The Private Practice Success Podcast

8: The Down-Fall of Private Practice

• Gerda Muller • Episode 8

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With industry voices forecasting a shift in practice sustainability, Gerda explores the challenges and opportunities that lie ahead.

Importantly, she discusses how to adapt and innovate to ensure your practice not only survives but thrives in a changing landscape. Whether you're a solo practitioner or managing a group practice, this episode offers valuable insights to help you stay ahead of the curve.

What You'll Learn:

  • The current predictions about the future of private practice and their implications.
  • How practice size may influence long-term sustainability and success.
  • The importance of innovation and adaptation in maintaining a thriving practice.
  • Strategies for avoiding the pitfalls of complacency and embracing change.

Who This Episode Is For:

  • Private practice owners seeking to future-proof their practices.
  • Allied health professionals concerned about industry predictions.

Connect with Private Practice Success & Gerda here:

Well, hello there, brilliant private practice owner. My name is Gerda Muller, and you are listening to the Private Practice Success Podcast. And this is episode number eight. 

The topic for today is the downfall of private practice. Now you might be thinking, “Well, that sounds pretty dramatic Gerda.” Well, it could have been worse. I will admit that I initially thought, Hmm, a good name for this topic of discussion would be the death of private practice. And then I thought that was a bit overdramatic. So, I've gone with the downfall of private practice. 

Private Practice Predictions

And the reason for this, is that there have been a couple of really important voices in our industry over the last couple of months that have made some scary predictions about the future of private practice.

So much so that I've had current and past coaching and mentoring clients actually reached out to me and said, “Hey, Gerda, did you hear about this? This was the prediction that was made. What do you think about it? Is this something I should be concerned about? What do I need to do?” So needless to say, some people have experienced those predictions with a bit of panic, which I think is a really valid feeling to have when you hear stuff like this.

And these predictions have been made by people that have authority and who I personally respect within our industry. So today, I'm not saying they're wrong, but I'm also not saying they're right. So, what am I saying? Well, you need to keep listening in order to hear what I'm going to say. But let's talk about the potential downfall of private practice.

Practice Size Matters

Now, what are some of these predictions that have been made? 

One of them, and probably the one that people have come to me about, was the fact that the prediction has been made, that going into the future, in order for you to have a long-term sustainable and profitable - what we would refer to as a successful private practice - that you would need to be on either end of the continuum of practice sizes. 

So, either you're going to have to downscale and become a solo practitioner or a sole trader, meaning that's just you, and you're working in potentially a highly niched field, but just you by yourself. Or you need to be on the other end of that spectrum where you are either, you know, a big corporate organisation - and there's a few of those that come into the market providing mental health and allied health services - or you would need to be a really, really large private practice.  And by large, I mean like minimum 10 rooms, right, which probably means that you have around 20, probably even 30. This is like, minimum clinicians to fill those rooms because we know in our industry, most people don't work full time in private practice. They like to do other stuff as well. 

The Middle-Sized Practice Dilemma

So the scary bit is what about the rest in the middle? And those are the people that've reached out to me and are going like, “Gerda. I'm slap bang in the middle. What should I do? What should I do? Do I just go down and become a solo practitioner? Because you know what? I'll have so much less headaches if I do that. Or do I not give up on my dream? Do I continue to push through and grow something really large and big, but how long is that going to take? And there's no guarantees, et cetera, et cetera.”

And I totally get it, because the majority of practice owners are sitting in that middle stage of where you probably have 2, 3, 4, to 7, 8, 9, 10 clinicians within your practice. And for a lot of people this might be a really comfortable scale, right? It's like, I've got my own business. Things are chucking along nicely. It feels really good to be able to say I have my business, you know, we are changing lives every day. I've got an amazing little team of clinicians, we all get along well, you know, we are aligned in vision and values. I don't want to grow. And I also don't want to become a solo practitioner where everything is just back on me again.  So what do I do? 

And then there's other practice owners that have that middle size practice and you know, they are struggling already. They are living pay cycle to pay cycle. They're just hoping they can keep the doors open, and they just go, you know when things get hard, it just means that I need to not see 15 clients a week, maybe 25 clients. Some of them even have to see 40, 45 clients a week to make up the shortfall when there's not enough money at the end of the pay cycle to pay everybody and pay the bills.

