The Death of Independent Practice
Has Been Greatly Exaggerated

by Ivan J. Miller, Ph. D.   

In the early 1990s there were many predictions that the solo practice of psychotherapy  was dead, and the future belonged to managed care and psychotherapists in large group practices.  As managed care disrupted the delivery of mental health care, Cummings, Pallak, and Cummings (1996) even titled a book, Surviving the Demise of Solo Practice: Mental Health Practitioners Prospering in the Era of Managed Care.  Yet, as the new millennium begins, a different pattern is developing.  The quality of services available in corporate health care has plummeted and consumers are increasingly rejecting managed care services in favor of self-paying independent professionals. The emerging pattern is that the independent practice of psychotherapy, based primarily on self-payment, is growing and becoming the gold standard for quality mental health services.

The potential self-pay market is substantial

Consumers have always spent a considerable amount of their own funds for psychotherapy, and it should be no surprise that consumers will continue to self-pay.  In 1987 before managed care was prominent, the National Medical Expenditure Survey indicated that consumers paid out-of-pocket between 45 - 48% of the money spent on psychotherapy (Olfson & Pincus, 1994). Today, the portion of psychotherapy expenses borne by insurance is much smaller.  The Hay Group (1998), an actuarial and benefits consulting firm, reported that the amount of money paid by insurance companies for mental health care declined 54% from 1988 to 1997.  Psychotherapy Finances reported that in a Foster Higgins employer survey, the percent of employers' insurance costs that funded mental health services declined from 9% in 1989 to 4% in 1996 (Practice fees, 1997).  This is a 56% reduction in insurance money available for mental health services.  This loss of insurance funds means that an even greater portion of the money spent on psychotherapy now comes out-of-pocket.

Currently, self-pay clients comprise a large share of the psychotherapy market.  A reader’s survey by Psychotherapy Finances in 1997 found that 44% of their psychotherapist/reader's income came from direct payment from patients (Fee, 1997).  Practice Strategies reported in 1997 found in a random sample survey that 47% of therapist incomes came from direct pay patients (Practice fees, 1997), 32% from managed care insurance, and 16% from other insurance.  Although I believe that these estimates for self-pay are high, they demonstrate that there is a substantial self-pay market.

The Boulder Psychotherapists’ Guild experience shows self-pay and independent practice are viable

Our six years of experience in the Boulder Psychotherapists’ Guild is showing that it can be successful to go outside managed care and develop the self-pay market. The Guild is an interdisciplinary group of 56 independent therapists who have joined together to educate the public about the benefits of psychotherapy and encourage patients to self-pay for traditional psychotherapy.  We are making a cooperative effort to try to increase the size of the self-pay market rather than merely competing for a share of the existing market.

The Guild is based on the simple principle that consumers will self-pay for psychotherapy because it is a valuable service.  I founded the Guild in 1995, and 56 local therapists agreed to contribute $65 monthly dues to a marketing organization that focused directly on reaching out to patients.  The marketing emphasized the difference between traditional, confidential psychotherapy and managed-care, ultra-brief psychotherapy.  At that time, such a cooperative psychotherapy - marketing program was a new and untested idea, and it took several years to develop a successful strategy.  Over the first three years, the membership declined from 57 to 47, but in the past two years has grown to 56  because the members are finding that the Guild generates a substantial number of referrals, and they support the principles the Guild is based on.  Last year’s membership renewal rate was 94%, and we gained ten new members.  Not only do the members support the philosophy of the Guild, but they also have seen enough referrals that they are willing to pay the current dues of $80 per month.

Boulder's Guild has been independently replicated in Connecticut, St. Louis, and Georgia.  In addition, the Guild model is endorsed by the American Mental Health Alliance (AMHA), a not-for-profit, practitioner owned and directed, multidisciplinary network of over 1500 mental health professionals in 13 states.  Dr. Charles Zadikow, President of AMHA-USA states that "Developing Guilds has become a high-priority initiative in at least 6 of the AMHA chapters.  From its beginnings, the goals of AMHA have included the ethical needs to protect the privacy and confidentiality of their clients, to help maintain their dignity and freedom of choice, as well as to assist in preserving what is best about their profession.  AMHA believes that the Guild is a perfect vehicle for their requirements and, as a collaborative marketing effort, offers their practitioners a way to maintain integrity, to build their practices without managed care, and to help educate the public about the real value of psychotherapy."

     Increasingly, consumers are self-paying for mental health services.  Some of the Guild members have developed managed-care-free practices and others are expanding the portion of their practice that is managed-care-free.  In addition, in the year 2000 the Guild is joining an Employee/Corporate Wellness Program with medical professionals who are also marketing directly to consumers to increase their self-pay practices.  At a time when professionals working with managed care are becoming more demoralized and experiencing declining incomes, the Guild is growing, morale is improving, and many are reporting that their incomes are rising.

Implications of the Guild's success for the mental health professions:

8. services, and in place, it has declared that employers and the government are their customers.  The Guild shows that the practice of psychotherapy can succeed when the patient is treated as the customer.

What does the future hold?

Will the future continue to be promising for the independent practice of psychotherapy?  I think so.  In addition to the current trend toward self-pay for quality and confidential psychotherapy, I think that the future vision portrayed in Star Trek illustrates a truth about the value of psychotherapy.  On the U. S. S. Enterprise, all professions and jobs are based on high-tech innovations except for one.  Even the preparation of delicious food is done by machines that assemble food by molecular formula, and medical conditions are diagnosed within seconds by a hand-held, body scanner.  The only person whose job is still based primarily on an interpersonal relationship is that of the Empath, Counselor Troi.  When facing emotional issues, each crewmember confidentially consults her, and without time pressure or cost-effectiveness guidelines, she listens and offers sage advice.  In this popular vision of the future, people can see that technology and formulas do not replace the need for a confidential and personal counseling relationship without undue time pressures.  I believe that there always will be an important place for the independent practice of psychotherapy in the future of humankind.

References

Cummings, N. A., Pallak, M. S., & Cummings, J. L.  (1996). Surviving the Demise of Solo Practice: Mental Health Practitioners Prospering in the Era of Managed Care.  Madison: Psychosocial Press.

 Employers are slashing behavioral health expenses.  (1996) Psychotherapy Finances, 22(10), 1.

Fee, Practice and Managed Care Survey.  (1997).  Psychotherapy Finances, 23(5), 5.

Hay Group.  (1998) Survey funded by the National Alliance for the Mentally Ill, the National Association of Psychiatric Health Systems, and the Association of Behavioral Group Practices press release.  5/7/98.  Washington, DC.

Olfson, M. & Pincus, H. A. (1994).  Outpatient psychotherapy in the United States, II: Patterns of utilization.  American Journal of Psychiatry, 151, 1289-1294

 Practice fees, incomes and trends report. (1997).  Practice Strategies,  3(12), 1.

Help to support the National Coalition by purchasing logo items from our store

Click here to view our PRIVACY policy