[00:00:00] Linzy: Hello and welcome back to another Feelings and Finances episode of the Money Skills for Therapists podcast. These are our short and sweet episodes that come out on Fridays where I answer your questions, the listeners of the Money Skills for Therapists podcast. And today’s question is from Sabra.

[00:00:17] Sabra: Hi Linzy, I have not taken your Money Skills for Therapists course.However, I have done a brief phone consultation with you, and I appreciated your feedback to me, which was that maybe it’s not the course for me right now, or at that time. It was about six months to twelve months ago, but I have been listening to your podcast since then, and I really enjoy them.

[00:00:40] So thank you so much for providing that content. I’ve also shared it with a lot of therapists that I see in my practice who struggle with money with their practice. So huge resource for our community here in Hawaii, and I appreciate it. My question today…

[00:00:54] What I’m noticing here is a lot of people are trending towards simple practice as their EHR management system, as well as billing system. I currently use a different EHR. It’s called Tebra. Not super stoked on it at all. It’s also very pricey. But I also use a medical biller. She does my credentialing and revenue cycle management as well, which is really helpful to know my numbers.

[00:01:17] And I don’t actually have to put them together. She does and sends me a report of everything that’s happened with myself and my four providers in the practice. So that’s lovely.But I pay her separately for billing. So she offers sort of like two different billable services, and they’re billed differently.

[00:01:33] I guess one of my questions is like, as people tell me how great Simple Practice is, and it’s so cheap, and that’s really the route I should go. And I mean, like all my colleagues… How do I know how much I should be spending for a group practice on something like EHR and billing? Like, I don’t know if that’s like a generalized question that can be answered, like per, you know, how many clients we see as a practice or per how many providers there are in the practice.

[00:01:58] So for example, I have four providers, but all of them really have like a a 10 to 15 person a week panel, so they’re not full time, but I’m really wondering, like, am I paying too much? How do I know if I’m paying too much for billing services and or credentialing services and or EHR and the combination thereof, and then second to that is, as folks look for billers… Here in Hawaii, they’re very limited, medical billers.

[00:02:23] And, I’m just wondering how maybe other folks in their communities have found medical billing services that are within their price range and that operate within the EHR that is also within their price range. So again, pretty specific yet general question. but appreciate all of your support to us as therapists in the community.

[00:02:41] And I’m so happy to share your information all the time with people, incredibly helpful. Thank you.

[00:02:48] Linzy: Okay. thank you for your question, Sabra. And I do remember our conversation. So it’s nice to hear that you’ve stayed connected, and thank you so much for sharing the podcast with other therapists as well in Hawaii. I really appreciate that. So yes, it is a specific question, but it does fall within broader questions of what do healthy numbers look like

[00:03:06] in group practice, and what is worth outsourcing versus what is worth doing in house, right? Because when you are paying a biller, you are outsourcing all the problem solving associated with billing, right? And so you’re not just outsourcing, you know, the software, the submission, um, of your claims for insurance, but you’re also outsourcing the problems, right?

[00:03:27] You’re outsourcing disputes with insurance, or the need to follow up, or to resubmit. Assumedly your biller is doing all of those things, which is valuable in terms of bandwidth, right? And so Simple Practice does offer the platform where you can submit yourself. But if there’s an issue, it’s going to have to be somebody from your practice who gets on the phone, whether that’s you, whether that’s another administrative staff that you have, there is going to be a certain cost to your practice in terms of time and energy

[00:03:56] if you bring the billing part in house.Many group practice owners decide that that is worth it, but I never suggest that group practice owners, especially once you have, you know, four folks on board, I’m hearing they’re all part time. So maybe you would think of it as like two full time equivalents.

[00:04:11] You’re getting to the point where you doing billing would probably not be a good use of your time. You know, you’re going to have a higher purpose for your own time in terms of marketing and supervising your team and maybe recruiting more folks. You know, there’s things that only you can do in the business, but billing is not one of those,

[00:04:28] right? So there is a value that is beyond monetary to outsourcing your billing. If they’re doing a great job, you know, one of my, my inclinations is to say, you know, if it’s not broken, don’t fix it. But there is this question, that you’re asking about how much should you be paying? So generally speaking in a group practice, there are guidelines that you can look at.