So there are people that are nice and comfortable in that area in the middle of private practice, to use that word, and then there's some that's there, and are struggling already. And they don't want to go down to solo because, again, it means that if I’m not working - like I’m sick or on our holidays - then I won't get paid. And I don't want to burn out because that's where I was before I started the group practice. The group practice helped me not to burn out while still helping more people, and I'm also trying to run this practice in a way that all of us have a place to come to, to do the work that we want to do without any of us burning out. 

But I also don't want this large machine. That's not why I became a practice owner. I don't mind being a business owner, but I don't want this last machine that's going to take so much of my energy and time and all of that stuff. And it just means it's more people to manage. And I don't want to do that. 

The Rising Pressures

So what do we do? What do we do then? Hmm. Very interesting. What do we do? And, you know, the problem also is that a lot of practice owners are struggling with cashflow at the moment. Not just practice owners, right? Business owners in general, small business owners and medium-sized business owners in Australia are struggling. It doesn't matter what industry you are in, because the costs of doing business have gone up. Salaries and wages and entitlements have gone up. It will go up again, for example, super - mid next year. 

The cost for clients in terms of living expenses have gone up, which means that our clients now have to make decisions around, Do I pay my mortgage, or do I go and see my psychologist this week? Right? which means that there's less work coming in.

For the first time in a very long time, one of the biggest issues I see and I hear from practice owners is not being able to fill their diaries.  For a long, long time, like years, that was not an issue unless you were brand new to business and to having your practice. Or unless you like to hire three clinicians at the same time, you would not have a client problem. People have client problems right now.  So this is just amplifying that panic and that awareness in terms of, Ah, something's going on here something's happening. 

Missed Opportunity

So here is my opinion. My opinion is that those predictions might come true. And I think that there is a very realistic chance that that prediction will come true. But it is up to us to determine whether it will, or won't come true, and how we're going to deal with it because now that the prediction has been made - and I thank those voices for making those predictions. I thank them for it. 

 You know, for us, that is like a wakeup call. It's a wakeup call that says, “Hey, it's You need to be mindful of this. This is what we are seeing coming and you can either put your head in the sand or you can freaking do something about it.” And when I was thinking about that and reflecting on some of my thoughts before I pressed the record, it made me think of the whole blockbuster Netflix saga. 

I know I'm going to show my age now, but you know, there was a time in my life where the highlight of my week was going to Blockbuster on a Friday, selecting DVDs for the weekend. And, you know, you would spend like 20 minutes there - at least - there were other people doing the same things. There was these different areas of Blockbuster with the themes and stuff. And, you know, they would even sell like popcorn that you can buy on your way out.   It was the highlight of the week, that we knew we were going to go get our DVDs, and spend the weekend, pop it back on Sunday and then start the week. And obviously, long story short, you would know that Blockbuster went under as a result of streaming services such as Netflix.

Before these streaming services came around, Blockbuster was like the market leader when it came to this type of entertainment. And interesting fact, and I'm not sure you may or may not have heard this - but back in 2000, this is like 24 years ago now, the Netflix founder, I think it's a guy called Reed Hastings, he actually went in and he met with the bosses of Blockbuster, and he proposed a partnership with them. Guess what? They laughed him out of the room. And as a result, they missed an opportunity, which had catastrophic effects for their business - with Netflix growing to be a multi-billion-dollar company.

The thing is, Blockbuster took their market leader status for granted.  They also built what they thought was a really efficient operational machine, but it was a machine of operations and systems that was very rigid. They were very resistant to change. So they failed to innovate, when innovation was called for. 

Four years later, the then CEO of Blockbuster again tried to float suggestions around change and innovation. Resistance was still there. Why? Because they were doing things a certain way for such a long time, a way that had made them a lot of money, but they weren't willing to innovate. And this is the lesson that we need to take from that. Okay. 

 And we need to go into this with our eyes wide open. Are we going to take this lesson from Blockbuster or are we just going to go - We're just going to do things the way we've always done it because that's how it is. I'm just going to continue living pay cycle to pay cycle because the way I've managed that has always worked.

