One of the most exciting things about a career in psychiatry is the opportunity to own your own practice. Whether you plan to practice general psychiatry or build a private practice around one of the many subspecialty programs, there has never been a better time in healthcare to own your work.
Given the relative flexibility of psychiatry training compared to other specialties and the increased demand for virtual mental health care, many senior residents begin establishing a small panel of private patients with the help and supervision of their training program.
A private practice is a business operated by a doctor to provide services directly to patients rather than one owned by a hospital system. Because psychiatrists do not necessarily have to evaluate their patients physically and have limited business startup expenses relative to other fields, the field is trending towards providing more direct virtual care.
Many psychiatrists and other mental health professionals will work from home or rent a small office space to conduct their virtual visits, some may join health insurance networks, and many offer their services priced directly to patients. The benefits of this are increased compensation, minimizing unnecessary documentation, and fewer restrictions around the types of visits provided.
My ventures into building a small private practice panel have been deeply rewarding. I’ve been able to synthesize my skills, build upon my experiences, and help address our community’s growing mental health needs directly.
Unfortunately, there are many steps required to establish a private practice, and they can be ambiguous and not easily accessible. This guide is designed to help you navigate the complexities of starting a private practice while maintaining the legal and ethical boundaries that are so important in psychiatry.
Disclaimer: Please note that this guide is not intended as a substitute for professional legal or financial advice. When considering your own private practice, work closely with supervisors and financial professionals since every situation presents unique challenges.
How to Set Up a Virtual Private Practice
Step 1: Does a Virtual Private Practice Make Sense?
First, like all great journeys, you must look within. Before launching your private practice, ensure it aligns with your overall career goals and lifestyle preferences.
Are you comfortable with technology? Do you enjoy working independently? Are you comfortable navigating the business, regulatory, and legal requirements for maintaining your own business?
You should be thinking about these things early in your training program while observing the diverse landscape in which your preceptors and other attendings practice.
Another essential aspect when deciding to establish a private practice is how supportive your environment is. It’s essential to consider your training program policies, local regulations and practices, and market demand for services.
It’s also important to talk with other trainees and attendings to understand how easy it would be to start a private practice. Urban areas in the United States with larger populations tend to have higher demand for private practice. However, the prospect of virtual psychiatry does make it somewhat easier to provide care in areas where you are not physically located, so long as you comply with local and federal regulations.
Step 2: Develop a Your Plan
Like any business, it’s essential to start with a detailed plan to maximize your chances of success. What is your practice’s mission? Who will your target population be? Will you take insurance or not? Does your employment include a non-compete clause preventing you from operating your own practice?
These are important practical and ethical considerations to consider early in the process. Again, getting feedback from others in the field is helpful when developing your business plan.
The ethical aspects can be quite challenging. For example, when you work as an employee for the hospital, you must see any patient based on their need for care. In private practice, you can structure yourself in a way that only participates with specific insurances or only accepts cash.
Concerns about healthcare inequities, determining a fair price for patients, and weighing the value of your experience while still in training can be difficult. Developing a network of doctors you trust and look up to who can help you navigate these challenges early on is vital.
Step 3: The Rules: Licenses, Certifications, and Regulations
One of the more straightforward aspects of the process is ensuring that you are in regulatory compliance.
You must have a full license to practice medicine in the state you hope to practice, that you are complying with all local and federal laws, that your business practices are standard, that you are adequately insured, and that you have program support before launching your private practice.
Many doctors hire a law firm to help ensure compliance, which can be helpful since these factors can change and vary a great deal by geographical area. Each state has its own organization of psychiatrists, which can be a great resource to learn about trends and resources for starting a practice in your area. They also offer networking events where people share trusted lawyers, accountants, insurance providers, and documents to get your practice running.
