Transitioning to Private Pay: A Guide for Therapists

Brandon Grill
October 13, 2023
How to Confidently Transition from Insurance Panels to Private Pay Therapy

Are you tired of dealing with insurance companies? Imagine a world where you don’t have to hassle with insurance, still attract clients, and earn a great living. Sounds great, right?

So, you might wonder, "Is it okay to leave insurance behind?" or "How do I even start?"

Good news → this guide will answer those questions and more. We'll dive into the benefits, tackle worries, and give you clear steps to confidently move to private pay. If you want more freedom and control in your practice, keep reading!

Addressing Ethical Concerns of Leaving Insurance Panels

Being a therapist is about helping people. So, you might feel a bit worried about leaving insurance panels. Will everyone be able to afford your services? Let's talk about this!

It's Your Choice: Just like everyone, therapists can choose how they want to work. And guess what? There's no one right way to do it. Realize that you have the right to free yourself of insurance panels if you desire and that you don’t have to feel guilty about it.

Quality Time with Clients: When you go private pay, you might see fewer clients. But the good part? You can give them more of your time and focus. This means better help for them and less burnout for you. Win-win.

There are Other Options: Even if some people can't see you, there are other places they can go for therapy. There are community centers, online resources, and other therapists who might have lower rates. Once you’re earning a great living in private practice, you can open some slots for clients who may not be able to pay your full rate.

Helping Clients Transition: If you decide to go private pay, you won't abandon your clients. You'll talk to them, explain the changes, and maybe even help them find another therapist if needed. You can also inform them about their OON benefits. You’d be surprised how many clients don’t know they have these!

You Can Still Help: Some therapists choose to have special times where they charge less or even offer free sessions. This way, they still help those who can't pay the full price as mentioned above.

Speak Up: You can use your voice to ask for better mental health care rules. Even if you're not working with insurance, you can still fight for better care for everyone!

Remember, being ethical isn't just about money. It's about how you treat people, and how you help them. Every therapist is different, and you can find a way that feels right for you (without having to make less OR feel guilty about it).

Understanding the Benefits of Private Pay

So, you're thinking about going "private pay." But what's so good about it? Let's look at the benefits of private pay therapy.

Be Your Own Boss: With private pay, you make the rules. This means you get to decide what's best for your clients without an insurance company telling you what to do.

Less Paperwork, More Time: Say goodbye to heaps of insurance forms! With private pay, there's way less paperwork. That means more time to do what you love → helping people.

Know Your Earnings: You set your price. So, you always know how much you'll earn. No more guessing games or waiting for insurance to pay up. And if you’re not convinced, look out for our future blog about insurance nightmares.

Work with Eager Clients: When clients choose to pay out-of-pocket, it often means they truly value your help. They're ready to work with you and see real changes!

Switching to private pay can be a great choice. It gives you freedom, more time, and a chance to build strong bonds with your clients. The best part is that you, not the insurance company, is in control.

Cons of Running a Mental Health Private Practice

Certainly, moving to a private pay model has its advantages, but it's essential to acknowledge potential downsides as well. Here are some cons of transitioning to private pay only:

Limited Client Base: Not all clients can afford out-of-pocket therapy fees, potentially reducing the number of clients who seek your services. However this may not be a problem depending upon your area of practice.

Income Fluctuation: Private pay might lead to more unpredictable income in the short term, especially when just starting out. Stick with it and follow a solid marketing plan to reduce fluctuations.

Increased Marketing Efforts: Without referrals from your panels, you’ll need to invest more time and money in marketing to attract new clients. I give ways to do so below. I’m also planning a blog about marketing your private practice, so check back frequently.

Potential Perception Issues: Some might perceive private pay therapists as "elitist" or catering only to wealthy clients, which you may fear will affect your public image. Don’t let this get to you → It’s perfectly okay to make a great living. Your skills are highly valuable and there’s insane demand in 2023!

Loss of Certain Client Demographics: Some demographics, such as students or low-income individuals, might be harder to reach if they rely heavily on insurance for health services. If this concerns you, do the math and see if you can afford to offer any sliding scale or pro bono sessions to these demographics.

Initial Financial Strain: Just like starting any business, the initial phase of transitioning to private pay only can be challenging. There might be a period where you see a dip in clients and income before establishing a solid private pay clientele. Consider it par for the course, and plan ahead.

Additional Administrative Tasks: Ditching insurance panels has a tradeoff: you might find yourself handling more administrative tasks, like managing payments directly with clients. Overall, this shouldn’t be more work than your panels currently give you.

