The financial stability of private therapy practices is increasingly precarious, with the majority of therapists reporting anxiety over the current economic climate.
Almost 85% of private practice therapists are concerned about the economy impacting their practice in 2024, according to a survey conducted by mental health-focused accounting startup Heard.
Despite these concerns, most therapists said they did not plan to raise fees in 2024.
“Many therapists worry that raising fees could make services inaccessible to clients, but others see it as the fastest way to improve their bottom line,” the report’s authors wrote.
The Heard survey was based on responses from 2,268 therapists in all 50 states and Washington, D.C.
Survey takers reported gross income decreased year-over-year. Almost 75% of therapists reported making less than $100,000 in gross income in 2023, while only 55% reported making less than $100,000 the year prior.
After business expenses, 29% of therapists reported making less than $25,000 in 2023.
To protect themselves from economic downturns, 43% of therapists said they generated income from methods other than therapy in 2023. The most common alternate source of income was supervision, followed by teaching, speaking, consulting and coaching.
The most recent Heard report found that about a third of therapists raised their fees in 2023. This is at odds with the previous year’s report data, which found that 64% of private practice therapists planned to increase their cash pay rates.
The report’s authors attribute the discrepancy to inflation and rising interest rates which drove up the cost of living in 2023.
“Even as they faced financial pressures, it’s possible some therapists kept their fees low in order to remain accessible to clients,” the report read.
Despite these financial pressures, many therapists offered avenues for clients from diverse economic backgrounds to receive care.
Nearly 75% of surveyed therapists said they offered sliding scale fees or pro bono sessions, a nearly unchanged figure compared to the year prior.
Respondents also reported which insurance providers they were in network with as well as their average reimbursement rates. This data is not otherwise available since insurance companies do not publish their average billing rates, according to the report.
Aetna was the most common insurance, with 50% of therapists reporting being in-network with the payer. The average Aetna reimbursement was $141, which was the highest average reimbursement rate of any insurance company included in the report.
Humana, which was in-network with significantly fewer therapists, had the lowest reimbursement rate at $96.
In general, insurance networks paid therapists less than their cash-pay fee. The average cash-pay session fee for individual therapy was $157, according to the report, while the average insurance reimbursement rate was $122 per session. Some insurance reimbursement rates were far below that, including Humana’s.
Overall, the report’s authors concluded that “the financial state of private practice in 2024 is cause for concern.”
“It’s getting more expensive to be a therapist due to inflation, yet rates aren’t going up, so therapists are struggling,” the report’s authors wrote.
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