11 May 2017

Should you use an app to help that client?

Should you use an app to help that client?

As the use of mental health and behavioral apps grows, psychologists must weigh their benefits and limitations

Today there are more than 165,000 health-related apps worldwide, helping users track their diet and exercise, monitor their moods and even manage chronic diseases, according to a 2015 report by the IMS Institute for Healthcare Informatics. Nearly 30 percent of these apps are dedicated to mental health. While the apps present new opportunities for psychologists to boost patient support and supplement the therapeutic relationship, their sheer number and variety can make it difficult for psychologists to determine which are the most effective, safest and most useful.

"There's been an explosion of apps, and clinicians don't have time to keep up with all of them," says Stephen Schueller, PhD, a clinical psychologist at Northwestern University's Center for Behavioral Intervention Technologies. "It's not their job and it's impossible for them to do it."

But since one in five Americans uses these apps, staying informed about broad trends in app use is important for psychologists, says David Luxton, PhD, co-author of "A Practitioner's Guide to Telemental Health" (APA, 2016).

"If you're not familiar with these technologies today as a clinician, it's time to start paying attention because our patients are demanding them," he says.

Why use apps?

Many practitioners find that mental health apps are a valuable adjunct to psychotherapy because they allow therapists to maintain a better connection with their patients and improve their ability to track clients' symptoms and moods. Some of the most widely used of these apps include T2 Mood Tracker, developed by the National Center for Telehealth and Technology (T2), and Optimism Online, a mood charting app that allows clinicians to monitor client entries and receive alerts to help catch problems as they arise.

San Francisco-based clinical psychologist Keely Kolmes, PsyD, says that many of her clients prefer apps to the paper-based tools that she's used in her practice for years, for recording thoughts and tracking moods.

"Apps help prompt my clients to log things like their mood or whether they exercised or drank alcohol or slept well, so that I can have an accurate picture of their week, as opposed to them trying to reconstruct things on paper the day before therapy or during therapy, which is much less reliable," she says.

Apps are also available to patients 24 hours a day, seven days a week, and can be a great source of educational information, particularly at times when a client's clinician is unavailable. These include several apps by T2, such as PTSD Coach and CPT Coach, as well as Day to Day, which delivers a daily stream of advice, support and other information throughout the day to boost a user's mood. Day to Day is one of 14 apps included in IntelliCare, a suite of apps developed by Northwestern University's Center for Behavioral Intervention Technologies that target depression and anxiety arising from various causes.

While more research is needed, several studies indicate that the use of health apps can also improve patient outcomes and satisfaction. A 2015 meta-analysis led by Harvard Medical School psychiatrist John Torous, MD, for example, looked at 10 studies examining the use of apps in the treatment of mood disorders. The analysis found that patients who used these apps reported improved depressive symptoms (Internet Interventions, 2015). And a 2013 study led by University of New South Wales psychologist Tara Donker, PhD, found that participants who used apps reported the apps were a useful way to get self-help for mental health concerns and disorders (Journal of Medical Internet Research, 2013).

Apps can also help clinicians gather data about their practice, says APA's director of legal and regulatory affairs, Stacey Larson, PsyD, JD. For example, several apps provide HIPAA-compliant note-taking (such as Insight Notes and Mobile Therapy) and can generate graphs or tables showing client improvement as well as areas that still needed to be worked on. "A provider can use them to help determine which interventions are working best and which should be changed, and this information can be shown individually or charted for a practitioner's whole practice, to determine how interventions are working more broadly across their patient population," Larson says.

Potential limitations

Despite their popularity, behavioral health apps are not regulated and many are not research-based, says Marlene Maheu, PhD, executive director of the Telemental Health Institute in San Diego.

"We're scientists—we need to have evidence that something works before we use it with our clients," she says.

Schueller agrees, and encourages clinicians to look for apps that come with documentation of the evidence on which they are based, including research on the intervention underlying the app, such as cognitive-behavioral therapy, as well as research specifically associated with the app itself.

"The most reputable apps are generally those affiliated with academic research institutions or government funding agencies, as they are the most likely to detail the app development and validation process," he says. (See list below.)

Patient privacy and security concerns also need to be addressed any time technology is used in clinical practice. Some apps, for example, allow communication between therapists and patients between sessions—a feature some therapists might want and others might not—and it's crucial that this communication be HIPAA compliant, Maheu says. It's also important for providers to understand what, if any, data are being collected when a patient uses an app, and to make sure patients are informed about this, Larson says.

"Mobile mental health apps can be either passive or active," she explains. "Active apps require direct participation from the patient—such as completing mood logs, self-symptom ratings or recording personal experiences, but passive apps are able to access information independently and gather data through smartphone functions such as GPS without the patient or provider even noticing. Though it may be beneficial, some people may not like the potential invasion of privacy associated with this type of data gathering." And Schueller advises clinicians to show patients how to put a screen lock or password on their phones for additional security.

Integrating apps into your practice

With all of these limitations in mind, how can practitioners ensure the best use of apps in practice? Schueller recommends asking colleagues how they may use apps in therapy, and posting questions on listservs to find out what others have found works best. Several organizations provide resources and reviews of mobile health apps, to help clinicians stay abreast of the most effective and safest technologies. (See list below.) APA and the Center for Technology in Behavioral Science also hosted a webinar in May exploring the role of apps in clinical practice. The organizations received an overwhelming response to the one-hour event, with more than 1,700 clinicians registering for the event, says Maheu, CTiBS president and CEO. Two more webinars are being scheduled for the fall. It's also imperative that psychologists take time to test an app themselves before endorsing it with their clients, Luxton says.

"Install it and try out every single possible scenario inside that app so that you know it very well," he says. And always get feedback from patients on how an app is working for them, Schueller says. "As you start to learn more about which apps are really resonating with the population of clients you're working with, it will help get your practice more in line with what your clients want."

And most important, he adds, clinicians must be mindful of how apps fit into the goals of therapy. "Apps are not a panacea," Schueller says. "There's a lot of enthusiasm here and some of it is warranted. But be cautious; they will not completely fix everything."

