What are the financial risks of hiring part-time clinicians?
Should I hire part-time clinicians?
While it may seem like a great idea to compile a staff full of part-time clinicians, it can be extremely difficult for the practice to make a sustainable profit. One of the most frequently asked questions I get is, “I found a great clinician, but they can only work part-time. Is it worth hiring them if they can only commit to 10-12 sessions per week?”
The knee-jerk reaction is to bring them on ASAP and hope for the best, because let’s face it: Hiring is hard right now - like painstakingly hard. Especially if your goal is to hire a licensed clinician. I’m sure if you’ve tried to hire over the last several years you’ve found yourself in this scenario, and possibly even decided to try it out to see if it would work. So, when I’m asked whether a part-time clinician should be hired, I pose a question back to the practice owner: “How has this worked for you in the past?”
My guess is that it hasn’t worked well. If it has gone well, it’s usually when the owner has either a good mix of part-time and full-time workers, or the part-time minimum is somewhere between 15-18 sessions per week and their clinicians are consistently full. Unfortunately, this is not the norm for many part-time clinicians in group practice. The scenario we see most is that the practice has several clinicians at part-time, barely seeing 8-10 patients. They are either at the break-even point or making the practice a negligible profit.
Why is this the case?
The reason that it’s so difficult to run a private practice with only part-time clinicians is that you have an increasing mix of different types of expenses, from payroll to overhead. Some costs are fixed, as in no matter how many employees you have, you’ll pay the same amount each month (ex. rent, utility costs). However, most overhead costs are not fixed, they’re variable. Variable costs are those that change based on the size of your practice. Adding clinicians to your advertising, worker’s compensation insurance, software, etc, can be a large increase in expenses!
The goal is for each employee to cover all their payroll and overhead costs, so that the practice as a whole can make a profit and be a sustainable place to work. If the practice can handle all the overhead and payroll expenses, chances are you will be able to increase bonuses, benefits, and offer more for your employees in the long run.
If the part-time clinicians are not meeting their goals or the minimum number of sessions is set too low, their payroll cost requirements will quickly eat up the profit. This will put you at a break-even point on that clinician, or depending on the overhead expenses, quite possibly a loss! Add up several team members at break-even or a loss, and you can begin to see why this model is not sustainable for most practices.
Even if you have part-time contractors instead of W-2 employees, the same principles apply. There can still be an issue because practice owners will often incur overhead costs in addition to the contractor’s pay. They’re added to the EHR, phone line, software, etc. Contractors can still make the practice incur higher overhead costs, even though they aren’t incurring payroll tax expenses.
What do I do if I have mostly part-time clinicians?
The first place to start is having a conversation with your part-time staff. Be realistic about where their expectations are, and see if they can increase their minimums to a higher level and still maintain part-time status. I know this can be very difficult to achieve with clinicians that work at multiple locations. Transparency for both parties is essential as you begin to learn what your staff is able to do and what they simply cannot.
Once the minimum expectations are increased, if possible, then you need to find a way to track your staff’s capacity performance. It is extremely important you know how full your team is each month, so you know if you can increase their referrals or if they need some coaching on retention and intakes. A combination of things can happen throughout the year that can affect a clinician’s session capacity performance, but as long as you know why someone’s session count is too low, then you can begin to work on the solution with your staff!
If you're faced with a situation where performance remains low, you may need to replace staff with full-time team members. This is a difficult decision, but ultimately the best course of action for your practice, your staff members contributing to profitability, and for your clients who need you to stay in business!
If you’re looking for a collaborative partner in your accounting and finances, and don’t know where to start with key performance indicators, please schedule a free consultation and learn how GreekOak Accounting can help your practice!
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This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. GreenOak Accounting is an accounting firm that specializes in working with counselors and therapists in private practice. We provide monthly accounting & bookkeeping services, 1-time services and online courses. For more information on our specialized services for therapists please visit www.greenoakaccounting.com