Therapist Survey: Subleased Office Space (Part 4)

This is the fourth post in a five-part series of articles based on a July 2010 survey of therapists regarding office space subleases. Previous articles examined fees and amenities offered, an analysis of factors related to deciding which practice to affiliate with, and how referrals and emergency coverage issues are handled.

The most useful part of the survey was the advice given by therapists about renting office space. Experience is the best teacher, and therapists participating in this survey have either rented space from another therapist, or are a "landlord" themselves, renting space to other therapists (or, in some cases, they have experience on both sides of the equation).

Therapists provided guidance for what questions to ask/issues to consider when subleasing space:

• What does my rental fee include? (Billing, scheduling, referrals, consultation group, marketing, inclusion on practice website?)
• Ask about additional fees up front: Are any fixtures to be added or modified, and who will be responsible for paying this fee?
• Ask for a full disclosure of costs for the space and for how much profit the therapist will make from the rent/fees you will be paying them.
• "Consider sharing space with other independent therapists over renting space from a therapist. The costs can be cheaper, there is more equality in decision-making, there are no hierarchies, and there is full disclosure about what you are paying for and what you are getting."
• Will I be getting referrals?

A couple of therapists provided their ideas of a "model" situation:

• "I would want 100% of my counseling fees and pay a monthly rental fee. I would pay per referral, if referrals were given to me. I would not sign a non-compete, because clients ethically should not just be handed over to someone else if I decide to leave. I would want a very explicit plan for how call-ins to the office were handled, and how I would know that my calls would be mine. Personally, I would want my counseling philosophy to 'gel' with others in the office."
• "Try to get office/secretarial support, telephone, and a couple referrals per month."

"It may be helpful to start out renting space from another therapist when learning the ropes of private practice, but it is important to know exactly what is entailed in the contract, how decisions will be made, and what actions will be taken to address concerns about the space or services," one therapist wrote.

Others gave advice on which issues to focus on when selecting a practice to affiliate with:

• "Check for compatibility of clientele and for confidentiality issues."
• Look at the general style of the office (culture, feel, fit)
• "I have done a percentage before, but I believe a flat fee is best, because you know how to plan."
• "Each therapist should share either similar values, or be compatible. They should know the reputation of the persons they are renting with or to/from. When sharing with several people, they all should get a say about who might also join the practice."

It's important to examine the whole financial picture, not just the rental fee.

• "Private practice has many hidden and unforeseen costs: legal, accounting, consultation, and practice building." Consider these when choosing a practice as well.
• "Compare costs and what that cost gets you in amenities."
• "A private practice is a business, and to assume that one gets referrals just for being there is naive. Business development is complex, time-consuming, and costs money."
• "Remember that going out on your own can be challenging too. If you share office space or a building, you can share office equipment, phones, and Internet. This can save you a lot of money. Not to mention electricity and office materials, such as paper towels, etc. In the office I am in, I do not have to clean the office either, as this comes along with the rent."

One therapist provided an innovative suggestion: "If you start with a percentage arrangement, make a cap and change to a flat monthly fee once the cap is consistently reached for six months to one year." This will help the renter decrease his or her overhead as he or she gets more successful.

Be sure to ask about how referrals are handled. 

One therapist noted, "I was fortunate to have a large referral base prior to coming to this office, and I had a lot of referrals that went directly to me. Sharing referrals can be challenging if you are just starting out, but as you continue to build your referral base, people will begin asking for you. In a shared office, this can be challenging, as everyone wants to have business."

One therapist recommends a careful self-analysis before seeking a practice affiliation. "Where are they in their profession? What is needed? How much time do they want to make available to do the support work, marketing, and business development?" Ensuring you select the practice that provides the services you need/expect will make the arrangement a beneficial one for both the subleasing therapist and the practice or "landlord therapist."

Another therapist cautions peers not to simply limit their focus on the financial aspects of the selection process. "By far and away it is most important that you know and trust the personal and professional ethics that the other therapists have in the office you are using. Everything else comes down to money, and that's not as critical."

Compatibility is key. "It is important to know the therapists, or at least talk to them in depth, to see if your personalities are a fit." Another therapist added, "Don't rent from a therapist who wants to tell you how to do therapy. I have never had that problem, but others have."

"Know the dynamics of the other partners with whom you share space. Seek quality, ethical concerns, and professional compatibility. Being picky is best."

Several therapists advised getting the contract terms in writing. "Read it carefully and compare it to either past contracts or standard ones," one noted. Another added, "Get everything in writing, and have each therapist sign it. This prevents misunderstandings and complications at a later time." Make sure the contract notes the specific rights and responsibilities of each party. "Read the contract! Know exactly what you are getting."

And get everything hammered out up front, if possible. "Negotiate before signing; doing so afterwards gets thorny."

Even finding the perfect office sublease situation, getting into private practice can be difficult, as one therapist reminds us. "You need to be fully licensed, in network with many insurance providers, and have a good base of clientele you might bring with you. Even with that, it is difficult for about a year to make any money."

One concluded, "I've been very fortunate, but it's important to have a contract with those in the same office so that all expectations are understood by all."