APA does not endorse any of the apps mentioned in this article.

Mobile health app resources

By Amy Novotney


This article was originally published in the November 2016 Monitor on Psychology

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21 Apr 2017

A Growing Wave of Online Therapy

A Growing Wave of Online Therapy

The flexible nature of these services benefit clients and providers, but the onus is on psychologists to make sure they comply with federal and state laws

It was an ad on Facebook that first prompted Los Alamitos, California, clinical psychologist Nina Barlevy, PsyD, to visit the online therapy website BetterHelp.com. The company promoted affordable online counseling, available anytime and anywhere, and Barlevy thought joining their panel of therapists might be a great way to supplement her income during slow times in her private practice.

"It looked like a good way to expand my practice here and there in my free time, if I was already going to be on my computer in the evenings or on my days off anyway," Barlevy says.

She went through Better Help's rigorous application process, which included verifying that she was licensed, and began communicating with users in her state via the site's secure messaging platform. The site also offers members the option to schedule live video and phone sessions with their therapists, though Barlevy worked mainly with clients via the site's unlimited asynchronous messaging service. They messaged her about many of the same issues her face-to-face therapy clients were dealing with, including stress, anxiety and relationship issues, among other concerns, and she messaged them back with questions, feedback, insights and guidance. They benefited from easier access to therapy, which particularly helps people in rural areas who may not be able to drive an hour each way to see a therapist face-to-face.

"[It is] a whole lot more appealing to be able to sit at your computer and type back and forth with someone," Barlevy says.

Telepsychology, be it by phone, webcam, email or text message, has been around in one form or another for more than 20 years, used most often by members of the military. But the explosion of smartphone users has created new opportunities for app-based companies to offer more accessible and affordable therapy.

Still, such online therapy creates concerns over patient privacy, as well as legal and ethical issues, including interjurisdictional practice issues, for providers who contract to work for these companies, which may not share the same code of conduct and commitment to do no harm, says Deborah Baker, JD, director of legal and regulatory policy in APA's Practice Directorate. Many of these online therapy companies also are not run by psychologists.

"When you're an individual provider, you can't assume that a business is going to be looking out for your best interest, so you really have to dig a little deeper and check in with your professional association and malpractice carrier to make sure you're complying with the law and with the APA Ethics Code."

Benefits for patients and therapists

The growth in online therapy companies—nearly a dozen have launched in the last several years—doesn't surprise Lindsay Henderson, PsyD, assistant director of psychological services at Boston-based telehealth company American Well, which offers therapy through video conferencing. The ease and convenience of scheduling a therapy appointment online and talking with a therapist from the privacy of one's own home—or wherever one may be—is a huge draw for consumers, many of whom are seeking therapy for the first time in their lives, she says.

American Well's online platform helps "normalize mental health care, especially among generations now who are so accustomed to interacting with people using technology," Henderson adds. "It just eliminates so many barriers."

Research studies, many of which are listed in bibliography format by the Telemental Health Institute, also indicate that telemental health is equivalent to face-to-face care in various settings and an acceptable alternative. While much of the research tests only the use of videoconferencing as the telehealth modality, a few studies, including two published in 2013, have also shown that asynchronous messaging therapy can be as effective as in-person therapy (Journal of Affective Disorders and Cyberpsychology, Behavior and Networking).

Even more encouraging is that when digital interventions are positive, effective experiences for patients, they may go on to seek face-to-face therapy, says Megan Jones, PsyD, adjunct clinical assistant professor of psychiatry and behavioral sciences at Stanford University School of Medicine. A study she led found that college students who needed a higher level of care for eating disorders were more likely to seek it out after participating in a digital body-image program and working with a coach online via asynchronous messaging through the online therapy company Lantern (Journal of American College Health, 2014).

"It can really be a nice first step in treatment for someone who needs more intensive therapy," says Jones, who also serves as chief science officer at Lantern.

Mental health professionals can also reap benefits from joining online care teams. In addition to supplementing practitioners' incomes with new patients, providing online therapy can help them maintain a better work-life balance, Henderson says.

"From the provider perspective, the flexibility of practicing telemental health fits so well into my life and allows me to better meet my patients' needs," she says. "I'm not at a point in my life where I want to be going to an office at 8:30 in the evening, but I will happily go to my home office, lock the door and see a patient at that time."

Employment at online therapy companies isn't limited to providing therapy to clients, either. Opportunities abound and will continue to grow in supervisory and training roles as well as full-time research positions at these mental health technology companies, Jones says.

But tread carefully

Of course, online care is not for every patient or practitioner. Clients with more serious mental illnesses or addictions likely need more treatment than digital therapy can provide. And some clinicians may find certain telehealth modalities difficult, says Barlevy.

"I'm such a people person, so it was tough for me to feel a real connection when I was just messaging with people," she says. "Plus a lot of people just stopped responding, and I felt like there wasn't enough time to really build a relationship. It actually turned out to be more difficult than I imagined."

In addition, some online therapy companies don't have clear guidelines for handling risky situations, such as a patient who may seem suicidal in his or her messaging responses, says Lynn Bufka, PhD, associate executive director for practice research and policy at APA.

While some apps do report that they use a member's IP address to determine their exact location and send police if a therapist is concerned about a member's safety, it's often more difficult to determine a patient's level of risk via a messaging app than face-to-face with them in a therapy room.

"If you're using an online therapy platform and you ask someone if they're suicidal and they say no, is that it?" Bufka says. "Those kinds of clinical issues come up, which is why I think most psychologists seem to feel much more comfortable integrating technology into an ongoing face-to-face or video/teleconferencing relationship versus using only messaging."

Practitioners also need to do their due diligence when it comes to making sure their decision to contract with an online therapy company doesn't run afoul of complying with the Health Insurance Portability and Accountibility Act (HIPAA), state licensing laws and other legal and ethical practices, Baker says. In addition, platforms that allow patients to connect anonymously with therapists may create legal and ethical issues for psychologists.

