Before You Change the Split: The Questions Group Practice Owners Need to Ask First

[00:00:05] You're listening to Empowered to Lead, The Therapist Practice. I'm Lisa Catallo, therapist, business coach, and your go-to for all things leadership and sustainable practice growth. This is your space for real talk, smart strategies and grounded support to help you lead with confidence, work with intention, and build a business that actually works for you. Let's dive in.

[00:00:29] Hello, and welcome back to the Empowered to Lead podcast. This is a place for group practice owners to hear other people's stories, to learn from each other, and to gather information on how to lead well, how to run a business well, and some tools and structuring in order to do that.

[00:00:55] Today, we are talking about some options instead of independent contractors. So if you listened to last week's episode, I believe it's episode 39 with Alison Maritas. If you haven't listened to that one, you might want to go back and listen first because I do speak about that a bit in today's episode. I talked to Alison Maritas.

[00:01:48] For something similar to what a lot of Canadian group practice owners offer. She has changed that structure. So we talked about why she did that, how that has worked, and what kind of a bit of the structure around what that looks like for her.

[00:02:04] She did it. Why did she do it? Because she was feeling like she lost financial ground every December, spring break, and summer, and the bills didn't change. There's still rent to pay. There's still all of the other expenses in running a business. Just because people took time off didn't mean that they went away. The other reason why she did that was because she didn't change.

[00:02:31] And feeling like her team could take time off. But she couldn't because she needed to be working to cover those expenses. So PIR, practice infrastructure rate, or that kind of structure is one option. If you are considering maybe moving away from a contractor relationship with somebody.

[00:02:54] So this week, we're going to talk about what some of the options are out there. But mostly we're going to talk about what is the question behind it? What do you want to know about yourself, about your business? What are some of the things that you need to consider before you go and say, okay, we're changing the structure?

[00:03:18] And so the reason why I think that's important is a lot of us tend to jump into things and not necessarily look at the bigger picture. Or maybe that's just me. I will say a lot of people that I talk to would call themselves accidental group practice owners.

[00:03:39] And so there's a number of you out there that chose a split, probably a 70-30 split or an 80-20 split. Some maybe 60-40 because that's what everybody else was doing. And in order to feel competitive, then you needed to do what everybody else was doing. Rather than really looking at what do you want? How do you want to lead?

[00:04:06] What does the business need in order to be profitable in whatever way you consider your business to be profitable? And so over time, over the next couple of months, I'm going to be speaking with a few different people about how to do this differently. What are some of the options out there for group practice owners? And today we're going to start with why do you want to change? What is going on for you first?

[00:04:34] Let's name some of the options that are out there that may be typical or maybe a little bit more creative than just doing an independent contractor split rate. So one option is a rent with a split. So typical or similar to what Allison said, she calls it a PIR. I know I can think offhand of three other group practice owners that do something similar,

[00:05:03] where they charge a service fee or flat rate or rent or whatever word they choose to use with that, and then they pay a split on top of that. One of them that I know, she charges a flat rate per session with 70-30 split on top of that. And she doesn't actually charge anything for sessions that are done at home, because when she created it, they weren't using office space.

[00:05:31] So she thought she didn't need to take a flat rate from that. She actually wishes she hadn't set it up per session and did a flat rate either per month or every two weeks like Allison did. The other two that I'm thinking of, they actually talked to their lawyers and accountants before they got started years ago. They started over 10 years ago.

[00:05:55] And that was the recommendation that their team had for them in order to make sure that they didn't cross some of those lines or muddy some of those lines between contractor and employee. And they have stayed with that over time. Another option. So you've got the flat rate plus a split. You've got rent, just sublease. It's one way of doing things.

[00:06:22] It takes your hands, your responsibility off of filling people's caseloads and having subleasers. It's a really good place to start when you don't know what you're doing or what you want as a group practice owner. I started that way. I have always had subleasers comprise at least part of the income that I have.

[00:06:46] One of them was because we just had been connected since school and I loved working alongside him and we had the space for him. And I've gone through various times of that's the main way that I'm covering my expenses.

