Formation of Independent Practice Associations to Protect Private Psychotherapy Practice

Two or more psychotherapists who provide services are considered competitors.  Agreements between psychotherapists that obviously restrain competition are “per se” illegal (i.e. intrinsically illegal) and include:

1. Setting or “fixing” prices..

2. Dividing markets.

3. Refusal as a group to provide services to customers for financial benefit (i.e. boycotting).

As matter of law, it is illegal for psychotherapists to agree on:

1. The rates they will charge for psychotherapy services.

2. Which community, population or patients they will and will not serve for financial benefit .

3. Insurance companies or other third-party payers with which they will or will not contract for financial benefit.

A group of mental health professionals can come together to discuss ways to collaborate and provide a higher quality of care provided the primary focus of their conversation is how working together in their formal association can provide a significant benefit to consumers.  Professionals in these conversations can discuss the cost to deliver the care provided, when, and only when, that conversation is ancillary to providing services which greatly benefit consumers. The primary purpose of conversation must be plans to deliver services that benefit consumers in a way that could not otherwise be provided by professionals practicing solo.

Individuals can form a committee to discuss the formation of a business association.  At some point, their conversations and business planning must be structured within the context of an attorney-client relationship - forming an Independent Practice Association (IPA).  

Once formed, IPA leaders can talk about potential business practices including directing, coordinating, organizing, encouraging, steering, setting agendas , and discussions for the purpose of creating potential service delivery models that are pro-competitive, that result in competitive agreements, and secure a fair compensation for association members as a group. This acceptable plan making is contingent on their pursuit of goals that provide and develop means to deliver services likely to be improved by the association which create a more valuable benefit to consumers than could be obtained from individuals who are not associated. 

Guidelines to Legally Discuss Quality, Value and Price

 It is important to have a discussion regarding quality, value and price in order to determine whether or not your community and your potential members have an interest or even an ability to improve on the status quo. Psychotherapists might have to abandon the notion of forming an IPA if their community consists predominantly of solo private practice professionals who are close to retirement and professionals who have a high referral rate of cash pay clients. 

Those intending to organize a private practice association may encounter significantly more resistance from professionals who are close to retirement or have cash only practices.  That is not always true, since some professionals are more interested in sharing what they have learned; helping to create a future for newer mental health professionals.

In order to discuss fees for service among a group of professionals the framework for that communication needs to:

1. Recognize that quality is the degree to which services and treatment increase the likelihood of desired outcomes.

2. Define opportunities and means to improve quality.

3. Identify and define the value propositions in the list of quality improvement initiatives.

4. Identify the costs to implement and administer quality improvement initiatives as well as reasonable profit.

5. Clarify whether quality improvement can be implemented on a cost plus reasonable profit or a fair price within which individual practitioners can administer their contract requirements.

Potentially Illegal Topics of Discussion

 There are topics that should not be discussed among independent practice psychotherapists.

Here are a few important cautions:  

1. Never discuss price or cost among members unless the discussion is ancillary to quality and represents a potential benefit for consumers.

2. Members of an IPA may discuss price and cost set by Payers.

3. Members of an IPA should never have a "naked" conversation or exchange about setting any price for their services.

Michael G. Conner, PsyD is a psychologist in private practice and an owner of Private Practice Cloud, LLC a healthcare operation support business. His business currently supports The Independent Mental Health Practices Alliance(IMHPA). Dr. Conner is a member of the Board of Directors of Mentor Research Institute (MRI). He acknowledges Michaele P. Dunlap, PsyD, Executive Director of IMHPA, and President of MRI, as co-author of this article.