Fall 2016: Volume 72, Number 2
Book Review – Financial Management for Your Mental Health Practice: Key Concepts Made Simple
By Samantha Slaughter, PsyD
Time and again, I talk to mental health clinicians who have “no idea” about how to run their practices as businesses, state they want to “focus on the clients” instead of the business, or avoid thinking about their practices as businesses at all. If the thought of the business aspects of your practice brings up any degree of fear/worry/concern, then consider reading Financial Management for Your Mental Health Practice: Key Concepts Made Simple by Jeffery Zimmerman, PhD, and Diane Libby, CPA. This small, concise paperback book outlines and defines the basic principles of accounting practices and business management. Clinicians who are new to private practice will appreciate the basics offered in this book. However, even those clinicians with several years of experience will find the book helpful as the authors provide guidance on common business decisions one considers throughout the lifetime of a private practice.
According to the authors, they want to “teach you the basics in a manner that is straight to the point and pertinent to running an independent mental health practice… we have written this book to help you think about your practice as a business and better understand some of the basic accounting and financial principles necessary to be fiscally aware” (pg. xiii). They appear to have the experience to accomplish these goals. The authors wrote that Dr. Zimmerman is a “psychologist who has spent more than 30 years in private practice” while Ms. Libby is “an accountant who consults with mental health practices” (pg. xiii). More extensive biographies are on pages 87 to 88, providing potential readers with plenty of reasons to consider the authors as experts on the financial management of mental health practice. Their book, only 88 pages, covers a plethora of topics within chapters with titles such as “I Never Took an Accounting Class,” “Accounting and Finances 101,” and “Principles of Practice Management.” The authors define accounting terms, provide arguments for why one should utilize specific metrics for the business-side of a practice, discuss strategies for determining compensation for owners and employees, review retirement options, and offer insight into the business of practice in the final chapter, “Making It Work.”
The strengths of this book are its concise writing, easy to follow examples, and the providing of information that covers the lifespan of a mental health practice. There is no fluff in this book at all. The authors give clear, well-written definitions and explanations of terms and concepts. Unsure as to the purpose of a profit and loss statement? Chapter 2 tells you what you need to know in one paragraph. In addition, understandable examples allow readers to comprehend key concepts. The authors use a hypothetical practice’s budget to show how all the numbers work together. Finally, whether you are just starting a solo practice or considering hiring your next employee, there is something for everyone in this book. Chapter 2 includes information on setting up accounting systems and choosing an accountant while Chapters 5 and 6 review various compensation models and retirement options, respectively. All of the chapters end with a section called “How It All Fits Together” that summarizes the chapter’s information, giving readers an overview of what was just read.
Like any book, this one also has weaknesses. The concise writing, while a benefit to some readers, may be a hindrance to others. Some readers find multiple examples and more than one definition for a term helpful as they grapple with unfamiliar topics. Also, it should be noted that the book is based on the 2015 tax code. The tax code is something that changes annually, sometimes with important consequences to small businesses like the typical mental health practice. Unfortunately, there is no way to update this book on an annual basis. In an age when electronic media is the norm, it is regrettable that this book is not available in an electronic format that allows for easy updates. However, much of the basic accounting and management information presented is not defined by the tax code, so much of the book’s information should be accessible for many years.
In conclusion, I found this book to be a helpful guide in my practice. The clear definitions, suggested metrics, and discussion of common business decisions will allow me to enter my CPA’s office more educated and better prepared to talk about the future of my practice. I intend to refer to the book often as I take my group practice from infancy to maturity.
Zimmerman, Jeffrey and Diane Libby. 2015. Financial Management for Your Mental Health Practice: Key Concepts Made Simple. Camp Hill, PA: TPI Press.
ISBN: 0990344533; $24.99 new
Author’s note: While it is not customary to add a dedication to a book review, I would like to dedicate this book review to Steven Walfish, PhD. I answered an email request on a listserv by Dr. Walfish for reviews of this book. Unfortunately, Dr. Walfish died unexpectedly earlier this year. His encouragement of early career psychologists and his wealth of experience will be greatly missed. – SS
Samantha Slaughter, PsyD is a business consultant and the CEO of Integrative Psychological Services of Seattle (www.IntegrativePsychologySeattle.com) as well as a licensed psychologist. She is the Chair of WSPA’s Advisory Committee, serves as the APA Federal Advocacy Coordinator, and is a past WSPA Board member. Questions and/or comments about this review can be emailed to her directly at Samantha@IntegrativePsychologySeattle.com