"My concern is that some of these models are probably start-ups that are launched by people in technology, who have good intentions but haven't fully investigated all the nuances in what's involved in providing health services," she says. "Do they fully understand HIPAA/HITECH, any related state laws and patient confidentiality policies? Do they fully understand that psychologists cannot simply provide services to patients anywhere in the United States?"

Psychologists interested in joining these companies should investigate those issues, and also find out exactly where patients are located if they are providing them therapy services to ensure that they are authorized to do so. Such issues were part of the reason Columbia, South Carolina, clinical psychologist Shawna Kirby, PhD, decided to part ways with an online therapy company she worked for in 2015. After several months as a contracted therapist, she terminated the agreement, due to a series of ethical concerns she had over how the company dealt with interjurisdictional practice issues, consumer privacy, informed consent and therapy termination. When she brought her concerns to the company's clinical director and owners, none of whom are psychologists, she says they brushed off her concerns, and then eventually blocked her from messaging with her clients. "It all seemed more financially driven, rather than care driven," she says.

That's why it's so important that psychologists play a leadership role at mental health technology companies, Jones says.

"These companies need our knowledge and competency at the heart of their decision-making process because we have a very different framework and we understand the responsibilities that we have to users in a very different way than you do if you come from a technology background," she says. "I want to have a peer at any company like ours."

By Amy Novotney


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21 Apr 2017

Secrets of a Great Group Practice

Secrets of a Great Group Practice

These top practices offer opportunities for research, pro bono work, built-in CE and more

After Anahi Collado, PhD, completed her postdoc at Emory University in Atlanta, the university recruited her for an assistant professor's job there. But she turned it down when an unusual, but appealing, opportunity opened up: The ability to conduct research in-house at Alvord Baker & Associates, a group practice with two locations in Maryland.

Now, Collado spends 80 percent of her time providing therapy and 20 percent conducting outcomes research in the practice and in local public schools where she studies a resilience program. The practice also has a full-time research assistant and director of research to support the clinicians who are part of the research team, which collaborates with Catholic University.

"I have the scientist practitioner model that everyone aspires to have," she says. "Here, it's a reality."

Offering in-house research is also part of the allure at Portland Psychotherapy Clinic, Research and Training Center in Portland, Oregon. Founding partners Jenna LeJeune, PhD, and her husband, Jason Luoma, PhD, were both trained in the scientist-practitioner model and wanted to design a practice that lived up to that ideal. "Even for the clinicians on staff who don't have research time, they see it as a really valuable part about why they are here," says LeJeune, who, with Luoma, detailed their approach in Professional Psychology: Research and Practice in 2015.

Providing research opportunities is just one of the ways these successful group practices appeal to clinicians—others include offering flexible scheduling, community service and mentoring. The Monitor talked with LeJeune and others to find out how they have created group practices where clinicians feel valued and empowered and clients love to visit.

Encourage personal growth. Another popular feature at Alvord Baker is in-house continuing-education programs offered twice a month on such topics as ethics, telehealth and interjurisdictional practice—many of which are presented by clinicians on staff. "We are always learning and always presenting," says founding partner Mary Alvord, PhD, who has a part-time staff member devoted to organizing CE.

Professional development is also a priority at Portland Psychotherapy, which offers lunchtime learning talks. In addition, every six months each clinician meets with Luoma to discuss ways they can grow professionally. "It's really helpful because I don't think I would think as much about the big picture without that meeting," says staff psychologist Melissa Platt, PhD. "There is a lot of attention to professional development here even when we are not outright seeking it."

Clinicians at Southeast Psych—with locations in Charlotte, North Carolina, and Nashville, Tennessee—are encouraged to be bold: Recently, one of the practice's licensed professional counselors, Myque Harris, MS, who is also a certified yoga instructor, asked her partners about revamping her office space so she could combine her clinical work with yoga instruction—teaching children, teens and adults yoga poses and breathing strategies that could reduce their anxiety and depression.

"Something I saw as a far stretch, they saw as something great I could offer the community," she says.

Now she has an office with enough open space to instruct up to six clients at a time.

Provide a great space. LeJeune and Luoma renovated an 1889 Victorian home in downtown Portland to house their practice and gave each clinician his or her own room. Platt says the cozy surroundings boost her mood and make the experience of seeing a therapist more enjoyable for her clients.

"I have worked in places where the therapy rooms were sad with no windows," she says. "Clients comment all the time that our environment feels therapeutic."

Likewise, IntraSpectrum Counseling in Chicago, a group practice with psychologists and social workers specializing in serving the LGBTQIA community, creates a welcoming environment by having LGBTQIA magazines in the waiting room, gender neutral bathrooms and even brewing a local coffee brand that has LGBTQIA-affirmative policies for staff and clients. They keep the staff pantry stocked with cheese sticks, granola bars and La Croix sparkling water to keep people's energy levels up.

"Staff only have a few minutes between sessions and you often end up thinking about your growling stomach in the session," says Rena McDaniel, MEd, LCPC, IntraSpectrum's chief operating officer and a staff therapist. "It solves a big problem in a simple way."

Clinicians at Southeast Psych, a general group practice with more than 50 providers, say the fun, positive environment is among the reasons they find their work so rewarding. When clients and their parents come for an appointment, a hostess greets them and offers refreshments and a professional cosplayer wearing superhero or princess costumes entertains younger children before sessions, while older children can play X-box games. The practice also has a theatre in its Charlotte office to host speakers and films for clients or staff. Their philosophy? Break the mold on practice design.

"You don't have to have a water fountain," in your practice, says founding partner Frank Gaskill, PhD. "But if you do, make it really cool."

Make it fun. Several of the practices offer just-for-fun team-building experiences. The team at IntraSpectrum chooses a yearly activity such as bowling or a cooking class to attend together—and all wearing wigs for a festive twist. Staff at Southeast Psych carve out two hours on the last Wednesday of the month for play, such as having pizza and watching a movie or playing arcade games.

