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with Julie Hanks, MSW, LCSW, BCD

3 Ways Managed Care is Hurting Your Practice

3 Ways Managed Care is hurting your

This is not the first time you’ve heard me share my perspective on the problems of building private practice based on managed care. The original intent of these third-party companies was to ensure equity for those who receive treatment, but the actual results have been far from successful and have caused a myriad of problems. Some have even described managed care as the cause of the mental health care crisis. And while managed care wreaks havoc on the field as a whole, this system is also problematic for private therapy practices. As a clinician, I can certainly attest to this. My guess is that you can too. Here are the 3 main ways that using managed care panels may be hurting your practice:

1) Micromanagement of Treatment

Managed care panels have a way of micromanaging you in a supposed attempt to make you accountable. This means that a therapist often has less say and control in the type, length, and modality of treatment provided to the client, who has also has less input in the process. Think about it: an outside, commercial middle-man is dictating how you, the professional, help your client. It’s easy to see how such a system lends itself to inadequacy and substandard care.

The mandatory diagnosing of clients is arguably the most deplorable part of using managing care panels. You are often required to provide a diagnosis, even if you do not believe your client has one. Even worse, some companies only accept certain kinds of diagnoses, which only further restricts your ability to provide ethical and accurate information and care.

2) Business Inefficiency

Communicating with managed care companies is a nightmare. There’s excessive paperwork to fill out and phone calls to make. The hassle is never-ending, and it takes away from what you want to do: use your professional skills to serve your clients. Not only is your business inefficient and time-consuming to operate, but by looking at the math, you’ll discover that your overall costs are increased as well. Even analyzing things solely from a business perspective, it’s evident that using managed care is not a desirable model.

3) Payment Problems

When working with managed care their contracted rates were 40-60% of my full fee. Not only was there a low fee, but there was also the frustration of denied or delayed payments. There would sometimes be problems with the paperwork, or things would get lost in the tedious communication, and I wouldn’t get paid for weeks or even months. I wasn’t being sufficiently compensated for my work, and I wasn’t always being paid in a timely manner. It was disheartening to say the least. It is emotionally and financially draining, and we deserve better.

These are three of the major ways managed care can hurt your practice (although there are certainly more). Thankfully, there’s a better way. A way you can work less and earn more. I’m excited to share you with in upcoming posts about how transitioning to a fee-for-service model helped me build a thriving practice.

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3 Ways Managed Care is Hurting Your Practice

Dr. Julie Hanks, LCSW

Licensed therapist turned business consultant Dr. Julie Hanks, LCSW has over 20 years in the mental health field & 12 years in private practice as owner of Hanks consults with therapists all over the world to build a fulfilling and profitable therapy business and attract cash-pay clients through technology and social media. Follow Julie on Twitter & Facebook.


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APA Reference
Hanks, D. (2015). 3 Ways Managed Care is Hurting Your Practice. Psych Central. Retrieved on February 22, 2020, from


Scientifically Reviewed
Last updated: 17 Feb 2015
Last reviewed: By John M. Grohol, Psy.D. on 17 Feb 2015
Published on All rights reserved.