Licensed Mental Health Counselor, Barbara Olson wrote in from Monroe, Washington talking about her own struggle to provide services to clients in need while also setting limits on how low she should slide on her fees . . . .
I just wanted to drop you a note and tell you how wonderful your site is. It’s very helpful. I especially appreciated your perspective on avoiding managed care and panels . . . .
I have had my own private practice (Monroe Counseling in Monroe, Washington) and have done well with pay-for-fee service or just being an out-of-network provider. I am just at that cross roads of trying to decide if I want to go onto panels, or just stay out of network. Call after call want to use their insurance because the economy is so bad and they can’t afford out of pocket fees.
Would you share with me if you use a sliding scale in your practice and if so, how do you come up with the scale?
I am struggling with just how low a fee will I accept, and yet want to earn a living, and charge a respectable/fair fee for service...just not sure how to come up with that fee.
In WA, the market seems to be $85 – $125 per hour session . . .yet is that what they are really getting, or are they dropping it down for out of pocket clients…just thinking out loud!”
Barbara, thank you so much for your kind words! I’m so glad you are a part of our online community here at Private Practice from the Inside Out.
I do not use a sliding fee scale and I recommend that mental health professionals find a different way to help their clients meet their mental health needs. I’ve address some of this in previous posts when I’ve talked to you about How I’ve Dealt with Clients’ Financial Needs, Reduced Fees, Sliding Scales, and Lessons Learned, and I’ve reminded you of some things you need to consider Before You Reduce Those Fees . . . . And, here’s a post where I’ve cautioned you about Setting Different Fees for Different Clients.
However, should you decide that you do want to create and use a sliding scale fee, here are the steps you need to take to do so.
Step 1 – To set your minimum fee on your sliding scale, identify the Usual and Customary Fee for mental health services in your geographic area. Use this a starting point.
Step 2 – Identify all costs (both soft and hard) related to running your business for 12 months.
Step 3 – Add the annual salary that you desire to make to the costs above.
Step 4 – Add the numbers in Step 2 and 3. Then divide by 12 to get the minimum monthly income you need to make in order to keep your business running.
Step 5 – Identify the number of clients that you have seen in the last 12 months. Then divide by 12 to get the average number of clients you see per month.
Step 6 – Divide the minimum monthly income you need to bring in from Step 4 by the average number of clients you see per month from Step 5. This number will give you the minimum amount you can charge your clients without putting your business in jeopardy.
Note that most new professionals undervalue their services and often struggle to build a strong practice. If you do not have enough clients coming in to see you, offering a sliding scale will not result in a bigger, stronger, healthy business. You cannot give what you do not have.
Step 7 – You are now ready to create your sliding scale. Determine what the breakdown of income levels and fees will be based on the high and low fee points you have calculated. Many businesses use the Federal Poverty Guidelines as a starting point . Here is an example of the 2011 U.S. Federal Poverty Guidelines and samples of sliding fee scales.
Step 8 – Remember that you cannot offer a sliding fee scale to some of your clients and not to others. Consider how you will gather and document your fairness in administering your sliding scale. One way of doing this is to create a form that gathers relevant information from each client. Such information may include proof of annual household income, number of dependents, chronic / debilitating illnesses, etc. (Remember to update this form regularly.)
If you have an example of a sliding fee scale that you have used, feel free to share it with us here!