Inflation, Reimbursement Rates, and Changing Client Needs

Linzy Bonham [00:00:00]: 

That everything is good, then we are so much more willing to make an investment, you know, maybe bet on ourselves a little bit, go for that bigger this or that. Because we. We believe that, you know, more money is coming. But when things feel uncertain, naturally we’re gonna become tighter, right? Like, physically we become tighter. I think we’re stressed, right? We become physically tighter. We become tighter with our money. So I see that in therapists, right? Like our. Our fear to invest in our businesses, and our clients are experiencing that as they’re trying to decide, as you say, do I pay $800 for therapy that I know is really gonna help me with my childhood trauma, or do I keep that 800 in my household because money has become very tight? Welcome to Money Skills for Therapists, the podcast that helps therapists and health practitioners in private practice go from money confusion and shame to calm clarity and confidence with their finances. 

Linzy Bonham [00:00:52]: 

If you’ve ever felt overwhelmed by numbers or avoided looking at your business money, you’re in the right place. I’m Linzy Bonham, therapist turned money coach and creator of Money Skills for Therapists. Before we jump in, check out my free on demand masterclass. You’ll find the link in the show notes or@moneynutsandbolts.com under masterclass. It’s the best first step to finally feeling empowered with money in your private practice. Let’s get started. 

Julie Herres [00:01:18]: 

Hello, everyone, and welcome to Therapy for your Money. We have a special episode today. We’re chatting with my friend Lindsay Bonham from Money Skills for Therapists. Lindsay, you are one of my favorite people. I always enjoy chatting with you, and so thanks for coming on today. 

Linzy Bonham [00:01:34]: 

Yeah, thank you. I’m so excited to be here, and I’m very excited that this is a dual episode, which I also feels very efficient. But we should pat ourselves on the back for efficiency because we’re going to air this episode, I guess kind of like, edited your way on your podcast stream. And edited my way on my podcast stream. So this is a dual function conversation. 

Julie Herres [00:01:56]: 

Yeah. Very efficient. Points for efficiency. So do you want to intro us in? What are we talking about today? We have a fun plan. 

Linzy Bonham [00:02:03]: 

Unofficially, this episode is called in this Economy, which is born out of you and I just talking to about our own businesses and what we’ve been seeing with changes in how people are acting and buying and thinking. And as we were talking about it, we were like, we should record an episode about this because this is impacting literally everybody that we support right now. 

Julie Herres [00:02:41]: 

Yeah. And there’s just a lot of similarities right. In what we’re seeing. We both, I mean, we work with kind of a lot of the same people and we’re recording this at the very, very end of September. It’s almost October. So just for context of like this is what’s going on. Right. Right now in the economy 

Julie Herres [00:02:56]: 

Yeah. So where should we start? 

Linzy Bonham [00:02:58]: 

How about we start by you, you sharing what you’ve been seeing in terms of your clients numbers and the challenges that are coming up for you? 

Julie Herres [00:03:04]: 

Yeah, yeah. We have been seeing. So at Green Oak, we work with a lot of practice owners, specifically a lot of group practice owners. So there are plenty of practices that are doing fine where it’s kind of cruise control. Things are going well. They, for the most part are practices that are pretty well established and that have good marketing mechanisms already. Right. So they know what dials to pull to to attract new clients. 

Julie Herres [00:03:28]: 

But we are seeing a lot more practices that are struggling with cash flow where we are in a place of I’m not sure I can make payroll or payroll taxes are behind or how do I pay myself. Right. Just the where. Where the waterfall keeps going and cash problems keep really spiraling. I imagine it kind of like a, you know, a drain, Lindsay, where things are just spiraling out of control and like the. You get to the bottom of that drain, like you’re just going real fast and there’s not that much that you can do to get out of it. Right. And so sometimes we’re at the top of that spiral, sometimes towards the bot the bottom. 

Julie Herres [00:04:04]: 

But this year specifically, we have seen just a lot more folks coming in to work with us for the very first time. Right. New clients to us that are in a what I would call a cash distress situation where, you know, it might almost be too late, where we are going to do everything in our power to help them get back on track. But it might actually already be too late. Right. There is a point where an account that we don’t have a magic wand and there’s only so much that we can do if things are already in a really bad shape, there may not be enough time for us to get things back on. On track. 