LeJeune and Luoma host board games and cocktails at their house once per month as a way for the whole practice to connect. "We try to get to know each other as human beings and meet each other's families and know what is going on in our lives," says LeJeune. "It has made it a totally different place to work."

Offer flexibility. For Harris, who came to Southeast after a stint in a Charlotte private school, getting to set her own hours allows her time to attend school events with her young daughter. "A lot of places talk work-life balance but aren't really living it," says Harris, who doesn't work Fridays and only works half days on Wednesdays. "We are definitely living it here."

Alvord also encourages her staff to set their own hours—and invested in high-quality videoconferencing technology so that staff who can't make it into the office on meeting days can connect from home. "Everyone can see each other even if we can't all physically be in the same office," she says.

Create a supportive environment. At IntraSpectrum, clinicians have weekly "consultation pods" where four or five clinicians with similar schedules meet to talk through difficult cases in depth. More informally, people make it a priority to carve out time during the day to talk through challenges. "People often say that it's a way to be independent in your work, but connected," says McDaniel.

At Portland, clinicians triage cases every other week and "check in on where we need support in our clinical work and our personal life," says LeJeune. Clinicians at Southeast Psych are assigned mentors during their first year with the practice; every new hire attends one lunch and one breakfast each month with his or her mentor to talk about his or her work with clients and how to build their practice.

Serve the community. Giving psychology away is an important common goal among the clinicians at Alvord Baker—many give free talks at local social service agencies and schools on such topics as cognitive-behavioral therapy and managing anxiety. They take turns facilitating monthly support group meetings of the local chapter of CHADD (Children and Adults with Attention-Deficit/Hyperactivity Disorder). In Charlotte, the clinicians at Southeast Psych do the same. Harris has given seven talks this year on such topics as how meditation can help children with ADHD and talking to children about sex. Southeast Psych also created "Psychology for All," a nonprofit arm of the practice that offers discounted services to local residents who can't afford psychological care.

As rewarding as these practices are, though, Gaskill says there is a downside to having a popular group practice: You often have to turn away great ­clinicians who want to work there. Southeast Psych gets at least two new resumes every week from prospective therapists.

At least one of those psychologists was inspired enough to create his own version. "He wrote to me eventually and said, ‘You guys rejected me, but I read your book, took it to heart, quit what I was doing and now I have my own group practice,'" says Gaskill. "Fifteen people now work for him; it is really cool to see that."

By Jamie Chamberlin


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28 Mar 2017

Business Fundamentals for Psychologists Booklet

Business Fundamentals for Psychologists Booklet

Psychologists bring unique skills and insights to almost every aspect of business, in industries ranging from health care to technology to manufacturing. Yet many psychologists may be unsure of how to apply their expertise effectively in a business career. This primer on business fundamentals is designed to provide a basic understanding of key business functions and to help you explore opportunities to expand your value as a professional.

Topics covered:

  • Help your organization overcome challenges around operational and cultural issues involving human interaction.
  • Planning and budgeting tasks related to projects and programs.
  • Management responsibilities including hiring staff, assessing performance, training, and team building.
  • Undertaking research and data analysis to develop key information and insights regarding, for example, customer behavior, product design, use of technology, or the benefits and trade-offs of process improvement.

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25 Jan 2017

Growing and Sustaining a Private Practice: Opportunities Are Where You Find Them and Where You Make Them

There are forces that impinge on the ability to develop a successful independent practice. These include lack of training in the business of practice, cognitive distortions on the part of clinicians regarding how a practice “has to be” and a lack of recognition of possible practice opportunities that utilize the doctoral-level clinician’s entire skill set. This presentation focuses on the process of creativity, and how entrepreneurial thinking can shape a thriving private practice. Numerous examples are presented on how mental health professionals may consider expanding their current practice patterns beyond providing traditional psychotherapy services in their offices.

Learning Objective 1
Discuss three concepts from entrepreneurship that relate to the expansion of a clinical practice.

Learning Objective 2
List three potential practice areas based on data-based research.

Learning Objective 3
Identify one Standard from the APA Ethics Code that relates to the developing new practice areas.

Presenter: Steven Walfish, PhD (deceased)

Dr. Walfish was a private practice psychologist in Atlanta and a partner at The Practice Institute and Clinical Professor at Emory University School of Medicine. He was the editor of Earning a Living Outside of Managed Care: Fifty Ways to Expand Your Practice, co-editor of Translating Psychological Research into Practice, co-author of Financial Success in Mental Health Practice: Practical Strategies and Ethical Practice and Billing and Collecting for Your Mental Health Practice: Effective Strategies and Ethical Practice and co-author of The Ethics of Private Practice: A Practical Guide for Mental Health Clinicians. In 2012, he served as President of APA Division 42. In 2016, he was awarded a Presidential Citation for his excellence in synthesizing practice and scholarship in all of his professional endeavors and his dedication mentoring countless others in relation to his forward looking view of what psychology is and psychologists can become. Learn more

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17 Nov 2016

Glossary of Financial Terms

Glossary of Financial Terms

Accounts Receivable: Money owed to you by clients or other payers for services you have performed. Accounts Receivable is a current asset that can be found on your Balance Sheet.

Assets: The total resources with monetary value owned by an individual or a business. They include things such as cash, stocks and bonds, real estate equity, money you are owed, and any property that could be sold. Assets can be found on your Balance Sheet.

Balance Sheet (also known as statement of financial condition or statement of financial position): An itemized financial statement that lists assets, liabilities, and equity. A Balance Sheet represents your practice's overall financial position at a given point in time.

Current Assets: Assets that are expected to be turned into cash, sold, or consumed during the coming year. Current Assets include cash, accounts receivable, short-term investments, inventory, and prepaid expenses. Current Assets can be found on your Balance Sheet.

Current Liabilities: Amount to be paid within one year for salaries, accounts payable, interest, and other debts. Current Liabilities can be found on your Balance Sheet.

Depreciation: The amount of expense allocated during a specific time period for certain types of assets that lose their value over time - for example, building and equipment. Depreciation helps a business reduce its taxable income by writing off the cost gradually over the life of the asset. It is an accounting expense, meaning that it is not an expense requiring an outlay of cash. Depreciation can be found on your income statement.