Now, you can continue to do that, but it might have consequences, and it might have pretty severe consequences. So as a responsible business owner, I would encourage you to ask yourself, What do I need to do? What innovation is required within our industry right now in order to stay abreast of changes. In order not to be kicked out of the market.

And if it is staying in the middle, how do I make sure that if I'm staying in the middle, I'm doing it in a way that my business is going to survive? That I'm doing it in a way where getting clinicians to join my team, getting clients to come in and pay money for services is going to keep working.

Adapting to Change

The problem I see within our industry is that a lot of practices in that middle section of our industry are just doing things the way they still did it five years ago, 10 years ago. I see and I hear it all the time. A case in point: Practices still paying percentages to their contractors instead of fixed rates. Practices still have contractors on old and outdated contracts. Practices not knowing how to have financial conversations with their employees. 

There's a lot of things that the practice owners in the middle are doing just because it's the way they've always done it, or it's the way this one person they knew or this one supervisor they knew who also dabbled in private practice told them they were doing it. Or they are doing all their business learning by asking random practice owners in Facebook groups and other communities, what they think they would do. 

What we need to know is that that person that answers your question in a Facebook group,  doesn't understand all the back-end stuff of your specific business. They don't have all the intricacies. So yes, you can take what it is that they tell you, maybe stuff that they've done. But all of that is not going to be relevant to your business and you shouldn't be making big business decisions and changes based on information advice that you get in Facebook groups.

Now, don't get me wrong, if you're not in my Facebook group, you need to join. But the purpose of those communities is just that -  It's community. It's where you go and you say, “Hey, I've had a really shitty week, I hope I’m the only one…” or you know, “I've just had to have this really hard conversation and it's so hard to be a business owner today”. 

That's the purpose of it. It's about community. It's about breaking that isolation that I know I felt so intensely when I was growing my group private practice, where I felt like there was nobody I could talk to about the challenges.  That is what those groups are for - to share, to debrief, yes to ask questions, but not for business coaching and mentoring. You cannot get that out of a Facebook group. Doesn't matter how hard you try.  And the problem again, bringing this back to that middle section of our industry, those are the practice owners that need business coaching and mentoring more than anybody else. 

And very often these are the ones that say they just can't afford it because the cash flow isn't what it should be. “If I only had more money, I could pay for it.” But that is what keeps them stuck as well. Or sometimes they go into coaching, mentoring, they do it for four, five, six months and they go, “Okay, I've learned something - now I'm going to go and implement it.” But you know what? You need business coaching mentoring more during implementation. Learning is the easy part. That's the easy part. The implementation is the hard part because you're going to start implementing. You're going to have resistance, whether that has something to do with clients, your admin team, or your clinician team.

It might even be your own internal resistance. And when that happens, you need support for how do I manage it? How do I set things up? These boundaries? How do I respond? How do I pivot? Should I be flexible with this specific situation? Yes or no? That is when you need the most help - because it's not a matter of if, it's when you get stuck. And it's when people get stuck and when it comes to boundary settings, that's when they regress - back to old behaviours and then they go, “Oh, well, that didn't work”. Well, no shit. Okay. Because you didn't have support during implementation. 

And as a business coach, mentor myself, it's like, I just want to pull my hair out. Like people, there's so much that you can learn, that you can do, and you don't even have to learn it all. You don't even have to do it all. It's really about finding what is the right thing for you and your business, but then making sure you've got support during the implementation stage, rather than going, “I'm going to go and do that myself.”

 It's in the doing where you need the help. 

And unless this middle section of the market is willing and able and committed to taking action and seeing it through, they're not going to be able to innovate in the ways that are required. And I'm not even talking about innovation for what is required in the next 6, 12, 24 months. I'm talking about freaking catching up from 2018 to 2024. Catching up from 2020 to 2024. 

