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By Julia W.

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Private Practice: Pros and Cons of Private Pay

One of the first questions that a therapist asks themselves when they begin their journey to starting their private practice is what payment method to use. 

It can be a tough decision to make since two of the main payment options each have their own pros and cons. Insurance may have its downsides, but it also has its advantages. The same goes for private pay as well.

In this article, we have compiled a list of pros and cons of using the private pay method for your practice. These positives and negatives will give you an idea of what to expect if you choose to go the private pay route.


No credentialing process

By now you have been told several times that getting on insurance panels can be a nightmare. It may seem like an exaggeration, but it’s really not. Getting on insurance panels can take months and, after all that, you might end up getting rejected. Private pay eliminates this hassle for you, since a private-pay client pays for sessions on the spot.

No delayed payments

Private pay means that your client pays you after every session. There are no rejected or delayed claims to deal with and you don’t have to wait to get paid like you would have to with insurance companies–a process which can take up to 45 days! Delayed payments slow the growth of a practice since you still have to pay rent and utilities when they’re due, whether or not you have received money from the insurance company.

Set your own rates

An upside of private pay is that you don’t have to stick to the rates that insurance companies dictate. You can choose to go lower or higher, depending on which one makes more sense for you and your practice. Most therapists who accept insurance complain that the preset rates sometimes discourage clients from seeking their services, which is bad for business.

Time saving/ zero-to-no financial paperwork

As we’ve already established, having clients pay at the end of a session is a quick and painless process. This is advantageous compared to the insurance process, which includes filling claim forms, sending them to the insurance company, then waiting for payment. No insurance claim forms to fill out also means no financial paperwork to file. Running a private practice comes with many administrative responsibilities and if there’s an option to eliminate some tasks from the list it should definitely be considered!  

Wider client variety

Accepting private pay enables you to accept clients who are not insured. This makes your services accessible to anyone who may need help but has been unable to get any because of insurance concerns. Business-wise, this could also be beneficial for your practice.


Working with insurance means that you have to submit some of your clients’ information when making clams. Some clients may not be comfortable with that and therefore might shy away from going to therapy. The private-pay option gives such clients an opportunity to get help privately.


Fewer referral sources

One of the biggest disadvantages of private pay is that you don’t have a wider referral network compared to therapists who are credentialed with insurance companies. This is because insurance companies provide their clients with the names and locations of providers in their network. Not accepting insurance means that you have to build your own referral network from scratch.

Education of potential clients 

Another downside to private pay is that you have to educate your target clients on the benefits of paying out of pocket instead of going through insurance. This can sometimes be challenging, especially if their insurance covers mental health.

Unaffordable for lower income individuals

While private pay exposes you to a wider variety of clients, it doesn’t mean that all of them are in a position to pay for therapy from their own resources. 

Clearly the pros outweigh the cons. Private pay is one of if not the easiest payment methods, especially for a therapist who’s starting their private practice. If you’re willing to find a way to make the cons work, then you should consider private pay. You can also check out our ‘Private Practice: Pros and Cons of Insurance‘ article so that you can make an informed decision.

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