Linzy Bonham [00:04:40]: 

Yeah. And as you’re saying that it Makes you think about how that is so specific. Like that’s the, the gift and the responsibility liability of group practice. 

Julie Herres [00:04:51]: 

Yeah. 

Linzy Bonham [00:04:51]: 

Built something that’s just so much bigger. You know, I think about a group pract, a large group practice. Like, you know, I’m working with one therapist right now who’s 55 clinicians working for them. And I know you work with folks of that scale too. That’s kind of like a cruise ship size business. 

Julie Herres [00:05:05]: 

Yes. 

Linzy Bonham [00:05:06]: 

Where it takes a lot of time to turn and pivot and get everybody on board and. Which is very different than folks who are in like solo practice who are more in like a kayak where they’re. 

Julie Herres [00:05:16]: 

Yes. 

Linzy Bonham [00:05:16]: 

Okay. 

Julie Herres [00:05:16]: 

Wow. 

Linzy Bonham [00:05:17]: 

I just got to like jump out and start doing these different things. So. Yeah, for a large business, the consequences can be huge when we haven’t kind of seen the writing on the wall early enough. 

Julie Herres [00:05:27]: 

Yes. And sometimes it’s because you’re not looking right at what is coming down the pike. Sometimes it just also happens as a surprise. 

Linzy Bonham [00:05:35]: 

Right. 

Julie Herres [00:05:35]: 

Like we’ve seen this year practices lose 25% of their clinicians in one fell swoop. Right. Sometimes in one day. And that’s not common, but it does happen. And it’s. I mean, you can’t plan ahead for that. Right. Unless you hear the rumblings of an uproar. 

Linzy Bonham [00:05:51]: 

Yeah. 

Julie Herres [00:05:52]: 

You usually don’t. Won’t that’s happening until it happens. And if you’re in a precarious situation to begin with, something like that can take the practice down. Right. If you don’t have reserves or a line of credit or cash in retained earnings, I mean, that can be the end of a practice on occasion. Yeah. 

Linzy Bonham [00:06:13]: 

Yeah. Because I’m also seeing this in the folks that I know in solo practice. 

Julie Herres [00:06:17]: 

Okay. 

Linzy Bonham [00:06:18]: 

Just as we kind of think about the, the bigger picture here, it’s happening in group practices where we are seeing like numbers are down. But also I’m seeing in solo practice, I’ve had a couple folks tell me, and of course this is anecdotal because it’s a couple but you know, premium fee therapists who have been full for years, like wait list. Always, always wait list. And now they have like a couple open spots which is going against years and years and years this data of having kind of a lineup out the door. And so we are seeing this kind of dampening in numbers. So let’s, let’s kind of zoom out a little bit because, you know, this episode is unofficially called in this economy. What do you see happening in the economy? Like we’re not officially in a recession. 

Julie Herres [00:07:01]: 

Yeah. 

Linzy Bonham [00:07:02]: 

But we’re definitely not booming either, but. 

Julie Herres [00:07:07]: 

Right, okay. So yeah, officially not in a recession. I definitely want to get your, your input on this too. I’m in the U.S. you’re in Canada, but you work with a lot of American practices as well. So what we are seeing is a lot of inflation. 

Linzy Bonham [00:07:22]: 

Right. 

Julie Herres [00:07:22]: 

The cost of living is really high and there’s a lot of fear is kind of what’s going on in the market. Right. Where changes to health insurance, where for a lot of folks are kind of bracing for including small businesses. Right. For significant increases most likely coming at the end of the year for open enrollment, for renewals of health insurance. That is likely what’s going to be happening just based on the legislative changes this year. Right. And so when then people lose access to healthcare, that mean that reduces the pool of folks to who can go to therapy. 

Julie Herres [00:07:56]: 

But when everything is just feeling a lot more expensive these days, and that’s certainly how it’s feeling over here is you start looking for like what is a little bit more optional. Right. What is, what is something that we could do without. And therapy is as helpful as it is and can be. But specifically sometimes cash pay therapy. 

Linzy Bonham [00:08:16]: 

Right. 