And you need to do that, because there's foundational stuff that needs to be put in place in order for you to move forward, and to innovate. If you are constantly on the hamster wheel, if you are constantly chasing your tail, if you are working from sunrise to sunset, trying to do all the things and be all the things to everybody and everyone within your business, you will not have time, to sit at the top of the mountain, - as I like to tell my clients - where you can see. You can see in the distance where you've come from, but you can also see the future. You can look at what is coming in the future. You can see what is that next mountain that I need to climb, and the mountain after that.

And what plan do I need? How many valleys are there? Is there like clouds over there that I need to manage? Okay. You cannot innovate if you don't have the time and the energy to sit at the top of the mountain. It is so so important. Otherwise, innovation is just a word, a fancy word that we're throwing around, like, “Oh we need to innovate.” And you can think that yes, you can be on board with it, but unless you actually freaking do it and you make the time to do it, it’s not going to happen 

Let's take a breath because I think I've got a bit ranty there. And if you know me, you know that that comes from a really good place. 

Leading Through Innovation

You know, I've been able to build what I like to refer to as a self-running practice. And that's the practice that I want for each and every one of you because that is a practice that doesn't burn you out. It's also a practice that doesn't burn out your team, whether that's admin or clinicians. And that's a practice that impacts the lives of clients in many, many ways. And it's possible. It's possible, but you need to say yes.  You need to make a conscious decision to work towards that. 

And I'm not saying that that's what you should want. If what you want is to become a solo practitioner again, hell yes! Do that. But make sure that you charge appropriately because unfortunately, in my experience, solo practitioners are at a much higher risk of burnout than group practice owners - because everything is on them. And because they think it's only me, they don't have admin support, which means that they end up doing the full-time job of a clinician and the full-time job of an administrative assistant and reception and bookkeeper. And that's why our solo practitioners are burning out. And I don't want that for you.

If you want to become a solo practitioner, you need to still remind yourself that you're a business. And you need to make sure that you have proper business support around you, which includes having a great accountant. A bookkeeper that can do your bank reconciliations for you, a VA at the very least that can answer your phone calls and capture them, especially in a market where clients and referrals are important, where people are struggling to fill their diaries, you want to capture those calls as they come in. You don't want to be only starting to call people at 5 PM or maybe tomorrow morning because you're just so tired by the time five o'clock comes around that you couldn't be stuffed to call or speak to anybody for that matter, or you're going to email and then the client needs to email back. 

We live in a day and age- and this is an example of innovation for solo practitioners - people want to know now whether you can help them. They don't want to wait days. They're going to go to the next person. People are clever. The health consumer behaviour when it comes to looking after their health and their mental health and their wellness. They have cottoned on. They are clever, they do their own research. And if you're not answering the phone, they're going to call the next person.  So you need to be willing to innovate and offer the market and meet the market what it is that they want, need and demand. Otherwise, you will become a blockbuster. 

And it's the same with our medium-sized practices. You need to have the time to innovate, which means that you need to put the frameworks and the systems in place that's going to give you the time to innovate. And you need to stop making excuses for why that is not possible for you. Because it will just get worse. It won't get better. It won't. Putting your head in the sand won't stop the innovation from happening around you. But things won't change if you don't change it. And doing another quarter, another six months, just doing what you are doing now, that's not going to serve you. 

Conclusion

So ultimately, the downfall of private practice is in our hands. It's in our hands, and we've got the power to do something about it. 

So I hope that this was not too much of a dim episode. But sometimes in business, we need to look not only at the good, but also the bad, and sometimes the very ugly. Because ultimately, we can only make decisions if we've looked at stuff - what's happening in our businesses and around our businesses and within the market with clarity and with open eyes.

All righty, I'm going to leave it at that. Thank you so very much for tuning in. I would actually love to hear your thoughts on this topic.  Please feel free to email me directly. My email address is gerdam@private-practice-success.com. 

That is the email inbox where I look at all those emails personally. I know, crazy, right? But I do it because I like to be in the know. I like to know what is happening for you. What are you struggling with? What's your challenges? What's your thoughts, your feelings? You know, that's what lights me up.

It's what I'm here to do, to help practice owners like yourself. So please never feel like you cannot reach out and email me. I will respond to those personally. Okay. 

Thank you so much for tuning in. And as always, remember that I am here to help you build a practice, you can't stop smiling about.  😊

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Gerda Muller

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