10 questions answered: Advice on navigating financial challenges as a practice owner 

According to a study by Heard, 85% of private practice therapists are worried about the economy’s impact on their work, with nearly 30% earning less than $25,000 after expenses in 2023. This perfectly mirrors the balancing act of therapy practice ownership—managing the business side while staying focused on providing care for clients. 

It’s a tough job, especially in today’s economic climate, but you’re not alone. To help, here are ten common questions about navigating financial hardships as a practice owner—answered with practical advice and real-life examples.  

1. What are the most common financial risks practice owners face, and why do they often go unnoticed?  

The truth is, many practice owners are therapists first and businesspeople second. You likely got into this field to help people, not to crunch numbers. That’s why financial risks—like not tracking revenue trends or missing billing deadlines—can easily slip under the radar.  

It’s all about two types of mindset: the business-oriented and the care-focused. Let’s imagine that a lead therapist and a business manager sit down to review monthly revenue reports at a private practice. They notice that individual therapy sessions generate higher revenue per hour compared to group therapy sessions. The therapist might suggest focusing on adding more group sessions to accommodate the growing waitlist and provide broader access to care. However, the business manager would argue that prioritizing individual sessions, which brought in more income per slot, would better support the practice’s financial stability, even if it meant a slightly longer wait for group therapy availability.  

The point here is that both of these perspectives are valid and absolutely necessary to the success of this practice. Therapists aren’t always business-minded—and that’s okay. But having a business mindset, or working with someone who does, is essential to running a thriving practice. It helps you prioritize and make decisions that create lasting growth and impact.  

2. How can you regain control of your finances when you feel overwhelmed?  

First, take a deep breath. Feeling overwhelmed is normal, but the best way to tackle financial chaos is to start small. Begin with a financial health assessment. Look at your numbers—billing, expenses, accounts receivable—and pinpoint the problem areas.  

Focus on quick wins, like sending out claims on time, automating payment reminders, and following up on overdue accounts.  

Break tasks into manageable chunks and set a schedule. For example, tackle one or two problem areas each day or week. The key is to take it step by step so you can start feeling more in control.  

3. What are the warning signs that your practice might be falling behind financially?  

Some red flags are hard to miss, like struggling to make payroll. Others might sneak up on you, like:  

• Rising expenses while revenue declines.  

• Accounts receivable that age beyond 90 days.  

• Overdue patient payments piling up.  

Here’s a tip: Check in with your billing and admin staff. If they’re feeling overwhelmed or behind, it could be a sign that your financial processes need attention. Open communication with your team can help you catch and address issues before they snowball.  

4. How do you balance fixing immediate financial issues with building systems for the future?  

It’s easy to get caught up in putting out fires, but you also need to think long-term. A simple tool like the priority matrix (also called the Eisenhower Matrix) can help. It’s a grid that helps you categorize tasks as urgent, not urgent, important, or not important.  

Focus on the tasks that are both urgent and important first—like meeting payer deadlines or addressing overdue claims. Then, carve out time to build systems that prevent future problems, like automating billing or setting up regular financial reviews.  

Remember, you don’t have to do it all yourself. Delegate tasks that don’t require your expertise so you can focus on what matters most.  

5. What habits or systems can help you avoid falling behind?  

The best way to stay ahead is to know your numbers. Build habits around reviewing your financial data regularly:  

• Daily: Track how many patients you saw and how many hours of billable services you provided.  

• Weekly: Check that billing is going out on time.  

• Monthly: Review your financial reports to see if your revenue is keeping up with your expenses.  

Over time, you’ll start to notice trends—like seasonal dips or busy periods—and you can plan accordingly. For example, if December is slow, you might encourage staff to take vacations then. If summer is busy, you could bring on temporary help to handle the increased workload.  

6. What are the most common mistakes in managing the revenue cycle, and how can you avoid them?  

One big mistake is not having a backup for key roles like billing. If your biller is out unexpectedly, it can throw your entire revenue cycle into chaos. Cross-train your staff so someone else can step in if needed, and make sure they stay up to date by practicing those tasks regularly.  

Another common issue is errors in eligibility verification. Always double-check that you’re billing the right payer and that the patient’s information is accurate. Eligibility mistakes are one of the top reasons claims get denied, and fixing them upfront can save you a lot of headaches later.  

7. How can you manage patient payments and reduce outstanding balances?  

Nobody likes surprises—especially when it comes to money. Let your patients know in advance if they’ll owe a copay, deductible, or out-of-pocket cost. This gives them time to prepare and avoids awkward conversations at the front desk.  

Make it as easy as possible for patients to pay by offering multiple options, like credit cards, online portals, or payment plans. And if someone has a balance, follow up consistently. A little communication goes a long way in keeping payments on track.  

8. Can you negotiate better reimbursement rates with insurance companies?  

Yes, you absolutely can! Many practice owners don’t realize this, but you have the power to negotiate. Here’s how:  

• Bring data to the table, like how many patients you see, the services you provide, and any specialties you offer.  

• Ask for better rates or more favorable terms, like extended filing deadlines.  

• Collaborate with other local practices to negotiate as a group.  
  The worst they can say is no, but you might be surprised at what you can get just by asking.  

Want more information on getting higher reimbursements? Check out this blog!

9. How can you build a financial buffer or emergency fund when money feels tight?  

Start small. Even setting aside a little bit each month can add up over time. Look for ways to cut unnecessary expenses, like unused software subscriptions, and focus on increasing revenue.  

Here’s a real-life example: A practice owner realized they were spending hours manually billing claims to save on software costs. By switching to an automated system, they freed up time to see more clients, which more than made up for the expense.  

The takeaway? Don’t get so caught up in saving money that you lose sight of your time’s value.  

10. What’s the most important thing you can do today to improve your financial health?  

Take action. It’s easy to get stuck in analysis paralysis, but the best thing you can do is pick one task and start. Whether it’s creating a budget, following up on overdue accounts, or delegating a task, just taking that first step can build momentum.  

Conclusion  

Managing the financial side of your practice can be challenging, but you don’t have to do it alone. By taking small, consistent steps and seeking help when you need it, you can build a stronger financial foundation for your practice—and yourself. Remember, you’re not just a therapist; you’re also a business owner, and that’s something to be proud of.