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Articles: The business side of practice & Laws, Risk Management, Ethics Important for Psychologists {Below}

The Business Side of Practice

Gretchen Kubacky, Psy.D.

Money, Money, Money

Middle Aged Woman

$ $ $ $

business and managing our own financial histories and feelings. At the same time, we tend to our clients’ fiscally-related anxiety, relational conflict, shame, avoidance, depression, and self-sabotaging behaviors.

     Money itself lacks emotion, yet it is an ever-present trigger for strong emotions. If you have any doubt, consider the often irrational reactions to every overnight stock market crash of the last century. From fear-based sales and cash hoarding to suicide after a loss, money has the power to elicit intense responses in us.

     In order to be effective clinicians, we must also develop competence as business people. This includes utilizing best practices and effective decision-making strategies to create profitable, functional enterprises. Understanding the basics of leasing, banking, investing, tax strategies and retirement planning are crucial elements of a healthy practice.

    This doesn’t require expertise in economic psychology, but rather, consistent attention to these under-addressed issues in the practice of psychology. Developing confidence in creating savings, managing debt and tax planning will ensure a stable practice, as well as a more powerful set of clinical skills. Keeping it simple, starting small and seeking help will enable you to flourish.


     Consider your immediate response to the topic: was it curiosity-arousing or slightly panic-inducing? Every necessary skill is learnable. Take this slowly and be as kind to yourself as you would to a client who is confronting a challenging issue. It is likely this is not merely an exercise in numbers – it may dredge up family history, good and bad past decisions and so much more that has brought you to this place today.

    Commit to clarity and consistency. This is not a one-time exercise. This is necessary for the long-term well-being of your practice, clients and life. With a firm commitment to your financial health, money-related stress will be reduced and satisfaction with your professional life will grow.


     Sit down during an unpressured interlude and, with honesty and compassion, write down as many of the tangible financial details of your practice that you know or can easily research (such as by going online to your bank), including sources of income such as session, consulting and speaking fees; book or recording royalties or residuals or product sales.

     Consistent monthly expenditures such as rent, online advertising, phone and internet fees, office supplies, health insurance, payroll, credit card processing fees, bank fees and parking fees.

    Annual or semi-annual expenses such as malpractice insurance, professional association memberships, conferences, retirement account funding and licensing fees.

     Occasional expenses, such as furnishings and equipment, new computers or software and moving costs.

     Dig deeper

     Next, consider the less tangible things, adding to this list as appropriate. Journal on the following, and how they have (or have not) affected the health of your practice: Uncollected debt such as late cancellation fees, bounced checks or expired credit cards.

    Incomplete or inaccurate billing, including coding errors or coordination sessions with another therapist where your time went uncharged.

    Failure to increase fees consistently.

    Speaking fees you never requested or expected.

    Website creation and maintenance costs.

    Ineffectively marketing yourself (time equals money

    in our world, and what’s the point of spinning your wheels?)

     How transference/counter-transference issues affect your interaction with clients and vendors regarding money.

Have you delegated so much you have no idea how your business operates?

     Ethical issues related to how you manage money such as retaining a client longer than necessary because of your financial need, failing to collect late-cancellation fees or punishing a client with overly rigid enforcement of late fees and reducing a fee without solid rationale, etc.

     Seek further education, support and consultation. The internet contains an abundance of resources. There are many books and skilled professionals available for consultation, including certified public accountants, certified financial planners, and continuing education courses. There are apps and online calculators, pre-made spreadsheets and other forms of automation to ease your experience.

     Ultimately, economics and psychology are closely related fields and processes. There are multiple interlocking parts to economic issues, including our socialization, education, attitudes, beliefs and expectations. Clinicians may not be maximizing their practices because they lack training in financial literacy, business management and practice development. Exploring and developing a well-rounded understanding of money and how it influences behavior results in a healthier, and more rewarding, practice on multiple levels. 


References available from the author.

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Gretchen Kubacky, Psy.D., is a California health psychologist and certified bereavement facilitator. She is the author of Moving Through Grief: Proven Techniques for Finding Your Way After Any Loss and The PCOS Mood Cure: Your Guide to Ending the Emotional Roller Coaster. She is also the Editor of The Los Angeles Psychologist magazine and a board member of the Los Angeles County Psychological Association. She incorporates financial health into a comprehensive discussion of mental health, physical well-being and relational health. Her work in grief counseling includes the financial concerns of both the dying and those left behind.. Her email is:

Laws, Risk Management, Ethics Important for Psychologists

By Samuel Knapp, Ed.D., 

Michael Gottlieb, Ph.D., and

Mitchell Handelsman, Ph.D.


