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Paid in Full: Tapping into the Self-pay Market

by Corporate Relations and Business Strategy Staff

Faced with low reimbursement rates, increasing competition from masters-level providers, and the administrative burden of managed care, some psychologists are finding ways to incorporate more full-fee services into their practices. This article identifies several practice areas that provide opportunities for non-insurance-based services and presents a basic framework for tapping into the self-pay market.

Who Pays Out-of-pocket

Although market opportunities exist most everywhere if you offer services that provide value, some practice areas lend themselves more readily to clients who will pay full fee for your services.

Forensics. Because third-party payers typically do not cover areas such as divorce mediation, conflict resolution and various types of psychological evaluation for the courts, they are a prime market for psychologists seeking self-pay clients. Additionally, in these situations, potential clients are often willing to pay top dollar for high-quality services. As with all professional activities, if you plan to add forensic work to your menu of offerings, be sure you have the appropriate competencies and qualifications.

Organizational consulting. Expertise in helping individuals, groups and organizations function more effectively makes psychologists especially well suited to working with clients in the business world. Organizational work can include a wide range of activities, such as coaching a high-potential executive for peak performance, helping a family-owned and operated business address complex dynamics that are negatively affecting company performance or working with a large corporation to develop new policies and programs to enhance employee well-being and improve organizational performance.

Life coaching. Opportunities abound to break free of a medical model that focuses on treating illness and "fixing" problems. Many prospective clients are willing to invest in services that will enhance their performance and help them feel better, be more successful, and maintain healthy lifestyles. Psychologists' existing skills can readily be applied to this positive approach that focuses on health and wellness.

Traditional mental health services. While you might not expect traditional mental health services to be included on a list of full-fee services, there are still clients who will willingly pay out-of-pocket. Their reasons might include a desire to see a specific psychologist who comes highly recommended, a lack of high-quality providers on available insurance panels, concerns regarding confidentiality when dealing with third-party payers, not wanting documentation of treatment to appear in their insurance record, and a belief that high-quality services are worth the financial investment. 

Tapping into the Self-pay Market

Finding new market opportunities usually requires some effort, but for those psychologists who can find creative ways to apply their skills and meet the changing needs of society, the possibilities are abundant. These basic steps can help you identify and start to develop full-fee practice opportunities.

Identify your strengths and areas of interest. Think both personally and professionally. What types of activities do you excel in? What do you enjoy doing? What professional topics draw your attention? What are your hobbies and personal interests outside of work? When adding new practice activities, try to build on something you are passionate about. You will be most successful in new endeavors if you enjoy your work and find it meaningful and stimulating.

Assess the market opportunities. Identify potential practice opportunities that can help you establish a new niche. What types of services do people want and what are they willing to pay for? Do a quick survey of the popular literature in your area of interest. For example, if you are thinking about pursuing organizational work, skim the latest bestsellers in the business section, magazines like Fortune and BusinessWeek, and the Wall Street Journal. For life coaching, get a quick read on hot topics by browsing the self-help section of your local bookstore. Other useful exploratory activities include conducting Internet searches to look for current trends in your area of interest, talking with others who work in related areas, and attending meetings of relevant organizations. These activities will suggest the issues people are concerned about and what they are willing to spend money on.

Evaluate the market realities. In addition to identifying potential opportunities, you should also assess market realities. What is the likely level of demand for these services? How much competition is there? Is there a target market and if so, can you reach it? What barriers (for example, high start-up costs, necessary competencies, required credentials) will you have to overcome in order to enter the market?

Create a plan. Create or review your business plan. Do the new services you are considering fit with your mission statement? How will internal and external environmental factors identified in your environmental assessment affect your plans? Who are your potential referral sources and how will you reach out to them? How will you market your services? What will it cost to provide these services and how will you finance your new operations?

Invest in business development. Be sure to allocate the necessary time, money and other resources to developing your new practice area. Devise and follow through with a comprehensive marketing plan that includes a variety of efforts, such as creating and distributing promotional materials, giving presentations to community groups, and conducting outreach efforts with potential referral sources. Even the best ideas may fail if you are unable to reach your target audience and effectively communicate the benefits of your services.

We'd Like to Hear from You!

Have you successfully integrated self-pay services into your practice? If so, we're interested in knowing what you've done. Please email us with a brief description of the self-pay service(s) you provide.

Date created: 2004