Equity: The amount of your practice's total assets you actually own (i.e., not financed with debt). Depending on the legal model and ownership of your practice, equity may be referred to as net assets, shareholder's equity, or proprietor's net worth. Equity can be found on your Balance Sheet.

Expenses: The costs associated with providing services and running your practice over a period of time. Expenses can be found on your income statement.

Fixed Assets: Long-term assets that are not expected to be turned into cash, sold, or consumed during the coming year. Fixed Assets include buildings, land, equipment, and certain types of furniture. Fixed Assets can be found on your Balance Sheet.

Income Statement (also known as statement of operations, profit and loss statement, or statement of earnings): A financial statement that shows your revenues, expenses, and profit over a specific period of time.

Long-term Liabilities: Amounts owed for debts that will not become due for at least one year. Long-term Liabilities can be found on your Balance Sheet.

Marketable Securities: Stocks, bonds, and other investments that have enough demand to be converted to cash or sold quickly. Information about marketable securities can be found on your Balance Sheet.

Net Accounts Receivable: Total accounts receivable, minus an estimate for uncollectables. Accounts Receivable can be found on your Balance Sheet.

Net Income: The difference between total revenue and total expenses. Net Income is the same as Net Profit and reflects your revenues adjusted for the cost of running your practice, depreciation, interest, taxes, and other expenses. Net Income can be found on your income statement.

Non-Operating Revenue: Revenue generated by things that are not directly related to the services you offer. Non-operating revenue includes things such as interest income, gains and losses, and other non-operating transactions. Non-operating Revenue can be found on your income statement.

Operating Revenue: Revenue generated from the day-to-day operations of your practice. Operating Revenue can be found on your Income Statement.

Profit (also known as net income or earnings): The amount of money your practice makes after paying operating expenses, taxes, and other current expenses. Profit can be found on your Income Statement.

Revenue: Money collected or that you expect to collect for providing services. Revenues can be found on your Income Statement.

Total Assets: The sum of your practice's current and fixed assets. Total Assets can be found on your Balance Sheet.

Total Liabilities: The sum of your practice's current and long-term liabilities. Total Liabilities can be found on your Balance Sheet.

Total Revenue: Sum of operating and non-operating revenue. Total Revenues can be found on your Income Statement.

Uncollectibles: An account that cannot be collected because the client or payer is not able or willing to pay. For financial calculations, such as Days Cash on Hand, consider using an estimate of uncollectibles based on historical data about the average percent of receivables you are typically unable to collect.

By Corporate Relations and Business Strategy Staff

Interested in Practice Management? Read our collection of articles on Practice Management curated specially for APA members and affiliates.

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17 Nov 2016

Eight Tips for Trimming Your Practice Expenses

Eight Tips for Trimming Your Practice Expenses

Making good use of resources is a key component in building a successful practice. Reining in office expenses is often a matter of working smarter, not harder. By thinking creatively, making the most of available resources and maximizing efficiency, practitioners can reduce expenses that cut into their profits.

This article outlines eight tips for trimming office expenses. Several of the tips below include suggestions from practitioners who responded to a call for cost-cutting tips from the last issue of the PracticeUpdate E-Newsletter.

Set and Follow a Budget

Create a detailed budget for your practice and stick to it. The starting point for reducing office expenses is to take a close look at your financial records, including your income statement, and determine whether, and where, changes are needed. Be sure to keep a record of your expenses every month and look for places where you could cut back. It is important to budget and plan for larger purchases and to periodically review the financial health of your practice.

Evaluate Your Rent or Mortgage Expenses

Office expenses represent a significant expenditure for most practitioners. Consider whether you can justify your costs in this area. Margaret Norris, PhD, a psychologist in independent practice in College Station, Texas, says that having a large office in a high-rent district doesn’t necessarily translate into increased income. She touts the benefits of having a less sizeable office in a well-managed building, in a location that is easily accessible to clients. “I could be spending twice as much in rent and I don't believe it would produce any more income than what I earn now,” says Norris.

Setting up a home office where you can handle administrative tasks can significantly reduce your overhead costs. Similarly, some psychologists find that they can see clients in an office connected to their residence. In both cases, you may be able to claim tax deductions for your use of the space.

Carol Lee Hilewick, PhD, a psychologist in private practice in Silver Spring, MD, has significantly cut back on expenses by having a home office. “In a high-cost area like Washington, DC, having an office of any size or quality can eliminate most profits,” says Hilewick. “The best thing I did to save money was to purchase a two-story home. I live upstairs, and the downstairs, which is above-ground, is dedicated to my office space. The layout is that of a professional office, which has a totally separate entrance.” Hilewick adds that while this arrangement offers benefits, she is careful to set up boundaries with her clients and to separate her professional life from her home life.

Seek out Better Rates for Communication Services

Are your local and long-distance telephone plans a drain on your budget? If so, call your carrier and ask about less expensive service rates and plans.

Holly A. Hunt, PhD, a psychologist in private practice in Long Beach, California, suggests calling telephone, cellular, paging, and Internet companies periodically to inquire about the availability of less expensive plans. “Companies are constantly competing with each other and generating new service plans and better rates,” says Hunt. “Even if you don't get all of your fees reduced when you call, you are likely to get some discounts. And if you don't periodically ask, you can be sure your rates will never change.”

An important reminder about phone expenses: Don’t forget to use toll-free phone numbers for third-party payers and other vendors whenever possible to save on long-distance charges.

Don’t Pay Full Price for Office Equipment

When making large purchases such as office or computer equipment, (secure document, requires login) shop around for the best deal. Purchasing a multifunction machine that can fax, copy and print can serve multiple needs and reduce your expenses. Hilewick saves money by purchasing office equipment such as copiers, fax machines and printers from a business equipment company that sells lightly used equipment. “My supplier always refurbishes the equipment and provides a warranty,” says Hilewick. “In this way, I can get a $6,000, robust, multi-featured copier for about $1,000.”