Julie Herres [00:08:16]: 

If we’re looking at, in my area, if you’re going to see someone once a week, that’s probably $800 a month. It’s $200 per session, $800 a month. Like that’s, you know, by eliminating that, that’s a lot of money coming back into the household. We are seeing sometimes that is no longer sustainable or folks are going to every other week. Right. We’re kind of changing the cadence of what they do. But we’re also seeing practice owners just not wanting to make a lot of changes. Right. 

Julie Herres [00:08:44]: 

Be kind of worried of like, well, do I have to just absorb the additional health insurance costs for my team members? Like how are we going to do that? I don’t want to reduce what we offer. It’s costing them more to live. But at the same time we’re seeing sometimes reimbursement decreases. What do we do? Right. There’s a lot of things that are just squeezing. Practice owners are making it just really, really hard. And also on top of that, SEO and ads don’t work the way they used to. Right. 

Julie Herres [00:09:16]: 

What worked two years ago no longer works. And so it’s kind of a relearning process. So that’s what I’m seeing on my side. 

Linzy Bonham [00:09:21]: 

What about. 

Julie Herres [00:09:21]: 

What do you think? 

Linzy Bonham [00:09:23]: 

Yeah, I think there are a couple pieces Going on one is, as you say, there’s just this feeling of being squeezed, of more tightness, inflation. Over the last few years, life has just gotten more expensive. And I think what also used to be considered, you know, a comfortable upper middle class income is no longer comfortable. It’s now just like what you need to get by, right? I had a student of mine tell me this is a couple years ago even that her accountant who is based in Edmonton, his opinion was that the new upper middle class was a household income of $300,000 before. 

Julie Herres [00:09:57]: 

Wow. Wow, right? 

Linzy Bonham [00:09:58]: 

It’s like that is like truly comfortable. Below that you’re still having to make these like this or that kind of decision, your money. Because everything is more, everything’s that little bit more. I notice that in myself. Like it’s always interesting to stop and notice our own consumer behaviors. Like when we ask why aren’t clients coming? Or in my case, why? Why aren’t people so keen to buy courses right now? Or I think about my own consumer behaviors. When I go to the grocery store now and there’s a stand that says like $4 bags of nuts, I’m like, yeah, I’ll take a $4 bag of nuts. 

Julie Herres [00:10:26]: 

Yeah. 

Linzy Bonham [00:10:26]: 

Like I don’t want to pay $10 right now. I’m feeling a little price sensitive, right? So I think that price sensitivity is across the board for a lot of people and I think there’s reasons for that. And there’s also reasons that are political and cultural right now. There’s a lot of bracing happening. You know, when changes started being rolled out by this new government, I was like stunned at what rolled out so fast. It’s like there’s just so much change that’s so shocking and so just fear inducing for a lot of folks. Just this, like, yeah, that’s happening all the time. And what do we do when we’re scared? Like, we tend to freeze. 

Julie Herres [00:11:04]: 

We brace, right. 

Linzy Bonham [00:11:06]: 

Like it doesn’t feel wise to take a risk when it also feels like. But what’s happening in the broader picture? A neighbor of mine who is very business minded made this comment that certainty breeds prosperity. When we feel certain that everything is good, then we are so much more willing to make an investment, you know, maybe bet on ourselves a little bit, go for that bigger this or that. Because we, we believe that, you know, more money is coming. But when things feel uncertain, naturally we’re gonna become tighter, right? Like physically we become tighter. I think we’re stressed, right? We become physically tighter, we become tighter with our money. So I see that in therapists. Right. 

Linzy Bonham [00:11:45]: 

Like, our fear to invest in our businesses. And our clients are experiencing that as they’re trying to decide, as you say, do I pay $800 for therapy that I know is really gonna help me with my childhood trauma, or do I keep that 800 in my household? Because money has become very tight. Right. And I wanna make sure that there’s extra money left at the end of the month, and I’m not scraping bottom. So, you know, I think there’s. 

Julie Herres [00:12:05]: 

That. 

Linzy Bonham [00:12:07]: 

Think that is happening is we are experiencing the. I don’t know if it’s just like the natural market. Correction is a word I would never use on my podcast, to be clear, but it does make you think about, like, a natural, like, correcting out of COVID was such a boom time for therapy. 

