In the group practice world, fee splits are one of the most common ways that therapists get paid. But if you're not familiar with this method, they can be a little confusing... especially if your first introduction to them is in the middle of a job interview! Let's break down fee splits and what to expect as a therapist potentially joining a group practice.
The Basics of Fee Splits
Fee splits, or revenue splits, mean that out of the amount each client is charged for your services, you get a percentage, which then goes into your paycheck total, and the practice keeps a percentage to cover overhead. So if clients are charged $100 for therapy with you and there's a 50/50 split, you get $50. If there was a 70/30 split, you'd get $70.
Typically, fee splits serve as a therapist's base compensation. Many practices also pay therapists for things like administrative/documentation time, staff meetings, training, etc. This rate is often, but not always, a separate hourly rate from your clinical services.
If I Receive a Fee Split, How Much Do I Get Paid?
The most annoying thing about fee splits is that you have to do more manual math to understand how much you're getting paid on average. You'll need to calculate how much you get for each therapy session, plus any paid admin time, plus any fees for things like late cancellations. Remember that there is an average cancellation rate of 5-10% at most practices, for which therapists often don't get paid unless it's a late cancellation or no-show.
It's also important to ask about other benefits, such as license fees, continuing education, liability insurance, etc. Some practices cover all or part of these fees for therapists.
Can Fee Splits Apply to W2 Jobs?
Yes, fee splits can apply to both 1099 and W2 statuses. Instead of a W2 salary, the hourly fee split rate applies, but the therapist is also given benefits. W2 positions will typically have a minimum number of sessions the therapist has to complete each month in order to maintain benefits. At many group practices, this number is somewhere between 22-27 per week on average. Again, because of the average cancellation rate, this means scheduling a few more sessions than that per week to make sure numbers are being met. Some practices offer W2 benefits for part-time therapists, but just like in typical corporate jobs, the benefits are often either streamlined or cost more out of pocket for the employee.
Some practices offer both 1099 and W2 options. Typically, the 1099 split is going to be higher, in the therapist's favor, because the therapist does not get benefits and has to pay their own taxes. The W2 split will be lower, because taxes are taken out and benefits are provided. However, the group practice typically calculates these rates to essentially be even- by recognizing what the take home pay would be for 1099 vs. W2.
What Does the Practice's Split Go Toward?
The biggest question I get from therapists is, "what does the practice do with their fee split?" along with "why isn't the split a higher percentage in my favor?" Well... the split largely depends on the size of the practice, the benefits offered, and the way that payment structures are set up for clients.
A higher split doesn't necessarily mean that the practice is a better option. Practices that offer upward of 80 and 90% of the therapy fee to the therapists often don't provide much in terms of support. Think about all of the overhead costs that can go into a larger practice: office lease or mortgage, office equipment (from complex things like neurofeedback equipment to basic stuff like toilet paper), furniture, utilities, EHR software for all staff, salaries for non-clinical staff such as receptionists and billers, clinical supervision for pre-licensed therapists, software and fees for things like banking and accounting, practice liability insurance, paying staff for administrative or meeting time when those staff aren't bringing in money, staff retreats, continuing education and training for staff, marketing for the practice, etc. The list could go on and on!
I'm not saying that group practices are above accountability when it comes to their fee split. Not at all. But it's important to have an understanding that the money from the fee split is spent on necessities in the vast majority of group practices. If you are concerned about the fee split percentage, it's always an option to ask the owner for a breakdown of costs. While I wouldn't necessarily expect to receive that information in an interview, perhaps I would after working with a practice for a while and earning that trust.
For many groups that offer a lot of the benefits listed above, something around a 50% fee split is pretty common. I've often seen 40-45% for pre-licensed clinicians, if the practice is providing them with supervision. I rarely see splits above 70% for the therapist unless it's more of a co-working situation, rather than a true group practice. Again, I'm not condoning or condemning any of these numbers, but rather relaying what I have often heard from practice owners and seen in job postings.
Other Fee Split Questions?
I hope this answered a lot of your questions around the practice of using fee splits in therapy group practices. If you have additional questions about this process, I'd be happy to connect with you for a consultation! Feel free to reach out to me through the contact form on my website.