Maximize Your Tax Deductions

Talk to your accountant about ways to maximize your deductions for business expenses. Eligible expenses may include business property expenses, health insurance costs, retirement plan contributions and business expenses such as professional memberships and journal subscriptions.

“Keep excellent business records,” advises Valerie L. Shebroe, PhD, a psychologist in East Lansing, MI. “Use a business credit card and business checkbook for ease of keeping business expenses separate.” Tip: Read “Making the Most of Your Accountant” to review economical and money-saving ways that a good accountant can be an asset to your business.

Review Your Staffing Needs

Periodically review your staff’s performance and salaries. Do you have the right person in the right job? Are staff members working efficiently? If you have an employee who is underperforming, work with that individual to create a plan for improvement. Although staffing costs can be a significant expense, the effective use of administrative support (secure document, requires login) can influence your ability to generate revenue, work more efficiently and provide better customer service. Consider, for example, whether having one higher-paid staff position or using multiple part-time staff positions better meets your needs.

Rethink — Don’t Eliminate — Your Marketing Efforts

When it’s time to cut back on practice expenses, you may be tempted to target your marketing budget. However, cutting expenses that generate referrals and income for your practice can have a negative effect on your bottom line.

Instead of eliminating marketing, it may be time to reassess your marketing efforts or consider changing your marketing approach. For example, you may want to consider bolstering your efforts and activities such as community involvement (secure document, requires login)  or networking. (secure document, requires login)  Tip: Review "Low-cost Ways to Market Your Practice.” (secure document, requires login)

Maximize Your Practice’s Efficiency

The more efficient your practice is, the more time you have to devote to clients and to building your practice. Take a close look at your various office processes, from billing to scheduling client appointments to making referrals, and look for ways to make them more efficient and cost effective.

  • Evaluate your scheduling. Are you making the most effective use of your office hours? If you find that you are regularly paying office overhead at times when you have no appointments scheduled, consider changing your office hours to better fit the needs of your clients and avoid spending money on utilities, staff and other expenses at times when you are not generating revenue.
  • Collect copays at the time of the appointment. Collecting 100 percent of copay amounts from clients at the time of service can reduce the amount of time and resources you spend following up later.
  • Use technology effectively. Consider whether you could increase your efficiency, or even reduce your practice expenses, with new practice management software or a new electronic billing service provider. Read more about practice technology. (secure document, requires login)
  • Eliminate wasted postage costs. Are you losing money on postage? When you are mailing promotional materials, be sure to target the appropriate audience. (secure document, requires login) When you pay bills, you may be able to save money on stamps by paying the bills electronically. Many banks now offer free online bill-paying for account holders. Before you submit bills and invoices, it is a good idea to review them for accuracy. This can save you time and money in the long run.
  • Maximize use of your office space. Do you rent or own office space (secure document, requires login) but only use it a few days a week? Considering sharing the cost of your office space, your support staff, and your utilities with another practitioner on the days you are out of the office. Bringing another psychologist on board who offers complimentary services can provide a broader range of services to the community. Do you have more space than you need? If so, consider finding ways to use the space to generate revenue or consider downsizing.

When it comes to running a practice, some expenses are unavoidable. Practitioners who make an effort to use their resources effectively and to follow a budget can get the most value for their money and protect the financial health of their practice.

Share Your Tips

Do you have additional tips for trimming office expenses? Send your suggestions for ways — both large and small — that practitioners can reduce costs.

By Communications and Corporate Relations and Business Strategy Staff

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17 Nov 2016

Making the Most of Your Accountant

Making the Most of Your Accountant

Many practitioners rely on their accountants' expertise for generating financial statements and preparing tax returns. Yet some psychologists may not take full advantage of the range of accounting services that can help practices thrive. This article touches on economical and money-saving ways that a good accountant can be an asset to your business.

Bookkeeping

The availability of computers and user-friendly financial software makes it increasingly easy to manage your practice finances yourself. In the long run, however, effective use of an accountant can pay dividends.

A good accountant will do more than simply keep track of receipts and balance the checkbook. In addition to offering professional guidance about how certain items should be classified when creating financial statements, your accountant will analyze and interpret financial data and generate information essential to tax preparation, strategic decision making and financial planning.

You can keep costs manageable by doing the simple bookkeeping and document preparation yourself. Ask your accountant to train you, a member of your staff or a part-time bookkeeper and advise you regarding the best record keeping formats to use. Creating and adhering to an organized record keeping system will reduce the amount of time your accountant will need to spend sorting through financial records and searching for necessary documentation.

Keep good records of all financial transactions, provide your accountant with complete and accurate books and well-organized receipts, and automate as much of your financial data as possible using online banking and financial software.

There's a "bottom line" benefit to using these solid financial practices: they will reduce the amount of time your accountant will bill you for.

Tax Services

As with bookkeeping, available computer technology (secure document, requires login) has made it easier to prepare and file your own tax return with minimal cost. Except in cases where practice finances are extremely straightforward, however, using an accountant to prepare your tax forms may be advantageous for several reasons.

Although it will certainly cost more to use an accountant to prepare your tax statements instead of doing them yourself, those expenses often are recouped as a result of tax savings and deductions that would have gone unrecognized if not for the accountant's expertise in complex tax law and knowledge of rules and exceptions that often change yearly.

In addition, working with an accountant can help minimize costly filing errors. And in the unfortunate event that you get audited, an accountant will be able to advise you regarding the best way to present your case.

Beyond preparing your documents at tax time, your accountant can suggest tax-saving strategies throughout the year. Frequent tax law changes often make the timing of certain expenses and deductions important.

For example, if you are considering donating your old automobile, your accountant might advise you to donate it before the end of the year, so you may be able to take advantage of a larger deduction that will be limited beginning the following year. Other changes related to deductions for office equipment, structural improvements to office space,and the deductibility of sales tax versus state income tax may result in tax benefits that put more money in your pocket if you take advantage of them at the right time.

