The pros and cons of employment models in private practice

The pros and cons of employment models in private practice

When entering the world of private practice there are many options available, should you be a contractor in a group practice or perhaps an employee? There are certainly pro’s and con’s to each and ultimately it might depend on what you are looking for.

Many private practices offer a sub contractor position to help them mitigate the risk of clients not attending or slow periods in the year such as holidays. These practices usually offer a percentage split of the client fee to cover the costs of running the practice such as marketing, rent and office administration costs. This model can work well in some instances but if you are used to earning a set salary and knowing that everything will be covered then this option may not feel very secure.

Adding to this insecurity is the fact that you don’t get paid if clients do not show up. You don’t get paid if clients refuse to pay their bill. You don’t get paid for sick days, public holidays or annual leave days. You also do not get superannuation in most instances. All of these costs must be factored into the fee you earn for the clients that you do see. Non clinical time to write notes, follow up with others in a client’s treatment team and organise your caseload, plus the cost of running your own business as well as invoicing, bookkeeping and accounting must also be factored in.

Many contractor models in operation are really employee models in disguise. That is, the contractor is treated as if they are an employee of the practice for all intents and purposes other than their remuneration. If a contractor is not truly operating an independent business, they may not be a contractor at all.

Under a contractor model employers and contractors must be very careful to not breach the code of ethics. Our code states that we can not receive commission or payments for referrals of clients. Payment must only be for services provided whether they be clinical, consultative, administrative or of another nature. It is important to also be wary of contracts that require trailing commissions to be paid if you leave the practice and a client goes with you. This is unethical and breach of section C.6.3 of the code.

An alternative to the contractor model is a base salary and rewards option. This approach provides the employee with the security of knowing how much they will be earning each week but also the chance to earn more via a reward structure. This structure is set so that the more revenue the employee generates, the more money they earn. This allows the employee to scale their income and therefore unlike in a health department role, they are not locked into a set income. But with the added security (in comparison to a contractor) of always having a secure base to fall on.

An employee model like this allows time and space for non clinical work to be completed, but it also still allows the flexibility of working in a private practice, seeing the clients you want to see and working in the way you want to work.

One of the other benefits of this approach is that you have greater flexibility to work within a team and to be a part of a positive team culture. This often does not exist in workplaces that employ contractors who can sometimes operate within a silo.

It is important to remember that private practice is not the same as the health department. Private practice owners often can not offer the same secure salary of a government position. This is not to say that one can not earn as much if not more than they would in the health department, but you do have to be willing to share some of  the risk. This may be in the way of a lower base salary. But the rewards are there if the revenue is generated.

Working in private practice can offer many benefits in terms of flexibility, seeing your ‘ideal client’ and working in the way you like to work. A contractor model within private practice may seem like a better option in the short term but in the long term you may not be better off. Especially if it is important to you to have workplace satisfaction and be part of a strong team culture.

If you would like to know more about the pros and cons of contractor models within private practice feel free to connect with Dr Kellie Cassidy for a confidential no obligations conversation.

Kellie Cassidy

Dr. Kellie Cassidy is an experienced Clinical Psychologist who works with children, adolescents and adults on a wide range of presenting problems. Kellie strives to assist her clients to improve their wellbeing and reach their goals through evidence based and clinically proven therapies.