     It is important for psychologists to know and follow the laws that govern their profession. The best psychologists appreciate the importance of ethically informed risk management strategies and the role that virtues and ethical principles play in their practices. In addition to adhering to the laws that govern their profession, best practices for psychologists include using good risk management strategies and relying on a sound ethical framework to guide decision-making.


     Legal requirements governing the practice of psychology are found in statutory practice acts, regulations of state boards of psychology, and other state and federal laws, such as mandatory reporting laws for child abuse or the HIPAA Privacy Rule. The regulations of licensing boards typically require psychologists to follow the  APA code of ethics, or some variation.

      Laws and regulations impose affirmative obligations on psychologists and layout prohibitions. For example, laws require psychologists to keep records of all their patients. But, if a prospective patient called a psychologist inquiring about services and the psychologist decided not to accept the prospective patient, the ethical floor of keeping records does not apply, and the psychologist has no legal requirement to document the encounter.

Risk Management

      Good risk management strategies are designed to keep psychologists from being disciplined by a regulatory entity, such as a licensing board or ethics committee, or from being subject to a malpractice suit. Risk management strategies reduce the likelihood that a complaint will be filed or found meritorious.

      The best risk management strategies are based on overarching ethical principles such as beneficence (promoting the wellbeing of patients), non-maleficence (avoiding harm to patients), respecting patient decisions, keeping promises made to patients, treating patients fairly and public beneficence (protecting the wellbeing of non-patients). They often go beyond the minimum required of psychologists and promote patient or public wellbeing.

     For example, in a case where a prospective patient sought services from a psychologist and did not like hearing the psychologist had no openings, the encounter was not with a patient and the psychologist had no obligation to document the interaction. Nonetheless, a prudent psychologist may want to spend extra time with the non-patient and provide other options for seeking care. Additionally, the psychologist may wish to document the interaction because this disgruntled member of the public may file a complaint.

     Good risk management principles are aligned with overarching ethical principles

and personal virtues. Any strategy that appears to harm a patient or violate an overarching

ethical principle should be reconsidered. These anti-ethical strategies are false risk

management strategies because they needlessly alienate patients or clients from their

providers and, in the long run, may increase the likelihood of a complaint being filed.

     For example, some psychologists still use pre-written, no-suicide contracts when they encounter suicidal patients, under the assumption that these contracts protect them if the patient died at their own hands. However, no evidence supports the utility of such contracts and they can be off-putting or convey that the psychologist is more concerned with their potential personal liability than the wellbeing of the patient. It is a better risk management strategy to allow patients to tell their stories, convey caring for them, and collaboratively develop safety plans to prevent suicide attempts. 


     Psychologists tend to do their best when they incorporate ethical principles or values into their daily practices and decision-making. Ethics are more than just a finite set of prohibitions and obligations.

     They also include the desire to live up to one’s deepest values, cultivate virtues such as humility and prudence and strive to reach the professional ceiling. For example, implementing positive aspects of ethics may include giving special attention to the message on their answering machine or the statements on their websites concerning accepting new or returning patients.  Such messages help inform prospective patients who would otherwise be waiting for a return phone call and would feel frustrated or disappointed to learn that the psychologist had no openings. Although some insurers and at least one state may require such notices, for most psychologists they represent adherence to the principle of public beneficence or acting in consideration of the wellbeing of non-patients and the virtues of respectfulness and compassion. 

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Samuel J. Knapp, Ed..D., ABPP, is a licensed psychologist in Penn. where he worked in community mental health centers in two rural counties delivering psychotherapy and crisis intervention services. He has written or edited 16 books, almost 100 peer-reviewed articles, and almost 500 professional presentations on ethics, suicide prevention, and other issues.

Michael Gottlieb, Ph.D., ABPP practices forensic and family psychology in Dallas, Texas. He is Board Certified in Family Psychology (ABPP) and is a Fellow of the American Psychology/ Law Society as well as four other APA divisions.

Mitchell M. Handelsman, Ph.D., is a Professor of Psychology and a CU President's Teaching Scholar at the University of Colorado Denver. He is an educator, researcher, licensed psychologist. He has published over 50 articles and book chapters—most on topics in professional ethics.

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