Talk to your accountant about how current opportunities and impending changes in tax law may influence your business decisions.

Strategic Business Planning

Far from simply being a "bean counter" a good accountant can be a trusted business advisor. Be open and honest with your accountant and make sure he or she is intimately familiar with the business operations of your practice. Knowing your professional and financial goals will allow your accountant to offer concrete suggestions for how to achieve your goals.

A good accountant also can help you create a solid business plan, take full advantage of your practice's strengths, determine the most advantageous business structure (secure document, requires login) for your practice, use your resources more effectively and manage revenues and expenses in a way that improves your bottom line.

If you are thinking about selling your practice, (secure document, requires login) doing estate planning or applying for a business loan, your accountant can assist you in determining the value of your practice.

Your accountant also can help you analyze your business operations, identify problems and suggest possible solutions. Areas to explore with your accountant might include:

  • Billing, collections and cash flow
  • Staffing and compensation
  • Budgeting and financial projections
  • Return on investment analyses for new technology or marketing approaches you are considering
  • Payer mix and reimbursement rates
  • Establishing mechanisms to monitor financial performance

Financial Planning

Talk to your accountant about any major financial decisions related to your practice. Whether you are thinking about buying new computer equipment, (secure document, requires login) deciding whether to lease or buy office space, (secure document, requires login) or planning a major business trip that you want to combine with a family vacation, your accountant can help you consider the various options, as well as their financial impact and tax implications. Your accountant also can help you establish internal financial controls and financial risk management strategies to help protect your practice.

Although you should not intermingle your personal and business finances, as a business owner, the two are closely connected. An accountant familiar with your practice is well positioned to offer guidance on personal finance topics such as retirement planning, long-term care insurance, wills and trusts, estate planning, personal asset protection and investment strategy.

As with any practice consultant, choose your accountant wisely. Find a qualified professional whose expertise matches your needs and who offers more than just number crunching.

Using an accountant to your best advantage is one more tool to help you grow and run a successful practice.

Learn more about managing your practice's finances.

By Corporate Relations and Business Strategy Staff

Interested in Practice Management? Read our collection of articles on Practice Management curated specially for APA members and affiliates.

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17 Nov 2016

Strengthen Your Practice Finances With this Basic Analysis

Strengthen Your Practice Finances With this Basic Analysis

A past issue of the PracticeUpdate e-newsletter included an article with key ratios to help you assess your practice's financial status. While informative, such an analysis doesn't necessarily help you understand how your operations affect your practice finances.

Analyzing operating data for your practice goes a step further and helps explain your performance, so you can make adjustments and implement strategies to strengthen your finances as needed.

As with your financial ratio analysis, begin by gathering relevant data from the past three years. Most of the data you need to analyze your operations —such as the mix of professional services you provide and insurance payers you use, along with productivity measures— will come from your practice management records, rather than from your financial statements.

Once you have compiled this information:

  • Calculate the operating indicators listed below, using the same time interval (e.g., annual, quarterly, monthly) you used in your financial analysis.
  • Look for changes and trends. Long-term patterns or gradual changes are often easier to identify visually, so it may be helpful to use a chart or graph.
  • Pinpoint indicators that look problematic and think about how can you address these problem areas and make improvements.
  • Once you have examined the historical data, start tracking these indicators on an ongoing basis to monitor your practice operations over time.

Although there are many operating variables you can explore, the following examples may be particularly helpful to track.

PAYER MIX: Break down the percentage of your total payments, the percentage of your total revenues and the percentage of your total clients by payer. For example, do Medicare clients make up 30 percent of your total client base, do 17 percent of your total revenues come from payments from a particular managed care contract, or are 61 percent of your total payments from private pay clients?

Having a larger percentage of clients or payments coming from a source with higher reimbursement rates is good for your practice finances. Conversely, growing segments from lower paying sources can put a dent in your revenues.

Just like investing, however, you should diversify your revenue sources. This will buffer you in the event of unforeseen changes, such as losing a contract, getting dropped from a panel or having a particular payer drastically reduce reimbursement rates or no longer cover a particular service.

Percentage of Total Payment = (number of payments from each payer / total number of payments) x 100

Percentage of Total Revenues = (net revenue from each payer / total net revenue) x 100

Percentage of Total Client Base = (total number of clients from each payer / total number of clients) x 100

SERVICE MIX: Look at the percentage of your time and revenues broken down by service type, such as individual therapy, group therapy, assessment, consultation and expert witness work. This will help you better understand how you are spending your time and what percentage of your total revenue comes from each type of service you provide.

Don't forget to include administrative time for each activity in your calculations. A service that pays $200 per hour might not seem so lucrative if you realize that you spend seven unbillable hours on administrative work for each billable hour.

Percentage of Time = (total hours spent on a particular type of service / total number of hours worked) x 100

Percentage of Revenues = (net revenue generated by a particular type of service / total net revenue) x 100

OTHER OPERATING VARIABLES: You might also want to calculate and track variables such as:

Average Length of Treatment = total number of sessions for all discharged clients / total number of discharges

Total number of sessions or units of service per year, month and week

Percentage of Cancellations = (total number of cancellations / total number of scheduled sessions) x 100

Percentage of No-Shows = (total number of no-shows / total number of scheduled sessions) x 100

Percentage of Referrals by Referral Source = (number of referrals from each referral source / total number of referrals) x 100

Client Mix Percentage = (number of clients with a particular primary diagnoses or core issue / total number of clients) x 100

You can calculate many of these operating variables by payer and client mix. For example, you might compute average length of treatment or percentage of cancellations and no-shows for each payer and for each primary diagnosis.

A couple of additional considerations reflect your practice setting:

  • If you operate a larger practice with multiple health professionals, you can gain a better understanding of how the practice is functioning by also tracking the "other operating variables" listed above as well as percentage of total revenues generated by each professional.
  • If based in an institutional setting such as a hospital or university counseling center, even though you may not have access to financial data, it should be feasible to track the percentage of your time spent delivering each type of service and the "other operating variables" listed above.