At a minimum, you want to ensure that you have:
- A full license to practice medicine and a DEA license to prescribe controlled substances (often required by residency programs)
- Malpractice insurance, either your policy or added on to your training program’s
- EIN to file your taxes (1099 or PLLC)
- An electronic medical record for e-prescribing (if required by your state)
- Registered your business through your state and local governments
A brief word on taxes: Unlike your usual job in residency, once you start a private practice, you will be responsible for paying business taxes. Many will hire an accountant for this step, especially if they are not interested in the financial aspects of operating a practice or are afraid of making mistakes. The process is straightforward enough that personal finance enthusiasts can file business taxes if the finances are simple.
Filing as a PLLC will help provide minor business-related legal protections if you are sued (although, importantly, it does not provide malpractice coverage). Once your practice grows to the point where you hire additional employees or offer benefits, most recommend partnering with a reputable accountant in your area.
Step 4: Selecting a Telehealth Platform
A whole world of telehealth platforms market various features for any number of situations. They range significantly in pricing. The most important things to consider are HIPAA compliance and a user-friendly experience for routine features like electronic prescribing, billing, and communicating with patients and other providers. Examples of popular, reputable companies include SimplePractice, Kareo, Charm, and TherapyNotes.
Some psychiatrists who have cash-only practices will only pay for the e-prescribing feature if their state requires it.
A truly barebones practice that involves minimal prescribing and does not need to comply with insurance regulations would include a notepad, pen, and filing system. Remember that this may carry legal risks as it can be harder to provide and access your records if sued and is atypical for modern psychiatrists.
Step 5: Open for Business!
So you’re registered federally, locally, and with your program… Now what?
Creating a website, designing business cards, and using a tool like Doximity for an office phone/fax number is pretty affordable and straightforward.
The more central existential question is if/when you will expand into requiring a physical space. This can also be complicated by federal statutes, which have generally been relaxed and somewhat ambiguous since the COVID-19 public health emergency, especially regarding controlled substance prescribing. A psychotherapy-only practice is the most flexible in this regard.
Many consider the benefits of having a physical workplace worth the cost. It’s important to know that you can also sublet office spaces for several hours a week for a low monthly rate.
The benefits of having a private space include a more professional image, clear boundaries between work and home, and a formal address for business and tax purposes. Having a space with others can be particularly helpful for safety reasons.
Virtual Private Practice Mistakes to Avoid
Many of the practical and artful realities of operating a psychiatric practice are outside the scope of this article. However, here are some general lessons I’ve learned while going through this process.
The first is the importance of obtaining a business address early. Even if you plan on setting up a home office, it’s essential to know that many federal and local forms/registries require a business address. This often cannot be a P.O. box address.
Alternatives include renting a small office space (see above) or a virtual business address. Publicly announcing your home address is not a great idea for safety reasons.
Many consider the home office deduction an important benefit of operating a virtual private practice. Indeed, the tax savings on things like office supplies and a percentage of your rent, electricity, and Wi-Fi can be significant.
It’s crucial to know that the IRS has stringent rules on how they define an office space. It should be limited to an area of your home that is used exclusively and regularly for your business. A small corner where you only see patients and work on documentation is acceptable, while a shared space (even periodically) is decidedly not allowed.
Perhaps the biggest mistake to avoid is ignoring the reality that most psychiatrists work in either an outpatient or private setting compared to the largely inpatient experiences of all ACGME-accredited residency programs. It’s vital to ask attendings early on for advice and their perspectives when operating or dealing with private practices to make sure you are prepared when it comes time to take the leap.
Similarly, having a network of supervisors and supportive colleagues you can meet with regularly when operating your own practice is essential, and much of this networking can take place during residency training. Local psychotherapy organizations, like psychodynamic or psychoanalytic institutes, can provide additional resources, mentorship, and professional development as well, even after residency has ended.
Go the Distance with Med School Insiders
Do you think a career in private practice psychiatry is for you? Our team of dedicated Insiders can prepare you with everything you need to launch a career in psychiatry in any setting. We’d love to meet with you to hear your story, clarify your goals, and create a plan that supports you at any stage of your medical journey today.
If you’re not quite sure yet, know that it’s natural not to be totally certain of the specialty you want to pursue. If you’re having trouble deciding or second-guessing yourself, check out our So You Want to Be playlist, which takes a deep dive into the pros, cons, and training steps for every medical specialty.