[00:07:04] It isn't as profitable financially, but it is more profitable if you want to be hands off and still have a sense of community and people around you. You can have a split and which is what, like I said before, pretty much the norm. You can change that percentage. So as you are considering, what does my business need?

[00:07:34] Where am I feeling like this isn't working for me? You may want to start crunching your numbers and look at what are the financial obligations of this business? And how do I cover them better? And does that include changing the split that I am offering to the people who work for me? The third option would be employee.

[00:08:02] You can choose to go the employee route. So I think a lot of times when we picture employee that we think that means I have to pay a salary or they have to work for eight hours, even if they're not seeing clients. There's a whole lot more flexibility in that option than a lot of us consider. That is an episode down the road, but that is an option.

[00:08:28] And then another option is going the dependent contractor route versus independent. So we're going to talk about that option again in another episode. But that is really when you have somebody who primarily works for your practice or only works for your practice, but neither of you are wanting to wanting the employee relationship. Then you may want to consider changing that to dependent.

[00:08:58] There are a lot more responsibilities from you, the amount of notice that you give, some of the relationship nuances that come with that. But that might be something that you want to consider if the independent contractor relationship isn't working great for you.

[00:09:19] So as we dig into the questions that I want you to consider before you even go and say, yeah, at least I want to go and do that route. Here's four key questions. First of all, why? Why do you want to change? Why do you have this business? Why is this an issue? What are you struggling with?

[00:09:46] So and have you tried to address it in other ways? So if you look back at the episode with Allison, she, Allison tried a year end account before she had the PIR. So saved for slow months. For her, it helped, definitely made a difference.

[00:10:10] But she didn't feel like it covered sick days or long weekends from month to month. So slowing down and saying, why is this bothering me? Why is this an issue? Why can't I save? What is not happening with what I'm offering? Why is this not meeting the financial needs of the business?

[00:10:38] Which leads into the next question. Have you actually looked at your numbers? So when you are an accidental group practice owner, a lot of times you are not looking at your numbers, either because of your own money story or because nobody has really taught you how to do that. Or you don't really even know what to consider in your numbers.

[00:11:02] So here's a few things that I would say you want to consider as you look at the financials and what your business actually needs numbers wise. So first of all, you want to consider what does an associate actually cost you? What does it cost you to have somebody on the team? So that's looking at things like your EHR, whether that's Jane or Owl, Paisley, looking at some of the other technology.

[00:11:31] Maybe you have a customer records management system that you're paying for admin. You've got rent. You've got chocolates in the front room. Looking at what does it actually cost to have that one associate in that space and the real numbers. Most of us don't consider what does my time cost the business?

[00:11:55] How am I being compensated or am I considering my time when I look at what the business needs to provide? I've talked to a few group practice owners who don't think that their admin should support them because they support the group practice. They think that they're almost donating their time. So I don't need to be paid the same as everybody else or I pay myself at the end.

[00:12:24] But now I'm resenting everybody around me. So when you slow down and go, if I'm the owner of the business and I am answering phone calls or I'm looking at the emails that are coming in. If I had an admin do that, I would pay $25 an hour, $30 an hour for somebody to do that. How many hours am I doing that each week? And put a number to that.

[00:12:50] If you are supporting your team and let's say you were to hire a clinical director in order to do that, what do you think you would pay a clinical director to do those tasks for you? Put that number beside each of those tasks. Really drill down where are you working in the business and put a dollar amount on it versus where are you working on the business and making it happen.

[00:13:17] Put a dollar amount on that to be really realistic about what your time costs the business. I will say because if you look down the road and you want to sell your business and you are still not paying yourself and doing all of those things or you don't actually know what it would cost to replace you, that does not make your business attractive.

[00:13:42] They want to know that the business can run without you and or they want to know how much it would cost to do all the things that you currently do and is that worth it to them. Look at your systems. As I already mentioned, EHR, different. Are you paying for Microsoft? Are you paying for Google Workspace? How much does your website cost?

