Navigating Associate Therapist Compensation in a Private Practice: A Guide for Early-Career Therapists

Starting your career as an associate therapist in a private practice can be both rewarding and challenging. As an individual with a CA LMFT license and fresh out of grad school, you might find yourself questioning the compensation and whether it aligns with industry standards. Here, we delve into the specifics of associate therapist compensation, factors affecting it, and provide insights to help you make informed decisions.

Understanding Current Compensation

As an associate therapist in a private practice, the initial compensation often ranges from $18 to $36 per hour, depending on whether you are classified as an employee or a contractor. This difference can significantly impact your overall earnings, especially in high-demand areas like Los Angeles. In this article, we will focus on the factors influencing these compensation rates and the various aspects you should consider.

Factors Influencing Compensation

Several elements can affect your compensation as an associate therapist, including the type of employment (employee vs. contractor), the billing rate, and the nature of your clients (insurance vs. out-of-pocket). Let's break these down:

Employee vs. Contractor

The distinction between an employee and a contractor can significantly impact your earnings. Employees typically receive a set hourly rate, whereas contractors operate on a fee-for-service basis, meaning they are paid based on the number of sessions attended.

For example, an employee therapist might earn $18 per hour, but the practice may charge $100 per session, with various splits depending on the arrangement. This setup can be misleading, as the therapist may only receive a portion of what the practice charges.

Contractors, on the other hand, start at a higher rate of $36 per session but are responsible for securing their own clients and managing their own schedules. This setup requires a higher level of independence and business acumen.

Billing and Splitting

The billing rate can also vary based on whether clients use insurance or pay out-of-pocket. In insurance cases, you may only receive a portion of the fee charged by the practice, typically around 60% (in your case, $60 per session). For private pay clients, you may be splitting 60/40 with the practice, meaning you earn $60 per session.

Add to this the fact that you are likely being paid for your supervision hours. Your supervisor might be paid $40 per session, and you could receive a portion of this as your earnings, further complicating the picture.

Initial Earnings and Comparing Rates

Your current earnings may seem low, especially if you have less than 2000 hours of experience. According to data, associates in a private practice with similar qualifications might earn as much as $60 per session, with rates increasing as the practice grows and the therapist gains more experience.

Given your current setup, where you are making $18 per hour and charging $100 per session, your annual earnings are around $65,000. In contrast, a full-time position might offer a salary closer to $60,000, with benefits such as health insurance and free supervision included.

Decision-Making Considerations

When evaluating whether your current compensation is appropriate, consider the following:

Job Classification: Are you an employee or a contractor? This will affect your earnings and benefits. Supervision and Support: Does the practice offer free supervision, and is this included in your compensation? Client Base: Are your clients primarily insured or private pay? This will affect your earnings per session. Workload: How many hours are you working—including supervision and client sessions? This will impact your overall earnings. Location: The cost of living and demand for therapists in LA versus the Bay Area versus rural areas will vary. Legal and Professional Guidelines: Check if there are any limits on how much you can charge according to your board and consult with legal professionals as needed.

Strategies for Advancing Your Career

After gaining experience and passing the necessary licensing exams, you can aim for higher pay as a full-time therapist. Additionally, consider the following strategies:

Networking: Build relationships with other therapists in your area to learn about better-paying opportunities. Pricing Strategies: Consider implementing a sliding scale based on your board's guidelines to increase flexibility in client payment. Contract Work: Explore contract work or agency positions that might offer better pay and benefits. Further Education: Pursue additional certifications or specializations to improve your market value.

Conclusion

Your current compensation may seem low, especially if you are just starting out. However, understanding the factors influencing your earnings can help you make informed decisions about your career path. Whether you choose to stay in your current role or move to a more lucrative position, consider all aspects including job classification, support structures, client base, and workload.

Stay focused, gain experience, and leverage the information available to you to ensure you are fairly compensated for your hard work and skills.