In February of 2023, we conducted an online survey of therapists in order to learn more about trends in private practice finances. Over 1,200 self-employed therapists from across the US responded.
The 16 questions on our survey had to do with income and expenses, education and licensing, insurance reimbursement rates, economic anxieties, and other factors affecting the everyday operations of private practices in 2022.
The information we gathered provides a glimpse into the challenges and opportunities facing self-employed therapists today.
Here are some highlights.
The cost of living and the cost of therapy don’t necessarily correlate
Differences in the cost of living in the five states for which we gathered the most information—California, New York, Florida, Texas, and Colorado—did not have a predictable effect on private pay rates. In fact, in New York—the second most expensive place to live in the country—a quarter of therapists charged rates below $100 per hour.
After rent, dues and subscriptions are the biggest expense for therapists
While 27.8% of respondents told us rent was their biggest expense in 2022, dues and fees were a close second at 23.5%. If more therapists continue to move from offices to home-based telehealth practices, we may see the cost of rent take a backseat when it comes to expenses.
For therapists, higher revenue does not mean bigger expenses
Well over a third of therapists (42.3%) reported they spent less than $25,000 on business expenses in 2022, while 13.9% spent $25,000 – $50,000. A glance at the data shows therapists in a range of income brackets—from under $50,000 per year to over $200,000—reporting expenses of less than $25,000. The rise of telehealth and diminishing reliance on traditional offices may be part of the reason for these low business expenses.
Most therapists who take insurance are reimbursed less than $150 per hour
In total, 77.1% of respondents said they accepted insurance in 2022. The majority were reimbursed less than $150 per hour. Of those, nearly a quarter (23.9%) were reimbursed less than $100 per hour. The five insurance companies respondents most commonly paneled with were Cigna, Aetna, BCBS, United, and Anthem.
Therapists are worried about the economy and most plan to raise their rates in 2023
A little over half of respondents said they were somewhat worried or very worried about how the economy would impact their practice in 2023, and 63.5% of respondents overall said they plan to raise their rates in 2023.
When it comes to financial literacy, there’s room to grow
Some therapists struggle with day-to-day accounting and bookkeeping. When asked, 9.3% of respondents said they didn’t know what their biggest business expense was, and 12.4% failed to consistently pay quarterly taxes.
With the future health of the economy no more certain in 2023 than it was in 2022, and the majority of respondents worrying about its impact on their practices, good accounting and bookkeeping are more important than ever.
Want to read the whole report? Download the Heard 2023 Financial State of Private Practice Report.