[00:14:06] And then looking at how much does it cost to market your group practice and break that out per session? Figure out if I'm spending $1,000 a month on Google Ads, how much does that, how many sessions do I need people to be seeing at the split that I am offering in order to cover all of these costs? And then look at, again, so what would somebody need to bring in to cover that? So here's what the costs are.

[00:14:34] Here's how it breaks down per session. Now, how many sessions would I need somebody to be seeing and play around with the different splits, if that's the option that you're going, the different payment system and see what rate you can actually offer. So coming back to Allison, she set her PIR by asking what she'd need to stay afloat if nobody saw clients for two weeks.

[00:15:01] And so that's the number that she came up with for the flat rate. And then negotiated, decided on what the split for the sessions could be on top of that. So what does she need if nobody showed up for two weeks and then the split is on top of that? If you don't know this, I would encourage you to keep an eye out. I will be offering the numbers room again in the new year in 2027.

[00:15:30] And this is a place to really slow down, acknowledge what you need to take home. What is your time worth? What does it look like to have an associate? How much do each of your revenue streams cost you and make you and make some real good leadership business decisions from that information? So that again is the numbers room. I'd love to have you join me in there.

[00:15:56] Question number three that I want you to consider is what is your mindset? What do I mean by that? I mean a few things by that actually. Um, so there have been a number of posts, um, recently, a number of conversations, both in my Facebook group for group practice owners, GPO network, if you want to find it. Um, and in, uh, groups where there are contractors, private, um,

[00:16:26] practice clinicians, and group practice owners, where it feels like people are saying that the associate, the contractor is, um, you're, you have to give them that money or you, you are taking that split from them that sorry. Yeah. Let's word that properly. Where either you, the owner or the contractor believes that you are taking money from them when they see a client.

[00:16:55] So if you are charging a hundred dollars per session, you are taking 40% from the clinician. That is not the correct perspective. You run a business. You are paying them for a service. You're paying them to see that client. You're choosing to give them 60%, 70% of flat rate for that service. You're not taking it from them.

[00:17:26] You are paying for a service. Do you believe that? Or do you believe that you are taking from them? So working through some of that mindset, um, do you believe in what you are offering? So if you are a group practice owner and you sit across from somebody who is, um, considering joining you and your mindset is, why would they even want to join me?

[00:17:54] They can make more money if they were on their own. I don't understand what would make them want to stay. That is not a great way of showing up. It's also not a great way of valuing you, what you have to offer, um, to them, to the community and, um, who you are as a leader. You need to come from a mindset of, this is my business. This is what I'm offering.

[00:18:22] This is what makes me stand out. This is why you would want to work here. And that is all wrapped up in the cost that it is to run that business emotionally, financially, um, physically, and all of those things. One of the things that stood out to me and my conversation with Alison, when we came to, um, this part of the conversation is this isn't a job for you. This is a business.

[00:18:52] You were running a business. And for a lot of people, um, profit is a four letter word, especially in social work circles. And you need to wrap your mind around, are you okay with making a profit in the business? What does profit look like? So that's also part of the mindset. It may mean you get to see less clients.

[00:19:19] So there's not a bunch of money coming into your pocket at the end of the day, but you have more capacity for the clients that you're seeing. You have a good mix of leadership and clinical work, whatever that profit looks like to you. It's okay to be profitable. You actually want to be profitable in order to make your business work. So if you have that mindset,

[00:19:48] then when a clinician isn't making enough money, or even if you look at Alison's, um, suggestion, the PIR, now let's say a contractor has to actually pay her for that two week period because they didn't see enough clients rather than, um, making money on top of that. That's because they are an independent contractor. They get to choose, they get to have a risk of, um,

[00:20:17] loss and a risk of benefit of profit. Um, but they walk into that eyes wide open. You are very clear about what it is that you're offering. And everybody knows the rules of engagement. What is your mindset as you're looking at running your business? And then another question would be, who have you talked to about this? So, uh, again, I have that free Facebook group.