Visit the Practice Finance section for further financial related material.

By Corporate Relations and Business Strategy Staff

Interested in Practice Management? Read our collection of articles on Practice Management curated specially for APA members and affiliates.

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17 Nov 2016

Are you Using Online Banking for Your Practice?

Are you Using Online Banking for Your Practice?

Practicing psychologists are increasingly turning to the Internet to conduct a wide range of business activities, from claims processing to marketing their practice. One online business activity that is growing in popularity is online banking, or using a computer to access financial account information and perform banking transactions through a financial institution’s secure website.

This article outlines potential benefits as well as recommended precautions related to online banking.

Benefits of Online Banking

Being able to quickly and easily access account information and conduct banking transactions can offer practitioners more time to spend with clients or addressing other business matters. Because financial transactions are posted online as they occur, practitioners can easily track and monitor their account activities, which can aid in budgeting and financial management.

In addition, online banking can offer cost savings by eliminating the expenses associated with paper bill paying. Additional savings may results from discounted prices for online services that some banks are offering to attract customers.

A Range of Services for Practitioners

Online banking services vary by financial institution, but many banks offer the following options that may be of particular interest to practitioners:

  • Pay bills online. Use this service to review and pay bills from your online account. This relatively quick and easy procedure allows you to access and track your payment history with specific vendors and also saves you the cost of postage and checks. Some payees can even send electronic bills, relieving you of the hassle of processing paper statements. You may also be able to arrange for automatic payment of a variety of bills on particular days of the month, as well as schedule payments ahead of time when you plan to be away from the office to ensure that your bills will be paid in your absence.
  • Download your online account information, including a detailed transaction history, into financial management software, such as Quicken, QuickBooks or Microsoft Money, or spreadsheet software. This service can help you to quickly and easily reconcile your accounts without having to manually enter each transaction.
  • Request automatic notification. For example, you may request to be notified via email if your account balance goes above or below a specified amount. This can help guard against overdrafts or warn you about suspicious account activity.
  • Conduct standard banking transactions over the Internet. For example, you may request that the bank stop payment on a check or order new checks via e-mail, instead of having to call or visit the bank. In addition, you may access and transfer funds among multiple accounts, both business and personal, view and print your account statements and view images of paid checks.

Some banks offer special online banking packages designed for small businesses. Depending on your banking needs and the services offered, you may want to consider a small business account for your practice. Services may include the option to pay your employees electronically through direct deposit and electronic payment of federal, state and local taxes.

How Much Does Online Banking Cost?

Many banks offer online banking services and electronic account statements at no cost, if you meet a qualifying account balance or you open a particular type of account that offers online banking as a benefit. Check the details of online banking packages so you are aware of fees that may be applied to particular services.

When considering online banking services, it is important to find out:

  • if there is a charge for setting up or closing an account, as well as any related technical requirements
  • whether special software or hardware is required, and the related costs. Typically, setting up an online banking account is a fairly quick and easy procedure that requires only a computer and an Internet connection
  • how to correct errors you might make — such as paying a bill twice by mistake or entering the wrong payment amount — and any fees associated with these types of errors

Is Online Banking Safe?

Online banking uses encryption, a form of invisible coding, as well firewalls, to protect your information from third parties. Typically, a password and personal identification number are required to log in to an online bank account. Most banks offer additional protections, such as automatically logging you off the site after several minutes of inactivity or when you leave the site without logging out of your online bank account.

Reputable banks have security measures in place to secure the personal and financial data stored in online accounts. However, data security is a serious concern for both banks and consumers, especially following a reported rise in identity theft over the past few years. Banks are constantly challenged to implement anti-fraud measures to protect financial accounts from a host of potential security breaches, ranging from the theft of printed bank statements from mailboxes to the unauthorized use of stolen ATM debit cards.
If you decide to bank online, some steps that you can take to help safeguard your online account information include:

  • Verify that the bank offers a sound privacy policy designed to secure your data and protect you from unwanted solicitations.
  • Access your account only from a trusted computer using a web browser that supports online banking encryption technology (this includes most current browsers, including Internet Explorer 6.0). Make sure the browser’s security and cookie settings are adjusted appropriately for your protection. In addition, make sure the computer has current virus protection and a firewall installed (secure document, requires login) and enabled to help block unauthorized users from accessing the computer.
  • Use a password that contains at least six characters and a mixture of letters and numbers. It is a good idea to use a password that you do not use for other online accounts, and to change the password every one to two months.
  • Monitor your account for signs of suspicious activity.
  • Never respond to unsolicited e-mails or phone calls requesting personal financial information or your social security number — even if the person requesting the information claims to be from your bank. Computer hackers may use so-called “phishing” tricks to persuade consumers to reveal their online bank account numbers and passwords.

Visit the Federal Trade Commission website for more information about protecting your personal information.

Weighing Your Options

In researching your online banking options, start by finding out what services your current bank offers. Many banks offer free demonstrations of their online services through their websites or local branches.

Before signing up for online banking services, consider the following questions:

  • Do you understand the features that are available and the costs associated with each service that you might use?
  • Can the bank confirm that online transactions are processed in a timely manner?
  • Does the bank offer a guarantee that covers unauthorized charges to your account that may a result from a banking error or security breach?
  • Does the bank offer adequate customer service? When you need assistance, will you be able to communicate directly with a bank representative by e-mailing, calling or walking into a local branch? Are representatives available during convenient hours, and will they respond quickly to your concerns?

Online banking is an increasingly popular tool that can help psychologists effectively manage the administrative demands of running a practice. It can save practitioners both time and money and can streamline the financial management of the practice. In considering whether to incorporate online banking services into your practice, focus on identifying and finding the services that best meet your needs and the needs of your practice.

PLEASE NOTE: The service providers and products mentioned here are provided simply as examples and do not constitute endorsements by the APA Practice Organization. There are other similar products and services available that are not identified in this article.

By Corporate Relations and Business Strategy and Communications Staff

Interested in Practice Management? Read our collection of articles on Practice Management curated specially for APA members and affiliates.

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