Julie Herres [00:12:26]: 

Yes, yes. Right. 

Linzy Bonham [00:12:27]: 

It was so terrible in so many ways. And yet people got therapy because they were stuck at home. Therapy was something you could access online. Maybe you couldn’t see your massage therapist or your osteo, but you could talk to somebody about your stress and anxiety. That was probably through the roof. 

Julie Herres [00:12:42]: 

Yes. 

Linzy Bonham [00:12:43]: 

So for a little while there, like, our job as therapists was to not burn out because we had so much demand. Right. And so that was. That was a boom. That was, you know, a high, high watermark for us as an industry, as much as it’s terrible because the work that we do helps people, like, get through terrible things. And now I think there’s also been a bit of a natural correction there, to put it a certain way. Just like an evening out that we couldn’t have stayed in those high numbers forever. Right. 

Linzy Bonham [00:13:11]: 

At a certain point, people want to spend their money on something else. 

Julie Herres [00:13:14]: 

Yeah. As in, like, for a couple of years, we saw that really, really high demand. And now we’re kind of back to. Yeah. Pre Covid. Right. Where there’s still a demand. There’s definitely still a lot of folks who need therapy, but it’s not as much of a. 

Julie Herres [00:13:27]: 

A priority necessarily. Right. Is that kind of what I’m hearing you say? 

Linzy Bonham [00:13:31]: 

Two, During COVID we saw a lot of folks seek therapy who wouldn’t have under other circumstances. Right. So they only sought therapy because they were stuck at home. And things got so bad, they were like, I need to talk to somebody. And they couldn’t see their friends, and they couldn’t see their family, and they couldn’t go to the beach, and they couldn’t do anything. And so I think, too, we’re probably getting closer to now that more typical therapy population which is folks who have done all the pre work that it takes to be like, okay, I need to do this work. 

Julie Herres [00:13:57]: 

I want to do this work. 

Linzy Bonham [00:13:57]: 

This work is worth it. But there’s always been like a large part of the population who’s really resistant to therapy and aren’t interested in therapy because it’s hard and it’s icky and it’s vulnerable. And now I wonder if, like, the fact that a lot of the folks can go paddle boarding instead means that they’re not going to therapy. Which to me, again, that’s just kind of like a maybe like a natural evening. And I do think that the culture has changed for the positive in that more folks now are therapy and will go back to therapy if they need to. But also a lot of people did therapy a lot during COVID so at a certain point, they’re gonna be like, okay, I’m good with therapy for now. 

Julie Herres [00:14:28]: 

Yeah. Yeah. Anything else that you’re noticing within maybe compensation or benefits or kind of though decisions around hiring? 

Linzy Bonham [00:14:39]: 

Yeah, I mean, what I am also hearing from a lot of group practice owners specifically, is that it’s a lot of competition to try to find folks. Right. So they are having to make decisions around how much can they actually to hire. And as a group practice owner, we know it’s really easy to over offer because you want to be that great boss, you want to attract that great therapist, you want to be a good person. But I definitely see a lot of therapists, they’re having to really, hopefully get really clear on their numbers, so they’re making offers that they can actually afford because new therapists coming to the space, it’s easier and easier to just work for yourself. 

Julie Herres [00:15:19]: 

Right. 

Linzy Bonham [00:15:19]: 

Which, to be clear, I’m totally an advocate for. If you’re up for the business stuff, definitely do it. Yeah, I think too, you’re seeing a lot of applicants who are like, demanding more, which on the group practice side means that group practice owners are having a hard time attracting new clinicians or maybe retaining people and having to figure out that balance of what can they actually offer and what will actually, like, destroy their business. 

Julie Herres [00:15:44]: 

Yeah. 

Linzy Bonham [00:15:44]: 

If they operate. So I’m definitely seeing more demands from. From applicants. 

Julie Herres [00:15:48]: 

So I will be the first to say the insurance market has not kept up. Right. I think that therapists are still vastly underpaid compared to other medical specialties. Like, that was the 10 years ago. That is even more so the case today. And yet, like, I get so much hate online for saying to group practice orders that you cannot overpay like your practice will fail if you overpay your therapists. Right. And the hate is usually in the form of like, look at these people telling therapists to not group practice owners to not pay us or we’re worth more, we should get paid a fair living wage. 

