How can a sole proprietor effectively anticipate which insurance

providers to sign contracts with in order to attract a larger client base?

Hannah Odell
Candidate Number: 0176

SL IB Business and Management

Word Count: 1722

Introduction

Page 3

Payment

Page 4

Analysis - SWOT

Page 5

Page 6

Internal

Strengths

Page 6

Weaknesses

Page 6

External

Page 7

Opportunities

Page 7

Threats

Page 7

Conclusion

Page 9

References

Page 10

Supporting Documents

Introduction
In 2008, the mental health parity law and federal parity law were passed which requires that
mental health services (counseling, rehabilitation for substance abuse, etc.) be covered by
insurance in a comparable way to normal physical health insurance. This law allows a patient or
client to visit their mental health professional as many times as needed in one year, something
that used to be limited. Even if a patient included mental health coverage in their plan, their
therapist might not accept that particular insurance.

Licensed counselors often have to deal with forming contracts with insurance companies. The
process of creating a contract can take a long time if communication is not immediate. These
contracts all include a fee schedule, and allow the mental health professional to see the
policyholders of that particular carrier and under what financial terms work best for each client.
By signing this contract, counselors are required to accept the feed and keep a record of all cases.

Robert Odell, MSW, LICSW, runs his own private practice as a licensed counselor and social
worker with around 40 patients. He has to deal with insurance companies every week to insure
that his clients get billed for their sessions and he earns his money. Odell offers multiple payment
methods: pay in cash or pay a co-pay while insurance covers the rest. To have to pay the smallest
amount, Odell must have signed a contract with a particular insurance company entailing what
he would earn in a 50 minute appointment. A different contract must be formed with each
insurance company that Odell chooses to work with. New insurance companies have been
forming in the last couple years and Odell must anticipate if clients will use that insurance and if
he should create a contract with them. Since Odell is a sole proprietor, he does not have anyone

to help him create these lengthy contracts, leaving him alone to manage his time between
providing help for his clients and trying to get new ones.

The problem this essay will address is how Odell can effectively communicate with new
insurance companies he wishes to work with while at the same time maintain a steady practice.
Using SWOT analysis, I intend to look at the effects of creating contracts with new insurance
companies and how those will affect the practice as a whole.

Payment
The simplest way Odell charges clients is straight from pocket on a credit or debit card. These
rates are higher than if the client were to be covered by insurance. Washington State Law
requires that everyone be charged the same amount even if it becomes discounted by an
insurance provider. Odell charges 140 dollars for a 50 minute appointment and 180 dollars for an
80 minute appointment which are never discounted to a private individual.

Working with around a dozen insurance providers, Odell must create a contract with each one.
The rate for one 50 minute session can range between 57 dollars and 112 dollars. Since insurance
companies will not target him, he must approach them. Each contract entails how much Odell
will get for each session with a client under that particular insurance company. He is able to view
every policyholder and can easily view a financial term that is best for them. Each client using
insurance must pay a deductible at the beginning of each year in order to receive coverage. Once
the deductible has been met, the insurance provider will pay Odell the agreed price and the client
will pay a small co-pay. If the deductible has not been met, the client will pay in full the agreed

price between Odell and the carrier until all of the deductible has been payed. If a client comes to
Odell who has a plan under a provider that Odell has not signed a contract with, he will still
make a claim and insurance will cover a smaller amount, resulting in a larger co-pay than if
Odell were to have a deal with that particular company.

Also, some providers are so large that effective communication cannot be utilized. Even though
most of the communication is done electronically, these providers have countless emails and
calls coming in every day so one-on-one communication is not always possible. From start to
finish, initializing, writing, approving, and signing a contract can take up to six months. Even
though Odell does not spend all of his time for six months doing this, it can slow the response to
changes in the market as well as dramatically decrease speed of decision making. If any new law
were to pass regarding health care and mental health services, the contract would have to be
revised which could take up another lengthy time. In the last year, Odell has signed two contracts
with new companies to insure he can provide counseling for a larger range of people.

Analysis - SWOT
Signing contracts with various insurance carriers is very important, but at the same time, Odell
must consider how much he gets paid. To look more on the effects of a contract with a new
company, the SWOT analysis tool can be used.

