Welcome back to The Designer Practice Podcast, and I'm your host, Kayla Das
As a group practice owner, have you ever felt that all of the responsibility is on you in your practice's client retention. Or perhaps you're an independent contractor, wondering what responsibility you hold in the client referral process?
As a business coach, I've been seeing a growing concern by group practice owners and independent contractors alike who fear a decrease in clients and revenue due to the responsibility of the other party. However, it's not always clear whose responsibility it is when it comes to the client referral and retention process.
In this episode, I'm going to discuss the responsibilities of group practice owners and independent contractors when it comes to the client referral and retention process.
Client Referrals
So, let's start with client referrals.
In group practices, it is the responsibility of the group practice to market the practice in a way that brings in clients consistently to refer to independent contractors hired within the practice. It goes without saying that without clients coming into the practice, there will certainly be a decline in revenue for both the practice and the independent contractor. So having a consistent flow of clients increases the practices revenue, and the independent contractor’s income.
When it comes to client referrals, independent contractors should not be expected to search for or bring in clients into the practice. Unfortunately, I hear that this is a requirement for some independent contractors in practices.
However, asking for independent contractors to search for or bring in clients into the practice, which then the practice receives a cut for the payment is quite unfair considering the independent contractors are often not being paid for their time outside of the session that they are getting a therapist payment split.
However, there is one exception here, and that's if you, as the practice owner decide to pay independent contractors for their time when marketing. That way you are actually paying them for their time, which would be appropriate when bringing clients to the practice. However, traditionally it is a responsibility of the group practice to bring in clients into the practice and then provide the referrals to independent contractors accordingly.
And saying this though, it's important to note that independent contractors are hired to do a task as long as that task exists. In other words, as long as clients are coming into the practice, the independent contractor may and will receive work. However, if client referrals slows down or dries up, this means that the task (i.e. therapy) no longer exists, which means independent contractors will see a decrease in caseload and income.
Unlike employment positions where you are guaranteed a specific number of hours a week, regardless of how many clients come in through the door, independent contract work is less predictable and doesn't provide that same guarantee. Typically, practitioners will have multiple contracts at any given time to supplement the income and income unpredictability. Or even have their own private practice on the side to help manage the unpredictability of independent contract work.
Although I won't be going into detail about the differences between employees and independent contractors in this particular episode, or even talking about different payment splits or what's fair when it comes to independent contractors doing work.
If you'd like to learn more about these topics, I actually do have two episodes on it. One is Episode 38, which is Employee vs. Independent contractor: Which is Best for my Practice?
And then the second is Episode 121, which is Therapist Payment Splits: What's a Fair Payment Split in Practice?
So, if you're still interested in learning more about those topics check those out after this episode.
Client Retention
Okay, so now that we've determined that it's the group practice's responsibility to get clients into the practice so that they can provide those client referrals to the independent contractors, it's time to discuss the responsibility of the independent contractors in the process.
And yes, independent contractors, you do hold some responsibility here.
Independent contractors are responsible for the retention of clients once a referral has been provided by the group practice. This both includes converting free consults into paid sessions, as well as retaining the clients after the fact. This means that independent contractors have a responsibility to build a relationship with the client pretty much from day one so that clients continue to return again and again when that referral has been provided as this provides that consistent income for both the independent contractor and the practice.
Now it's important to note the client retention may look different depending on the client population, clients presenting concerns, financial situation of the clients, such as how many sessions they can afford out of pocket, or even the number of sessions that an insurance provider will provide each year.
There may even be cases where the referral provided by the group practice was an inappropriate referral, as the client may have concerns that are outside of the independent contractor scope of practice or specialty. This means the client retention may be more challenging or simply not ethically appropriate. And when I say retention, we are still therapists first, and of course we wanna ensure that we're providing the best service, within our scope of practice when it comes to clients.
However. There are strategies that independent contractors can take to help with the practice’s retention of client referrals.
For instance, maybe after an assessment, the independent contractor determines the client concerns is outside of their scope of practice. However, they know of other contractors within the agency who have the skills required to support the client effectively and appropriately. Then, it would be good practice to refer the client to an in-agency practitioner this way the client stays within the practice, and the practice continues to build income based on the referral that they had originally given to the practitioner.
In cases where you may be the independent contractor and you're just unsure if there are other practitioners within the agency who can support, you could always discuss this with the group practice owner. And then if it is determined that there are no other practitioners within the agency with the appropriate skills required for a referral, then providing out of agency referrals would be appropriate and ethical. But overall, it is the responsibility of the independent contractor to retain the clients once the referral is provided.
