think anything is trainable if you put the time into it. Again, think about what you might be doing that you don’t need to be doing.
My friend Kelly Higdon who was on the podcast is a big proponent of not answering her email. If you get a ton of emails a day or you just find yourself sucked into emails, hire somebody. Hire an undergrad, hire a personal assistant, or hire a VA and train them on what kind of emails are important for you to get and which ones you can have somebody else respond to. My guess is that if you sit down and look at it, you’re going to find that there are very few tasks that you have to do just on your own.
That’s the third thing- doing work that you should not be doing, work that you should think about outsourcing to other folks.
So that’s my rundown here of [00:26:00] three ways that you’re losing money in your practice right now that you could probably change. As with anything, set aside some time for yourself over this next week.
Now, if you’re in front of your computer, that’s great. If you’re driving like I usually am when I listen to podcasts, take a moment at your next stoplight and write yourself a little sticky note or talk into Siri or whatever it might be. Set yourself a reminder to block out let’s just say an hour this week to go back and research fees in your area. Determine a new flat fee. Look at your billing software. Research some billing companies, and write up a balance billing form. You can do any of those things easily in an hour. So, take some action. That’s where we’re at today.
I hope that you enjoyed this podcast. This is something that’s really important. And like I said, it really struck me [00:27:00] when folks started talking in The Testing Psychologist Community on Facebook about giving up their testing practices and feeling like it’s not sustainable and how they’re losing money. That cut right to my core. That’s hard to hear. So, if any of these things can help you bolster your collections and get your practice back in the right place, then that’ll be great.
Looking forward we have, I have rather, I don’t know why I say we so much, I have a lot of cool interviews coming up. So definitely stay tuned to the podcast. I would especially like you to stay tuned for next week’s episode. Next week, this would be the episode on, let’s see, February 5th, I believe it is, not this Monday or not today or not this week, whenever you might be listening, but [00:28:00] February 5th, stay tuned.
I am going to announce two really cool pretty big things, changes in The Testing Psychologist world, opportunities for listeners, opportunities for the folks in the Facebook group. So try to keep that in mind. I’d love to have you listening to that episode on February 5th to get in on some of these things that I’ve had in the works for quite a while. I’ll be really excited to unveil those to y’all.
Now, in the meantime feel free to join us in the Facebook community. If you haven’t already, it’s The Testing Psychologist Community on Facebook. And if you want to listen to past episodes or read some blog posts or get info on consulting or support in your practice, you can go to thetestingpsychologist.com and check out everything else that has been going on over the last several months in The Testing Psychologist world.
All right y’all, take care. Great to be with [00:29:00] you. See you next time. Bye bye.