Julie Herres [00:16:20]: 

Like yeah, I agree with that. And yet like if the business that you work for goes underwater, that helps literally no one. Right? Like then there is no business left. A business has to make money. That’s how capitalism works. Like it or not. Like it’s not a non profit. A business must generate more revenue than it spends. 

Julie Herres [00:16:40]: 

Right. That’s how a business works or it will no longer operate. And actually for non profits, that’s the same is true. They still have to bring in more dollars than, than what, what it actually costs to, to run the nonprofit. So, so even, even in a nonprofit sense like that, the numbers still work the same way. But so that is even more important now, right? Where that’s where the squeeze is happening. Those reimbursement rates are not going up. Sometimes they’re even going down. 

Julie Herres [00:17:04]: 

And brand new clinicians are coming in saying like, I want to work 15 hours a week and make 100 grand. Like that’s great. And that’s not possible. Right. Like there is, there is no math that’s going to work for that. And I hope that someday there is. I do hope so. But in a group practice setting, that’s simply not, not possible. 

Julie Herres [00:17:21]: 

It may be in a private pay setting, but then you might be dealing with other things in a private pay setting, like not having enough clients to keep you full. Right. So there’s kind of always a, an ebb and flow and a balance. Of course a private pay practice can pay more, but it also costs a lot more to get a new client in the door. 

Linzy Bonham [00:17:39]: 

It does. Yes. Yeah. 

Julie Herres [00:17:41]: 

Yeah. 

Linzy Bonham [00:17:41]: 

There’s a. No matter what business has its challenges. 

Julie Herres [00:17:45]: 

Right. 

Linzy Bonham [00:17:45]: 

No matter what kind of practice we have, we’re going to have our challenges. Yeah. And so I’m hearing like, yeah, that Reimburs is lower. It’s not catching up. So that’s also something that’s kind of like squeezing therapy practices. And this is what I see sometimes is for, for some folks and this is where for some people it does end up making sense to go private pay. The reimbursements are so low that no matter how many hours you work, you’re not actually going to make enough. Especially if you’re like a solo parent, you just won’t make enough to support your life. 

Linzy Bonham [00:18:10]: 

Right. So that’s Another kind of squeeze that we’re seeing is this larger system, this insurance system that we don’t have direct control over, has not valued the therapy very much in terms of reimbursements. 

Julie Herres [00:18:21]: 

Yeah. 

Linzy Bonham [00:18:22]: 

Yeah. 

Julie Herres [00:18:22]: 

And also in this economy, I do think a lot of practice owners have realized they do not actually want to be business owners. They do not like the business side of running a practice. And that’s whether it’s a solo or group practice. I think a lot of people go in thinking, oh, I’ll just, you know, have a website and that. That’ll be that. Right. Like, just clients will come to me and I’ll see clients, and that’ll be it. But as. 

Julie Herres [00:18:52]: 

As you and I know, there’s so much more to being a business owner than that. Right. There’s the compliance piece, there’s the marketing piece. Like, how does money come in? The billing, the payment processing, the taxes at the end of the year, there’s just so many different things. That is often unpaid labor where you’re not directly getting paid for the time spent doing that. And I have definitely seen more of that this year. People saying, you know what? This is not for me. So either they’re going from a group back to solo or just opting out altogether and saying, I’m gonna go. 

Julie Herres [00:19:23]: 

I will make more money working for group practice. So I’m gonna go do that at this point because I do not enjoy managing people and all of this stuff that comes with it. Yeah. 

Linzy Bonham [00:19:34]: 

Or, you know, I’m thinking about solo practice owners. Go back to work for, like, a hospital system or something like that. 

Julie Herres [00:19:39]: 

Yeah. 

Linzy Bonham [00:19:40]: 

It is true. Like, I think because we’re at a time now where, again, like, the market’s a little quieter, it’s a little harder to get those clients. We’re no longer having to, like, put a table against our door to protect ourselves from the people, like, beating down our door. Now that we’re not in that place. I think a lot of the normal challenges of running a business are becoming applicable to therapists that maybe we were a little spared from before. Yeah. 

Julie Herres [00:20:02]: 

For the long terms of. Yeah. 