Internal

Strengths

Having more plans with a variety of carriers will allow for a bigger client base. People
will be motivated to come to Odells practice because of the deal hes made with their
provider.

Also, this makes billing easier for Odell. For companies that dont have a deal with Odell,
he must send a claim for 140 dollars and the return amount is unknown. The more
carriers Odell has approved, the less mystery and guessing there will be when it comes to
earning money. With contracts, the price that agencies will pay is stated and will remain
the same for every client under that insurance.

Weaknesses

If Odell were to approach a new insurance company but he didnt agree to what he would
be paid, this can cause a setback in new client growth. If a client comes in with insurance
that Odell doesnt work with, that client will in turn pay a larger co-pay than if Odell
were to work with that agency.

Also, these contracts are time consuming. As stated before, it can take up to six months
before everything is finalized and signed. In that time, clients with that pending provider
could have not liked the fact that they had to pay a large co-pay and could have already
left Odell for another therapist. Odell works a four day week and his schedule is usually
fully booked weeks in advance. This does not leave much time to quickly reply to any
phone call or email regarding the outstanding contract.

External

Opportunities

A new insurance provider could surface, opening up the opportunity to create another
contract. It doesnt cost Odell any money to create a contract, only time. If no clients are
coming in with this new insurance, this will allow Odell more time to finalize the contract
instead of hurrying to finish because a client doesnt like paying a large co-pay.

Also, accepting more insurance agencies will make Odell more desirable to possible
clients. If a new client is on a budget, they may be unwilling to pay in cash or cannot
afford it. By creating new contracts, Odell will be able to target a larger population. Other
therapists in the area may not have as wide of a range of accepted insurance carriers as
Odell, making his service superior.

Threats

Competitors can often cause a threat. Odell is not the only counselor who lets people pay
with insurance, obviously, so that doesnt limit other counselors in the area to which
providers they can use. They can just as easily create contracts with new companies,
making Odell look less distinct among other professionals.

Also, even though counselors are not trying to heavily compete with other counselors,
marketing can still be done. Odell has set up a website for his practice that includes
content that he believes will be appealing to potential clients, making his website easier

to find. Other Seattle counselors also have websites and potentially could be more
popular because of factors like time and money.

Time is a factor that can affect popularity because even though Odell has been working in
Seattle for 16 years, other counselors have been there longer. This allows for the
competitors to set up their market and establish their client base. The Internet has really
taken off in the last couple decades and has become immensely important in the business
world. Odell has had his website for seven years, but only recently has it been optimized
for the client. Other therapists could have had their websites developed for longer and
that could be what attracts clients.

Money is another factor that can affect the amount of new client growth. Odell hires
someone to work on his website for him, and over time, the cost will build up.
Competitors could be more successful because their website could be easier to use, more
visually appealing, or has more features. All those come with more money spent. Odell
needs to develop his website to be above standard, but can only do that if he generates
more revenue.

Conclusion
Robert Odell has run his own private practice for over 16 years. Hes been working with
insurance companies all that time to make sure his practice does not put clients in a bad financial
positions and that involves creating contracts to sign. These contracts are often a lengthy process

because effective and rapid communication is not always an option, resulting in a process that
can take up to six months. Once these contracts have been made, they require no maintenance,
only that Odell must keep a record of all clients under that insurance and all their appointments.

With this new a developing world, new insurance companies are becoming more prominent, and
more clients are coming to see Odell with these carriers that he doesnt offer. The question
proposed was how Odell can anticipate which companies to sign contracts with to avoid wasting
his time. This essay has proved that signing with new companies before he has clients under that
insurance will allow him to spend more time working on the contract, as well as eventually
leading to a larger client base if the carrier is not recognized by other counselors and therapists in
the area.

References
Odell, Robert. "Counseling & Therapy - Couples, Relationships & Individuals." Seattle
Counseling. Published 2011. http://seattle-counseling.com
"Does Your Insurance Cover Mental Health Services?" Accessed 20 Feb, 2015.
http://www.apa.org/helpcenter/parity-guide.aspx.
Odell, MSW, LICSW, Rober. "Interview with Robert Odell." E-mail interview. 19 Feb. 2015.