Opening a Private Therapy Practice Part 1: All About the Numbers

Let me be honest: starting a private practice can be very difficult.  There are many websites and manuals with information on how easy it is to start a business as a Mental Health clinician; however these sources are often too simple in their explanations, allowing much room for confusion. When I went through this process myself, I had help and advice from many wonderful people; but to tell the truth, I struggled with what I needed to do first and in what order. It is because of this experience that I want to share what I have learned with you in an easy, three part series.

My hope is that this blog will not just be another How To manual, but one that offers guidance and clear direction. This process can be tedious and discouraging. Believe me, I understand the feeling of wanting to crawl under your covers with a dozen cookies because there is just too much to do and no obvious place to begin. So let me help! Start here!

This post explains the absolute first steps that must be completed as soon as possible. Keep in mind, there is a lot of lingo to learn here — so keep a notebook handy with all of the new information you are learning! 

What is a National Employer Identifier?

You may already be aware of this one, but just in case you are not— an NPI number, National Provider Identifier is a unique to you identifier as a healthcare professional. This is basically a way to consistently identity you from other professionals, over many years and practice locations. When I Google search my name and licensure, I have found a number of people with my name in this field! The NPI helps to differentiate me from these name doppelgängers. 

This identifying number never expires and will never be reassigned to someone else. If you move to a different state, it stays the same. If you close up shop and reopen years later, it is still the same (you can see how this is important in the case of poor care by a physician or practitioner). The reason it cannot be replaced or changed is that it is forever connected to your own personal social security number. It also does not specify where you are practicing, or even what you are practicing The number is just a number; it identifies nothing other than that you are a health care professional in some way shape or form. This all came about in 2005 and is enforced by the Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification Standard.

Assuming that you are moving into private practice after working in a community health or behavioral health setting, you likely are covered under a Type 2 NPI Number for organizations. These NPI numbers allow for the organization to company to bill for services that you provided, but you are covered by their umbrella. Moving forward into private practice, you will need to apply for a Type 1 NPI Number. You can obtain your Type 1 NPI number at nppes.cms.hhs.gov. Give yourself a couple of weeks to receive the number, as this can be a slow process. 

What is a Employer Identification Number?

An Employer Identification Number (EIN) is a type of Taxpayer Identification Number (TIN); which is an identifier used by the IRS (Oh yes, you also have to pay taxes and organize all of this for yourself now; but I can help with that!) Your personal social security number is also considered a TIN. This EIN distinguishes you as a business. Technically speaking, you can skip this step and use your own social security number; however going forward in your work you will be sharing this number with a number of insurance companies and other relative people that you are in business with. With that in mind, I personally like to keep those numbers separate. Also consider that in the future you may expand to include an employee or two; an EIN is definitely preferable over your own social security number in that case. 

Once you have completed these steps, you are on your way! Your next steps are covered in Part 2: how to find a practice location and make it your own.

TL;DR

A NPI number is a National Provider Identifier that you are required to have to practice any sort of health related service. You can apply for that here nppes.cms.hhs.gov.

A EIN is an Employer Identification number, also known as a Taxpayer Identification Number (TIN, EIN, it’s all the same thing), that you must have for your business. 

You will be asked to provide these numbers when you are communicating with health insurance companies and other entities. Believe it or not, you will probably have these 10 and 9 digit numbers memorized by the end of this!