[00:20:46] I offer coaching. Um, I think it's really important for us to be talking to other group practice owners to get some of that peer support, to get a coaching support, to look at, first of all, if you're talking to other group practice owners, what are you doing? What works for you? How do I glean from you? Maybe I'm going to be curious about another system. Even in having Allison join us, that's her way of doing that. Um,

[00:21:14] that is a really good way for her. It works for her in order to do that. You're being curious, but then don't stop there. Group practice owners, even myself as a coach, we are not accountants. We are not lawyers. We don't know the CRA requirements of your specific business. If you choose to go this route, we don't know the implications because that's not our training.

[00:21:43] Most of us did not do that before we started out in this. So, glean, talk to your peers, you know, get ideas, but make sure that you are talking to your accountant. Um, so, what does this look like? Does this make sense? Does this financially actually cover what I think that it's going to? Do you have any suggestions for the structure? Talk to a lawyer, an employment lawyer,

[00:22:12] or an HR consultant. Um, what's the difference between a dependent and an independent contractor? What would you see would be some struggles if I went to the employee route? Or what would you see would be some options if I were to look at a dependent contractor versus an employee versus the independent contractor arrangement that I already have? What do you think I need to ask myself? What are things that, as you know,

[00:22:41] my business, um, that you think I need to consider? So, casting that net wider than just, oh, I think this, or I, you know, I really admire this group practice under, I'm going to try that. Do your homework. And then I really want to encourage you to consider what is important to you. One of the things that Allison said was the hardest part for her

[00:23:09] was that first contract review conversation. And the freeing part of it was she no longer felt like she was the only one carrying the cost. So, is it important enough for you to make change, to protect yourself, to protect the business, to make sure that this is sustainable? Some people won't want to accept your boundaries. And at the same time, contractors don't stay forever. So, what is your risk tolerance?

[00:23:39] Um, how do you want to do this? Really slow down and consider, how do I want to do this? Why is this important? Why do I want to make these changes? And, whatever you decide doesn't have to be permanent. You can make this change, and in a year, two years, five years, down the road, you have changed as a leader. The landscape of business has changed. What you need from the business, um, has altered,

[00:24:08] and you can make a change. This doesn't have to be written in stone, permanent. This is what you do forever. I would say you want to do it at least a year or two before you make more changes. Um, but keep that in mind. I want you to consider also, if you are resenting the people who are working for you, if you are feeling like you are burning out, you are of no use to anyone if the doors can't be open. If you burn out as a leader,

[00:24:38] and you can't provide what you feel like you want to, or that you promised, it's not worth it. It's not going to be a place that people want to stay. Um, you won't have a business for them to work out of, if you don't start making some of those changes that you are noticing. And also you might say, actually, as we talk this through, I'm actually quite okay. Because as I look at those numbers,

[00:25:05] now I'm looking at facts and all of the information. And if I consider what I actually want this business to give me, it's actually meeting those needs. And that would be awesome too. So I'm not saying you have to go out and change anything. What I am saying, slow down, look at all of the information, make informed decisions as you go forward. If you have questions about this, or you're considering changes,

[00:25:35] I would love to hear from you. I offer individual coaching. I also have the group practice connection, where we're having conversations about this, this type of thing on a monthly basis. The numbers room will be available in the new year. I am here to support you. I want you to thrive. I want you to build a sustainable business that meets your needs, meets your community's needs, and meets your therapist's needs.

[00:26:06] Let's grow something great together. Thank you for tuning in today. I hope that you found this helpful. And I'm looking forward to future conversations. About what some of our options are, as Canadian group practice owners. Have a great day. Thanks for hanging out with me on Empowered to Lead, the therapist's practice. I hope you're walking away with something that you can put into action. Because leadership isn't about doing more. It's about leading with purpose.

[00:26:36] If you're ready for deeper support, I'd love to see you inside the group practice connection. My monthly membership, where Canadian therapists like you get coaching, community, and the tools to build a business that actually supports your life. You can check it out at grouppracticenetwork.ca. The link's in the show notes. And hey, don't forget to hit follow so you don't miss what's coming next. We're building something great here, and I'm so glad you're a part of it. Thank you.