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Starting a Private Practice Despite Managed Care
By William E. Callahan Jr., M.D.
Despite formidable obstacles, it is possible to start a new, successful private practice in a heavily managed health care market, and to do it without managed care! I’d like to share with psychiatrists at all stages of their careers how this is possible.
I am a 36-year-old early career psychiatrist, two and a half years out of residency training at the University of California at Irvine Medical Center. I practice in San Clemente and Newport Beach, Calif. I recall being repeatedly told by faculty that it would be difficult to succeed in a private practice, and several times I almost gave up the idea altogether. What made me decide to go for it was a combination of support from some of my supervisors and especially other successful psychiatrists in my district branch. I am also a fighter who likes a challenge.
My background prior to psychiatry includes a general surgery internship, followed by four years working in the special forces community as a flight surgeon. In that time I cared for casualties during the Panama conflict and served in the Gulf war for six months, as well as in other operations and aircraft accident investigations. Part of what I learned in both my military training and my own psychotherapy was to trust in myself. This was the foundation with which I began this endeavor.
To decrease my personal stress level, I decided to refrain from buying a house or new car during my residency or immediately thereafter. With renting I felt I could easily downsize if my income fell below expectations, without risking ruining my credit with a bankruptcy or foreclosure. This has allowed me to ride out the ups and downs of a new practice without panic, though not without anxiety.
I then focused on an area that had fewer psychiatrists than other parts of this region (San Clemente, where my main office is). I continued all my moonlighting positions when I left residency. These included nursing home consultation positions at two homes and a small private practice in a well-established gay and lesbian counseling center. These would not provide enough income to live on, but guaranteed some baseline income. I also accepted a part-time assistant medical directorship that provided a monthly salary I could depend on.
With some small measure of monthly income, I then set out to clarify what has been the fun part—what I would love to do in my professional life. I decided on continuing a specific, rapid kind of dynamic psychotherapy called intensive short-term dynamic psychotherapy. This has given me a reputation even among some skeptical physicians as someone who knows how psychotherapy can make a difference and can do so in a relatively short time.
I also decided to focus on service within the gay and lesbian community, to become expert at psychopharmacological management of AIDS, and to serve the chronically mentally ill through two nonprofits, the Mental Health Association and the John Henry Foundation. This gave me specific community groups to which I could speak and boards on which I could serve with other citizens who are interested in mental health and could get to know my name and abilities—all while serving in organizations and for causes that I care about.
I did almost no advertising in the traditional sense, except to place a 1.5-inch ad in the Yellow Pages, which was mostly to convey a sense that my practice is permanent and stable. I also ran one small ad in a magazine targeted to the gay and lesbian community, since that was an inexpensive way to reach a population I wanted to work with. I deliberately set my fees below the average in Southern California, and I require payment at the time of each session. Since I do no insurance billing besides Medicare, I keep my overhead low, and I don’t lose income to lost collections or time to fruitless negotiations with insurance or managed care companies.
In the time I have been practicing this way, there have been incredible rises and falls in the rate of referrals, and several times I considered giving up. However, I used the strength and experience of the members of my district branch to reassure me that this happens, even to them. This kind of mentoring—whether official or unofficial—is a valuable service to ECP’s, and I hope other district branches are encouraging it.
Over the past 10 months I have had a steady increase in referrals and have gradually eliminated all the previously described positions except my private practice and my nonprofit work for the chronically mentally ill and with the AIDS Services Foundation. I hope that my experience will inspire other psychiatrists to follow this road if this type of practice is one of their dreams.