Linzy Bonham [00:20:03]: 

Having to, like, figure out all these different ways to market and you figure out how to really get our numbers really working for us. Yeah. We. Some of us have not really had to do this work before, and now this might be the project that a lot of group practice owners or solo practice owners are having to do as things kind of quiet down a little bit. 

Julie Herres [00:20:21]: 

Yeah. Something I say often is in small business, it’s not a question of if something will go wrong, it’s a question of when. 

Linzy Bonham [00:20:28]: 

Right? 

Julie Herres [00:20:29]: 

And this is the when. Now is the when for a lot of people. Like, something is going wrong. And then as the business owner, it’s on you. You have to deal with it, and you have to. There is no one else coming to save you. You have to figure it out. Okay. 

Julie Herres [00:20:41]: 

It’s not easy. 

Linzy Bonham [00:20:42]: 

This is the most downer episode I’ve ever recorded, to be clear. 

Julie Herres [00:20:47]: 

Sorry, everyone. 

Linzy Bonham [00:20:49]: 

There’s a part two coming. Everyone who’s listening right now and is like, oh, my God, this episode’s almost over. And they only talked about things that are bad. So we are doing a part two to this episode because we really wanted to give the lay of the land. So let’s summarize. Julie, kind of our. Our analysis so far of kind of what’s. What’s going on. 

Linzy Bonham [00:21:04]: 

We’ve got economy generally kind of damp. People in a bit of, like, a bracing position right now, holding on to money. Holding on to money. 

Julie Herres [00:21:12]: 

Yeah. 

Linzy Bonham [00:21:12]: 

When I’m making motions with my hand that my listeners won’t be able to see because we do not do full YouTube grasping onto their money. So we’ve got that kind of vibe that’s kind of the zeitgeist right now. Insurance reimbursements are lower sometimes than they even were a couple of years ago. You’re getting not paid as much. We’re seeing after Covid. Maybe this, like, boom that we had in therapy is now kind of evened out. We’re back to maybe more pre Covid numbers. 

Julie Herres [00:21:35]: 

Marketing is challenging. 

Linzy Bonham [00:21:37]: 

Yes, Marketing is challenging. 

Julie Herres [00:21:38]: 

And if you have employees, they’re asking for more, even though there is no more juice left to squeeze off. Yes. Yeah. 

Linzy Bonham [00:21:46]: 

So kind of these squeezing for all times. And I will say in terms of the marketing piece. 

Julie Herres [00:21:49]: 

Yeah. 

Linzy Bonham [00:21:49]: 

Things like SEO and Facebook ads not working like they used to. 

Julie Herres [00:21:52]: 

Yeah. 

Linzy Bonham [00:21:53]: 

I remember when Facebook ads, I will share personally, was like a. A machine. In the kind of marketing course that I did that helped me launch money skills for therapists in the way I sell it now, there was kind of this idea of like, Facebook is like a machine and like you put in a dollar and $3 come out or $4 come out. Like, there really was a time when we talked about Facebook that way and that time is over. So running those, like Instagram ads and Facebook ads still can get you folks, but it’s definitely not. Again, we are out of this kind of boom. Time for therapy and for online business too, I would add. So, yeah, that’s kind of our lay of the land. 

Julie Herres [00:22:25]: 

What a downer. Have some solutions for you, right. Some ideas for you in ep. So I do hope you will join us for the next episode on a more positive note. Yes, we’re doing all the, all the hand signals like we’re going to be so positive folks. Come on back. 

Linzy Bonham [00:22:43]: 

Do some, do some self care, ground yourself, read some escapist romantasy. That’s my new coping mechanism in life. And come back next week and we’re going to talk about how to adjust to these times that we’re in. 

Julie Herres [00:22:54]: 

Perfect, Julie thank you, Lindsay. 

Linzy Bonham [00:22:59]: 

Foreign I’m Linzy Bonham, therapist turned money coach and creator of Money Skills for Therapists. If you’re ready to go from money confusion and shame to feeling clear and empowered, my Free On Demand masterclass is the best place to start. You’ll learn my four step framework to get your private practice finances finally working for you. Register today using the link in the show notes or go to moneynutsandbolts.com under my masterclass. I look forward to supporting you.