How to Establish a Private Practice, Part 1: Before You Begin

I recently decided to try to build a small private practice, with the eventual goal of staying at my full-time job, but leaving my fee-for-service job and doing private practice instead. The benefits of transitioning from fee-for-service to private practice are that I would make more money, be able to select the population and clients I work with, and get to decide how to structure things like paperwork and policies (within legal and ethical guidelines, of course).

I search online for information, tips and steps to take to start a practice, but found surprising little (excepts ads). So, I'm trying to remedy that situation through a series of posts on the subject, as I muddle my way through. This is part 1.

Things you will need ahead of time:

1) The first requirement for a private practice is pretty obvious: you have to be licensed to practice independently. Usually that means a graduate degree and a certain amount of post-graduate supervised experience. You will need to produce a photocopy of your diploma, and of your professional license, when applying to join insurance panels (a process referred to as credentialing).

2) Next, you need professional liability insurance (aka malpractice insurance). Many professional associations, such as the NASW and APA, offer low-cost insurance options for members. You will have to produce proof of insurance when applying to join insurance panels. However, it can be a little confusing to figure out what to buy. While the minimums vary from state to state and panel to panel, I have found that $1,000,000 per claim, $3,000,000 aggregate is the most required by panels in my area. (This is different than what was recommended on NASWMA.org, which suggested $2,000,000/$2,000,000, and would not have worked for at least one of the major insurance panels in the area because of the lower aggregate coverage). The good news is it is fairly easy to change coverage levels if you accidentally purchase the wrong amount initially.

The other quirk of malpractice insurance is that the premium varies depending on how many hours per week you practice. However - this total includes ALL of your practice, not just your private practive. So, for example, even though I will only be seeing clients privately fewer than 8 hours a week, I also have a full-time job, and therefore need full-time insurance.

Once you buy insurance, they will send you two things: a stack of papers that include all the fine print and details of the policy, and a "certificate of insurance." You will need to provide a copy of the certificate as part of credentialing. (It may be referred to as the "face sheet" but does not say "face sheet" anywhere on it, and my insurer sent it separately - just know they are the same thing).

3) Once you are licensed, you will also need to apply for a National Provider Identifier - also called your NPI number. The application is available online, and is pretty straightforward. You don't have to be in private practice to get one, and it's easy to change your information after the fact (e.g., to update your practice address, license, etc).

4) Maintain an updated resume or CV - apparently you need one, even if you're trying to be self-employed. You will have to list at least the last 5 years of work experience, and account for any gaps, as part of credentialing.

Once you have gathered these things, there are some decisions to make. I'll address those in the next post in this series, so stay tuned. And if I've forgotten anything you need ahead of time, leave a comment!