There is No Mission Without Margin

A View From the Watchroom

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Barry K. Wyrick, MS, MBA

Chief Operating Officer

There is No Mission Without Margin (9/26/13)

As I mentioned in my previous post, the counseling profession has struggled with the apparent conflict between being a “helping service” and being a business.  I briefly talked about the origins of this conflict, but I would like to extend that analysis today and talk about its impact on counselors.

Earlier in my career, I had worked for a community mental health center as a program director for their family programs, which was completely funded by state and federal contracts, and the clients who participated in the programs were not liable for any personal payment whatsoever.  My agency then transferred me to be the director of the outpatient programs, including outpatient counseling and psychiatric services.  When I took over the program, it was hemorrhaging money.  As I began to analyze the revenues and expenses, I discovered huge client balances that had not been collected for months, and in some cases, years.  When I discussed these balances with the counselors, their response was, “Payment balances are the responsibility of the front desk.”  The counselors had completely distanced themselves from any responsibility for the business, and when I tried to explain that the success of the business was everyone’s responsibility, I was met with great resistance.

A couple of years later, I was hired as the Executive Director of a Community Mental Health Center.  When I looked at the agency’s financial performance for the past 5 years, the agency had lost money every year.  As I dug deeper into the financial problems, I found that our write-off for third party (insurance) uncollectable accounts was over 50%.  The current policy of the agency was to bill the insurance company once, and if the bill was denied for any reason, the agency wrote off the balance.  As I talked with the financial staff about this practice, I was told that the previous Executive Director had told the staff that they didn’t need to worry about rebilling these accounts because the county office would make up for it at the end of the year.  However, when the state budget cuts affected the amount of county money available at the end of the year, the agency never revisited this practice and began to lose money.  When I changed this practice, the agency was able to make a profit for the two years that I managed the company.

When counselors are in the master’s level training program, the educational programs work diligently to teach the students the skills necessary to be a good counselor.  However, very few of these training programs offer the students any education in the business of counseling.  Many of these students will go on to be private practitioners, and if these counselors are not adept at the business of counseling, they will never be successful.  People enter the field of counseling because they want to help people.  But these same people spend large amounts of money on their master’s degrees, they have bills, and they have families; and they are often surprised at how little the community agencies pay and how little insurance companies are willing to pay them in private practice.  They then get discouraged and resentful, and frequently leave the field.

In order to address these difficulties, counselors must come to believe that what they do has value.  We must believe that our training, experience, and skills have a financial value for the services that we provide.  Even though we are helping people, it is not good for our own mental health to do so at our own expense.  We have to take care of ourselves before we are able to take care of others, and part of taking care of ourselves is feeling valued (including financially) for what we do.  We should expect to be paid, and can discontinue our services if we are not paid.  We should expect that the reimbursement that we receive from insurance companies is a reasonable amount, and we should not sell ourselves short because that amount of money is what they are offering.  I too frequently hear of counselors who are being paid unreasonable low fees from insurance companies that are seeing 35 to 40 clients per week, just to be able to pay their bills.

If we are able to firmly grasp the idea that our services have value, we can then teach our clients that the service that the client is receiving from us has value to the client.  While we would expect that the less that a client has to pay, the more likely they would be to show up for their services; what I discovered in a financial analysis at the community mental health center was a significant inverse relationship between no-show rate and client co-payment amount—meaning that the less that a client was expected to pay out of pocket, the more likely they were to no-show the appointment.  The reason for this phenomenon is that if the client does not have to pay for services, it is likely that the client will not personally value the service.  If the person has to pay, then they are more likely to think, “If this is going to cost me money, then I’m going to get something out of it.”  And that thought is how the counseling process begins to have value for the client.

There is no mission without margin.  As much as you are fulfilled by the act of helping others, if you are unable to pay your bills, you will go out of business.  The community mental health center where I was the Executive Director hired a person with no experience managing a company to replace me when I left.  The community mental health center was bankrupt and out of business in two years.  Our businesses have costs—rent, staff, insurance, utilities, supplies, and so many more that we don’t anticipate.  And we have costs—house payment, food, car payments, loan payments for school, family expenses, and all those little things that leave no money in the bank at the end of the month.  If we do not mind the business aspects of our companies, our companies will cease to exist.  If we don’t mind our own finances, we find ourselves having to find jobs that pay better.  So the simple fact is that if we don’t make money, we can’t help anyone.  I may sound hard and cruel in that statement, but the days of looking to the state or federal government for payment are long gone.  And if you have seen insurance company reimbursement rates recently, the days of running a successful business from those payments are short indeed.  I believe that each of us as counselors, whether in private practice or in agency practice, must make the “business of counseling” a part of our everyday activities and a part of our clinical practice with clients.

Thanks, and I will talk with you again soon.

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