[00:04:49] And I really like the Profit First guidelines that Julie Herres lays out in Profit First for Group Practice Owners around how much to pay for administration and operating expenses. So she actually has very clear guidelines and I’m going to direct you towards, you know, her resource, Sabra, in terms of looking at your own numbers on

[00:05:06] the ratio that you should be spending that tend to reflect healthy numbers, right? There’s always exceptions. There’s always variables, but she has some very clear suggestions on what to spend on administration at different levels of practice revenue, as well as what to spend on operating expenses, and I will say, generally speaking, the guideline for operating expenses as you get into

[00:05:26] a larger company, you’re getting into the hundreds of thousands of revenue, is you’re usually looking at operating expenses somewhere in like kind of the 20 percent range, like 15 to 30%, somewhere in there. So because you’re paying for that current software, Tebra, which I hear you’re not thrilled with, that would fall under your operating expenses.

[00:05:45] But then also thinking about your administration, there are guidelines that you can think about of what to pay an administrative staff, and I’m fairly sure, you know, on a small size practice, it’s about 5%, that Julie suggests, like, somewhere in that range. So I would sit down with your numbers and just think about, compared to the revenue that comes in the door, what percentage are you paying for this billing service every month, right?

[00:06:08] Does it end up being 5 percent of what comes in the door. I mean, you’re also probably paying per submission. So looking at the way that you’re charged, how much do you end up spending compared to your group’s total revenue on that billing service? How much are you spending on your current EHR, right, which I hear you’re not in love with,

[00:06:25] so there might be other reasons to make a change there. And then how much would you be spending on simple practice? And look at that as a ratio to your total numbers, in the context of the other numbers that are going on, Sabra. So, you know, Simple Practice, as you start to add clinicians, there is an expense that comes with that.

[00:06:40] It’s not cheap, but if it’s doing what you need it to do, that can be a good investment, but you’re going to want to see, you know, what is that going to do to your operating expenses? Is that going to start to tip you kind of out of that 20, 30 percent range? Does that start to put you into numbers that are much higher?

[00:06:55] Generally speaking, once our operating expenses get beyond 30%, usually it starts to be unsustainable. Right? There’s just too much money required to run the business. And then when you think about your clinician splits and what they’re taking from their fees, and then having money left over for you to get paid, usually over 30 percent for operating expenses is, is too much.

[00:07:12] It’s not sustainable. Right. So if you think about switching to Simple Practice and cost that out, look at that in relationship to your other operating expenses you currently have, does that start to put it too high? But then you’d also be getting rid of that billing expense. Is the billing expense now kind of beyond 5 percent of your revenue?

[00:07:29] Just sitting and looking comparatively of where are you now? Are you within those ranges? Grab Julie’s book, Profit First for Group Practice Owners, because that will give you some more numbers to put into context based on the revenue size of your practice. Cause I don’t know your revenue size, but Julie has great charts there that let you see, okay, for solo practice, small group practice, medium group practice, large group practice, here are some guidelines of what your numbers can look like.

[00:07:53] And then you can run your numbers based on where you’re at now. Are you within healthy ranges for what tends to work for group practices for the size you are now? And if you made this switch where you no longer work with billers, but you move over to simple practice, what does that do to your numbers?

[00:08:08] But I would also really, really think about your bandwidth, Sabra. So if you do not work with billers, is there somebody on your team who’s going to take that over? Is there an existing administrator who would be great at that? And you can pay them a lower fee than you’re paying the billers, and they’ll be happy to get on the phone chasing insurance claims?

[00:08:24] Or would that be coming to your plate? Because if it’s coming to your plate, I’m going to say, based on my experience with group practice, and again, the value of your time and your impact on the practice, you doing the billing is probably not a good use of your own time. So would it be going to somebody else?

[00:08:39] Do you have another admin staff? How many more hours would you end up paying them to do the billing? Or would you maybe bring on another admin staff to be doing some of your billing? Because maybe you have some other administrative tasks that they could also take on, right? So take some time to really ground in your numbers, look at them in context, run these scenarios, and that’ll help you start to see what makes sense for your practice.

[00:09:00] Not just in terms of money, but thinking in terms of bandwidth and time. Who would take over this billing task if you were not working with your billers? So definitely some numbers for you to dig into, Sabra, there, but I do remember from our conversation that you were actually pretty confident and clear with numbers.

[00:09:15] So I think that this might be well within your comfort zone. And you can see what information comes back, and that’ll help you make a strategic decision here. Thanks so much for your question, Sabra. If you also have a question that you’d like answered on one of our feelings and finances episodes, you can just click on the link in the show notes.

[00:09:32] It’ll take you to our podcast page. It’s super simple. Just like Sabra, just press record, introduce yourself, share some context, if you’d like, and share your question. And I would love to answer your question on an upcoming feelings and finances episode. Thanks for joining me today.