Avoid Common Mistakes When Starting a Group Practice

By Maureen Werrbach, LCPC on October 18, 2022

There are many things to be done when starting a group practice, from establishing an accounting process and meeting legal requirements to figuring out staffing issues. Amid all the planning, it’s easy to make mistakes or decisions that can have unforeseen or long-term effects. Here are ways to avoid some common mistakes group practice owners make when starting out to help ensure a smooth operation in the beginning and well into your practice’s future.

Hire an attorney

In the age where we have all of the world’s knowledge at our fingertips, it can be overwhelming to see what others are doing. However, it is important to remember that what’s good for someone else’s business won’t necessarily work for yours. If you’re dealing with an employee matter, an employment attorney or HR professional is your best bet. If it’s more business related, a business attorney will be able to help. Relying on legal advice from social media groups can lead to misinformation and extra headaches down the road. Advice from an attorney can be pricey, but it is important to have a solid foundation to build your business on. Asking your local friends and colleagues for referrals to attorneys in your area is always a good place to start.

Consult an accountant

Just as important as having proper legal counsel, having an accountant who really has a pulse on your business is key to running your practice smoothly. Having someone do your bookkeeping and accounting is important because they will understand the ins and outs of your business's financials. They can help you keep an eye on trends and issues so problems can be resolved when they are minor instead of in the middle of a financial disaster. I learned the importance of having an accountant who did our accounting regularly (monthly, versus quarterly or yearly) when I ended up owing more in taxes than I had saved in my first year as a group. Now, I have an accountant who checks in regularly so everyone’s on the same page. Ask your accountant if they offer bookkeeping services; many of them do, and they may be able to set you up with a dashboard so you can see the finances of your business at a glance.

Think through your compensation structure

Be careful when setting up your compensation structure, as sometimes practice owners offer a higher rate than they can actually afford. Working together with your accountant and attorney can help you come up with a compensation structure that is sustainable for your business, so there is no need to make a big, complicated change somewhere down the line. Make sure to take into consideration your administrative (such as an admin person or team) and leadership (supervisors or other leadership support) costs and any other benefits you offer to make sure the plan works for you.

Decide between contractors or employees

Some states have strict laws about who can perform different types of roles, and the distinction between independent contractors (ICs) and employees (W2s) is an important one. This is not to say that bringing on contractors is always a mistake; there are many group practices where this structure makes sense and works well. 

Many people are tempted to start with ICs versus W2 employees because it is easier to set up and get started, and there’s less involvement with the owner. However, if that is not allowed in your state, or you would really prefer the level of oversight that you can only get with W2s, you will have to switch eventually. Making the switch from IC to W2 is expensive and difficult, so be sure to do your research before you bring on your first clinician. 

Understand your ideal clinician

I have found it helps to define who my ideal clinician is before searching for applicants, so that I know exactly what I am looking for. While gut instinct is important, and you can certainly use your gut to help you decide, there are other things to consider as well.

Some questions to consider:

Do they have a specialty you are looking for? What are their credentials? Do they need supervision? What is their availability – do they have a night or weekend free? What are their goals for group practice – are they happy to work for someone else, or are they looking to start their own practice down the line? Do their values align with the values of the practice? What will their job entail? Just seeing clients? Marketing? Community engagement?

Decide what you need from the role before you hire for it. Hiring out of desperation or fear often does not tend to go well, because it is harder to hold out for someone who is a good fit.

Don’t feel tempted to do all the things

Group practice owners have a lot on their plates. It is hard to go from being the person who wears all the hats to the person who delegates out tasks. When you are first starting out, you might not have the resources or time to delegate right off the bat. However, do not write it off completely, because delegating minor tasks allows for time to focus on the big-picture goals for the practice. Learn how to simplify and eliminate processes that are clunky or unnecessary. Take time off and let your systems work. Delegate out tasks that do not bring you joy or that take up too much of your precious time. Social media, billing, answering phones, HR, and payroll are all things that someone else can handle. Focus on your strengths and let others take care of the rest.

* The content of this post is intended to serve as general advice and information. It is not to be taken as legal advice and may not account for all rules and regulations in every jurisdiction. For legal advice, please contact an attorney.

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