So, the reason I'm sharing this is that yes, although it's the group practice owner's responsibility to provide clients, it is also your responsibility as an independent contractor to retain those clients once given. And that includes converting the client into a paid client when you have free consults. As well as building that relationship so that they continue to come back.
Without client retention even the most reputable practice with a steady flow of clients coming in through the door, wouldn't be able to continually fill a practitioner's caseload.
So that's really important to know that even though yes, being an independent contractor you do less of the marketing work, you still have responsibility when it comes to the retention of those clients.
The Client Referral-Retention Framework
So let me try to provide a visual here. Think of client referrals and retention as a triangle. On one side of the triangle is the group practice who provides the client referrals to the independent contractor. On the other side is the independent contractor who focuses on the client retention. At the tip of the triangle is the revenue generated for both the practice and the independent contractor.
Now visualize that there are arrows from both the client referrals and the client retention to the tip of the triangle (i.e. the revenue). If you take either the client referrals out or the client conversion or retention out, a significant decrease in income and revenue will occur.
For example, if the practice stops marketing and stops bringing in clients, then there will be no new clients to provide to independent contractors.
If the practitioners or the independent contractors do not convert or retain the clients, then each client referral may result in little to no income once that referral has been given. And the marketing efforts that the practice is taking is essentially fruitless because they are likely paying way more in their marketing than they are seeing in return from their practitioners. Similarly, if the client comes for one session and leaves again, it is hard for the independent contractor to keep a full caseload.
So let me give you an example with a couple numbers here. Let's imagine that one independent contractor has an average retention rate of eight sessions per client referral. Whereas another independent contractor has an average retention rate of two sessions per client referral. Now, let's imagine that both practitioners charge $150 per session. Let's also assume that the therapist payment split is 60/40, meaning 60 goes to the practitioner, 40% goes as a practice.
Okay, the therapist with the average retention rate of eight sessions per client will bring in $1,200 of revenue with $720 going to the independent contractor and $480 going to the practice for each client referral.
However, the therapist with an average retention rate of two sessions per client will bring in only $300 in total revenue with $180 going to the independent contractor, and $120 to the practice for each client referral. In addition, the therapist with an average retention rate of two sessions per client will require a lot more client referrals overall to gain that full caseload that I know that they are hoping for than the therapist with an average retention rate of eight sessions. So, in this example, the therapist with the lower retention rate is making less money for both themselves and the practice.
So, both the practice and the independent contractor both hold responsibility in the client referral retention process.
Recap
Okay, so let's recap.
When it comes to building revenue into a group practice and getting consistent income as an independent contractor is a joint effort. If you take either out of the equation, then a decrease in revenue will certainly occur for both the independent contractor and the group practice owner.
So you might be thinking, okay, this is all great information, but what next?
If you are the practice owner, ensure you continue your marketing efforts to bring in clients into the practice consistently. But also, it may be helpful to start building policies, procedures, trainings, and even having conversations with independent contractors about best practices in client retention. This may include strategies for how to convert clients from consults into paid sessions. It also may include retaining client’s long term. As well as how to refer out a client if they receive a referral that is outside of their scope of practice. In other words, should they make an effort to find an appropriate referral in the agency first before resorting to out of agency referrals? Or do you allow them to make referrals at their own discretion regardless of agency practitioner availability? So these are things that as a practice owner you're going to want to think about to ensure that one, your practice is set up for bringing clients in. As well as strategies and policies that your independent contractors know about so that they can most effectively service the clients and your practice.
But if you're the independent contractor, it may be helpful to seek out trainings, advice and clinical supervision around client retention practices, which for all intents and purposes, are really building that relationship with your client.
If you're looking for a clinical supervisor in Canada, you can also check out our Canadian Clinical Supervision Therapist Directory at canadianclinicalsupervision.ca, which has clinical supervisor listings across the country. So, if you do need someone to help you with your client retention as well as other clinical supervision needs check out the Canadian Clinical Supervision Therapist directory at canadianclinicalsupervision.ca.
Also, if appropriate to do so, you may find it helpful to gain clarity from the group practice that you work at with regarding to their expectations or policies, procedures regarding client conversions, retention, and out of agency referrals.
At the end of the day when the practice is thriving, so are the independent contractors, and if the independent contractors are thriving, so is the group practice. So, it's mutually beneficial for you both to be on the same page.
Anyway, I hope this episode was helpful. Also, before you go, I'd love if you would follow the show on a major podcasting platform. Currently we are on Apple Podcasts, Spotify, and YouTube. So, if you follow us, you'll never miss an episode.
Thank you for listening, and until next time.
Bye for now.
