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Common Compensation Models for Group Practices

By Maureen Werrbach, LCPC on December 4, 2019
Common Compensation Models for Group Practices - TherapyNotes with Maureen Werrbach

At some point, every group practice owner has to decide which type of compensation model they want to use for the clinicians in their practice. While social media is a great platform to get support and advice on business strategies, when it comes to compensation, it’s important to know all of your options. However, it’s also just as crucial to have an employment attorney in your state take a look at your practice and help you determine the right compensation model for your unique needs.

So, let’s talk about the different compensation models that group practice owners frequently use and explore just what they look like in practice. 

Salary

Salaried positions in a group practice is definitely the least common compensation model used. In fact, it’s really reserved for use in well-established group practices and is rarely used for new or emerging group practices because it carries the highest financial risk of all of the compensation models. With a salaried position, a group practice owner is paying a set amount per pay period whether or not the clinician has a full caseload—that’s often not manageable for a new group practice where clinicians may take upwards of three months to grow their caseload! Group practice owners who use a salary model claim that paying their clinicians is much easier than all the other models that I’ll discuss below, and as those group owners who don’t do a salary compensation model know, it can take a lot of time to do payroll when clinicians are not salaried.  

Thinking about trying your hand at salaried clinicians? Here are some things to think about:

  • How do you plan to take varying payment amounts for each session (different insurance rates or sliding scales)?
  • How do you determine the average number of clients that each clinician should see?
  • How many extra administrative hours will they spend on taking notes, collaboration, marketing, networking, and anything else?

Oftentimes, salaried positions will pay less than their counterpart compensation models because the financial risk is highest for the business and clinicians are paid whether or not they maintain their caseloads and prioritize their schedules.  

Average salary in group practice for a fully-licensed, Master-level clinician is approximately $50,000 for 25 billable hours per week.*

Flat Hourly Rate

Paying a specified dollar amount per session is one of the most common ways to pay clinicians. Many group owners who live in states that don’t allow commission-based pay opt for hourly wages. In this scenario, group owners typically offer a clinical rate for client sessions and an administrative rate for all non-client session time spent on things like marketing, blogging, collaboration, etc. Clinical session rates are determined by coming up with an average between high and low paying insurance reimbursement rates, sliding scale and reduced rates, and the group practice’s full fee. A flat hourly rate will take the highs and lows of reimbursement into consideration, and a group practice will typically make more over time than with a commission-based pay model because all client and clinician rate increases benefit only the group practice (unless the group practice owner decides to provide a raise to the clinicians). 

Average non-clinical rates for fully-licensed, Master-level therapists range from $15–30 per hour. Average clinical session rates for fully-licensed, Master-level clinicians range from around $30–70 per hourly session (the wide range is dependent on whether or not group practices are private pay and if insurance is accepting).*

Commission-Based Pay

Commission-based pay is the second most popular compensation model. Group practice owners like this model because both the clinician and the practice earn proportionately per session depending on the reimbursement rate of the insurance provider or the client. It also provides the clinician with an opportunity to see the fruits of insurance reimbursement rate raises at the same time that the group practice does. Commission-based pay often bundles certain things into the “clinical hour,” like time for collaboration or taking notes, and it is often paid on income received. It’s important to talk with an employment attorney in your state to ensure that you are paying the clinicians in your practice appropriately. 

Average commission rates are around 60% for independent contractors and around 50% for employees (other employee benefits are added on top of this percentage).* The 10% difference in pay between IC and W2 employees accounts for the taxes that an employer absorbs and those that the IC pays themselves. 

Combination Hourly Plus Commission

A more recent concept is the slightly more complicated hourly rate plus commission model. Group practices in states that frown upon strict commission pay for staff sometimes opt for a blend of minimum wage payment for all work plus a smaller percentage for clinical sessions. This ensures that clinicians are paid for all hours worked at the time of working them (where commission pay is commonly paid on income received, not work done) while still being paid a percentage of income received.

Average combinations are typically around $15–$20 per hour plus 30–35% commission on income received.*

At the end of the day, it is important to talk to an employment attorney in your state to determine which compensation model makes the most sense for you and your practice. 

*Average rates were gathered from The Group Practice Exchange Facebook group, The Exchange membership community, and individual and group coaching sessions with group practice owners from around the US. 

* 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.
Maureen Werrbach, LCPC

About Maureen Werrbach, LCPC

Maureen Werrbach, LCPC, is a therapist and owner of Urban Wellness, a counseling group practice in Chicago. She started Urban Wellness in 2012, which has grown into a team of 20+ clinicians with multiple locations. Maureen is also the owner of The Group Practice Exchange (TGPE), a consulting business and platform for current and aspiring group practice owners. TGPE provides guidance for starting a group practice, as well as marketing, organizational structuring, business development, and leadership advice. Visit www.thegrouppracticeexchange.com for more.

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