Pros and Cons of Private Practice vs Employed Work

The honest pros and cons of private practice come down to this: you trade infrastructure for control. In an employed role, someone else holds the payer contracts, submits the claims, answers the phone, buys the EHR and fills your schedule, and in exchange they set your fee, your caseload and often your documentation standards. In private practice you decide all of it, and you also become the person who handles the denied claim at nine at night. Both are reasonable choices. The decision usually turns on how much unpaid administrative work you can absorb, and for how long.

What is an employer actually doing for you that you stop getting?

Most of what an agency or group practice provides is invisible until it is gone. Before you compare salary to session fee, look at what disappears from the back end:

• Payer credentialing and contracting, including the follow-up calls when an application stalls
• Claim submission, denial follow-up, invoicing and client statements
• An EHR, a practice phone line, and the vendor agreements behind them
• Someone answering inquiries while you are in session
• Intake paperwork, insurance verification, scheduling and rescheduling
• Referral flow, directory listings and marketing
• Payroll, benefits and in many cases malpractice coverage

None of that is clinical work. All of it still has to happen when you are on your own.

What do you actually have to set up to open a practice?

There is a defined list, and it is finite. The order matters more than the difficulty, because several items depend on the one before it.

1. NPI. A National Provider Identifier is a ten digit number issued through NPPES that identifies you in standard healthcare transactions. A Type 1 belongs to you as an individual; a Type 2 belongs to a business entity, and clinicians who form one generally end up needing both. It is free.
2. EIN. An Employer Identification Number is issued by the IRS to identify a business for tax purposes. It is also free, and it keeps your Social Security number off insurance and vendor paperwork.
3. Business entity. Sole proprietorship, LLC, or in some states a professional entity such as a PLLC or PC. You register these with your state, and each state decides which ones a licensed clinician is allowed to use.
4. CAQH ProView. This is the credentialing database most commercial payers read your information from. It is not an insurance panel. Completing a profile does not put you in network anywhere.
5. Credentialing, then contracting. First the payer checks your license, training, work history, malpractice coverage and references. Only after that do you sign a contract that sets your rates and makes you an in-network provider.
6. Infrastructure. An EHR, a business associate agreement with any vendor that will touch protected health information, a practice phone number and voicemail, a way to take payment, malpractice coverage, and a professional will if your state or board expects one.

A professional will is a document that sets out who handles your records and notifies your clients if you become unable to practice. Confirm what applies to you with your own attorney, your accountant and your licensing board rather than with a colleague in another state.

How long does credentialing take?

It varies widely by payer and by state, and nobody can tell you a date. In practice, applications are delayed far more often by a missing document or a stale CAQH attestation than by an actual decision. A panel can also be closed to new providers in your area no matter how complete your file is. Plan your opening around the possibility that your first in network effective date arrives later than you hoped, and keep a private pay option available in the meantime.

What are the genuine advantages of private practice?

• You set your fee and your caseload size, rather than meeting someone else's productivity target
• You choose your specialisms and who you accept, within your scope and license
• You choose your EHR, your documentation workflow and your schedule
• The full session fee comes into the practice instead of being split, though what remains after expenses, taxes and unpaid administrative hours is a different number entirely
• You decide how you are found, from your Psychology Today profile to your Google Business Profile for counselors and therapists

What are the genuine disadvantages?

• Income is uneven, especially in the months between opening and your first payer contracts
• Administrative hours are unpaid and they land in the gaps between sessions
• There is no paid time off; a week away is a week without revenue and with an inbox waiting
• Self employment taxes and your own benefits become your responsibility, which your accountant should walk you through
• Isolation is real, and consultation becomes something you have to arrange deliberately

Can you run a part-time practice while staying employed?

Many clinicians do, and it is often the most sensible version of this decision. A part-time practice lets you absorb the setup period while a paycheck still arrives, and it tells you honestly how much administrative load you can carry. Before you start, read your employment agreement closely for non-compete and moonlighting language, and have an attorney review anything ambiguous. Build at the pace the admin allows, not the pace your clinical confidence allows, because those are different speeds.

What changes if you hand off the administration?

The honest answer is that most of the cons on the list above are administrative rather than clinical, which means they are the part of private practice you can get help with. A virtual assistant for therapists handles the non-clinical layer: returning inquiries while you are in session, sending and chasing intake paperwork, insurance verification, scheduling and rescheduling, billing support and denial follow-up, keeping your Psychology Today and Google Business Profile listings current, and triaging general email that contains no protected health information. At Assistant to the Therapist, assistants are trained for mental health practices specifically, and contact forms are built so no PHI comes through them. Your own HIPAA obligations remain yours, and any vendor touching protected health information should be under a business associate agreement you have reviewed.

If you are still in the setup phase, our posts on building a Psychology Today profile and on claiming a Google Business Profile cover the two listings that do the most referral work early on.

Common questions

Should I form an LLC or stay a sole proprietor?

Both are used by solo therapists, and the right answer depends on your state, your liability exposure and your tax situation. Some states require licensed professionals to use a professional entity such as a PLLC or PC rather than a standard LLC. Forming an entity is also separate from how that entity is taxed, which is its own election. Confirm both questions with an attorney and an accountant licensed in your state.

Does a completed CAQH profile mean I can start billing?

No. CAQH is the file payers pull from, not a panel. You are not able to bill as in network until credentialing is complete, a contract is signed and the effective date on that contract has arrived. Keeping your CAQH attestation current is one of the simplest ways to avoid an avoidable delay.

Do I need a website if I have a Psychology Today profile?

A directory profile does the searching work; a website does the confirming work. When someone is given your name by a physician, a friend or a former client, the website is what tells them you are real, reachable and taking clients. For many solo counselors a clear five page site is enough.

How many administrative hours a week should I expect?

It varies with caseload, whether you take insurance and how much of your intake is automated, but most solo practice owners are surprised by it rather than prepared for it. Track it honestly for a month before you decide whether to hire. That number, not your clinical caseload, is usually what tells you it is time for support.

If this was useful

• Book a free coffee coaching call — A short, no-cost conversation about what is actually slowing your practice down.

Photographs by Vladimir Srajber, Monstera Production and Adrien Olichon on Pexels.