"No other professional career path would have you weighing accessibility versus your rightful income seriously. Taking insurance just to be martyr makes no sense."

Weigh these potential drawbacks against the benefits to make an informed decision that aligns with your goals and values. Don’t feel like you need to make an immediate decision. Continue reading to get even more informed.

Practical Steps to Prepare for the Transition to a Cash Only Therapy Practice

Are you ready to dive into private pay? Great. 

Our best tip for transitioning is to increase your private pay clients and decrease your insurance clients over time. Then you’ll be in a good position to phase out your insurance panels one at a time.

With that said, here’s some steps to help you transition:

Know Your Area: Before setting your price, see what others charge in your town or city. This will give you a good idea of where to start.

Money Rules: Decide on your prices and when clients should pay. Should they pay before or after each session? Also, think about what to do if someone cancels, no-shows, or misses an appointment. Will you still charge them? Get clear on this ahead of time.

Niche Down: In 2023, people want specialists, not generalists. Think about it like this: people want the surgeon who’s done 1,000 surgeries, not 5. Same with therapy → they want someone with experience for their specific issue. So choose 1 major focus and advertise yourself as such.

Shout It Out: Tell people about your services! Update your website, expand your referral network, give a presentation at a place your target audience can be found, and more. Consider hiring a therapy business coach for guidance.

Be Seen Online: If someone searches for a therapist online, make sure they find you! Have a nice website and maybe even list yourself in online directories. Check out this curated list of directories for therapists.

Make Friends: Connect with other therapists who only do private pay. Join groups or go to meetings. They can give you tips and maybe even refer clients to you! Just be sure to repay the favor as soon as you can.

Plan Your Money: Sometimes, you might have more clients. Other times, fewer. Save some money for the quieter times so you're always okay.

There you go! With these steps, you'll be on a smooth path to private pay. Remember, every big change takes time. When in doubt, fall back on universal values: perseverance, determination, consistency, and service.

"More flexibility, more control over your practice, improved hours, less administrative work, higher compensation. I’ve found the private practice community to be generally optimistic, encouraging, and hopeful about treatment outcomes."

Private Practice Transitions: How to Tell Therapy Clients You’re Leaving Insurance

Switching to private pay is a big step, and your current clients will surely have questions. Open communication is the key here.

Start by setting aside a bit of time during a session to explain your reasons for the change, emphasizing that it's all about offering even better care.

Next, consider giving your loyal clients a special price for a while as a heartfelt "thank you" for their trust. And if any client decides not to continue with you, be prepared to kindly suggest other therapists who still take insurance.

Finally, ensure all of your current clients are informed about their OON benefits. Some clients may have these benefits and simply not know about them. Informing them opens the door to continue therapy with you, and for you to keep them as a client.

Remember, changes can be tough, but with understanding and clear conversations, you and your clients can smoothly move forward together. Or at least part amicably.

Overcoming Potential Challenges

Switching to private pay sounds exciting, but there might be some bumps on the road. Let's talk about these challenges and how to tackle them.

Setting Your Price: Think about how much you need to earn to cover your overhead, personal expenses, savings, future marketing budget, and have a little extra for pleasure. Then calculate how many clients you’d need at a variety of rates to get an idea. It's okay to adjust your price until it feels right. But starting without an idea will only make transitioning harder.

Ups and Downs in Money: Some months, you might have lots of clients, and other months, just a few. It's smart to save some money for the slower times. Even better if you can do this in advance.

Being the Best Choice: Make sure clients pick you. Keep learning, improving, and working on your own mental health. Invest in your education every quarter if not more regularly to differentiate yourself. The more educated, experienced, and specialized you become, the more valuable you’ll be in the marketplace.

Dealing with Doubts: Some people might question your choice to go private pay. That's okay! Believe in your decision and remember the good reasons you had for making the switch. Work on your own feelings proactively to prevent self-sabotage.

Life has challenges, but with some planning and a positive attitude, you can face them head-on. The feeling of working for yourself and earning a solid living will be well-worth your efforts today.

How to Leave Insurance Panels

Okay, so you've decided to go private pay. But how do you leave those insurance panels behind? Let's break it down step-by-step:

Step 0 - Set a Deadline: A goal without a deadline is just a wish. Putting a date on when you’ll no longer accept insurance panels (perhaps 90-180 days out) makes it real. So put your skin in the game and set a deadline. Then follow the steps below.

Step 1 - Do Your Homework: Each insurance company has its own way of doing things. Find out what you need to do for each one. Tip: Pick the panel you like least and follow this process for them first.

Step 2 - Say Goodbye in Writing: Write a letter to each insurance company. Let them know you're leaving and thank them for the time you worked together.

Step 3 - Be Patient: After you send your letter, it might take some time (like 90 days) before you're officially out. So, hang tight and stay engaged til the end.

Step 4 - Play Fair: Make sure you follow all the rules when leaving. And always put your clients first. That's super important.

Step 5 - Help Your Clients Move On: Inform your clients about their OON Benefits if they have them. If a client still can't continue with you, help them find another therapist. They'll appreciate it and this leaves the door open if they ever want to come back to you. 

Step 6 - Keep All Your Papers: Save copies of all letters and notes. It's always good to have a record of everything.

Step 7 - Get Some Advice: If you're unsure about something, ask someone who knows the rules really well. Hire a lawyer who knows about laws affecting this area.

Leaving insurance panels is a big step, but with a plan, it can be smooth and easy. Remember, you're doing this to make your work less stressful for you and higher quality for your clients.

How to Transition to Cash Pay Only: Jane’s Story

In Austin, Texas, Jane Mitchell, an LCSW with 5 years of experience, felt the strain of insurance paperwork. She loved helping her clients, but administrative tasks overshadowed her passion.

After a stressful week of payment delays, Jane knew she needed a change. Workshops on private pay introduced her to a different way. Fellow therapists shared their success stories, and Jane decided to take the leap.

Aware of the importance of communication, Jane reserved the last few minutes of each client session to discuss her shift. Their reactions varied: concern, understanding, and curiosity. To ease the transition, Jane offered special rates for her dedicated long-term clients.

Jane revamped her website and, with expert advice, set fair, competitive rates. However, challenges loomed. She noticed a temporary dip in her clientele, and doubts occasionally clouded her decision. Despite a few skeptical peers, Jane's stayed the course.

Her perseverance bore fruit. Without insurance constraints, Jane offered richer, more dedicated sessions. Word-of-mouth referrals increased. Personally, Jane found a better work-life balance, rekindling her love for hobbies like painting.

A year into her transition, Jane reflected on her journey. Challenges had been numerous, but the rewards far outweighed them. She enjoyed closer bonds with clients, a rejuvenated passion for her work, and a life where she controlled her destiny.

Allow Jane’s story to inspire you. If one therapist can do it, so can others. That includes you!

Celebrating the Benefits of the Transition

By now you've made some big changes, and that's awesome. Let's take a moment to celebrate the good stuff that comes from going private pay:

Your Own Success Stories: Maybe you've had more time for each client now, and you've seen them grow and change in amazing ways. That's a win!

Time for Loved Ones: Once the dust is settled and your practice is humming along, you may have more time and energy for your loved ones like family and friends. Celebrate your time freedom.

Grow and Learn: Without all that insurance paperwork, maybe you've had more time to take a class or learn a new therapy method. You're becoming an even better therapist every day. Let this lead to a virtuous cycle of improvement and growing success.

Life Gets a Bit Easier: Remember when you had to wait for insurance payments or fill out those endless forms? Not anymore. Now, you have more control over your time and your money.

It's important to stop and think about all the good stuff. Every change has its ups and downs, but look at all the positive things you've gained. Here's to a brighter, better way of doing what you love.


Whew! That was a lot, wasn't it? Changing to private pay is a big journey, but you're not alone. Many therapists are making this choice, just like you.

Remember, it's all about finding the best way to help your clients and feel good about your work. Every therapist is different, and that's okay! Find what works for you, and go for it.

If you ever feel stuck or unsure, come back to this guide. We're here to help you every step of the way.

Cheers to new beginnings and doing therapy your way!


This blog post is provided for informational purposes only and is not intended as legal, business, medical, or insurance advice. Laws relating to health insurance and coverage are complex, and their application can vary widely depending on individual circumstances and state laws. Similarly, decisions regarding mental health care should be made with the guidance of qualified health care providers. We strongly recommend consulting with a qualified attorney or legal advisor, insurance representative, and/or medical professional to discuss your specific situation and how the laws apply to you or your situation.

About the Author
Brandon Grill

Brandon Grill is a mental health copywriter and marketer based in Las Vegas, NV. He loves helping mental health professionals build fulfilling businesses. You can find Brandon going on a walk with his adorable nephews.