Are Psychotherapy Group Practice Owners Exploiting Pre-licensed Therapists?

Part One

Within the mental health field, debates are being had amongst many clinicians on whether psychotherapy group practice owners are engaging in unethical labor exploitation when they pay their employees, licensed or pre-licensed, considerably less than what clients and insurance companies are paying for an hour of psychotherapy.

To illustrate the ethical dilemma outright, here's an example of a common group practice structure where the owner has 15 pre-licensed associates, pays 3 supervisors, and runs all the business operations of the practice. She has hired someone for billing and credentialing, a bookkeeper, and an accountant. Her job within the practice is mainly overseeing the people she pays to run the business, and as with most CEO or director positions, lots of high stakes issues arise that she and only she has to handle. 

She runs payroll, monitors productivity and documentation, does the hard work of recruiting, hiring and occasionally firing. While she handles some aspects of marketing, she expects associates to do their own marketing and pay for their own malpractice insurance. It's best for associates to learn the ins and outs of the business so they can launch into solo practice once licensed, if they wish.

She pays each associate $40 per client hour, and requires them to keep 20 clients per week as a full time caseload. Insurance pays somewhere near $100 per associate hour, which roughly means associates keep 40% and the owner keeps 60% to pay for expenses and profit. 

In this scenario, each of the 15 associates make $3200 per month, and $38,400 per year.

The owner is pulling in $72,000 per month and $900,000 per year in revenue *for the company.* 

Someone ignorant about business math might become infuriated to think the workers are pulling in barely enough to cover their own personal expenses while the owner is making 72k per month. It's important to understand that the 72k pays for all other business expenses, and in this case the 3 supervisors, the bookkeeper and accountant, the billing and credentialing person, and so on.

If expenses include office space (as opposed to a fully telehealth based practice), the owner will be pulling in considerably less profit to keep for herself.

There's a world in which the owner takes 50% of the monthly revenue for herself - in this case, $36k per month. There's one where she only takes 10% of the revenue, which would be $7200 per month. Perhaps it could be as low as 5%, making her monthly income $3600 per month.

So she may be making around 10x what her associates are making (a 10:1 pay ratio), and she may be making roughly the same amount of what they’re making. We would only know for sure if group practice owners opened the books and showed us the business math, and any who are reading this are welcome to in the comments to help readers clarify!

Those who think capitalism as an economic-political system is mostly fair and good, one that promotes innovation and creativity and freedom, see no issue with any amount of wage gap between a worker and an owner, whether it’s 3:1 ratio or 100:1 ratio. She is the one who built this business from the ground up! She has created 15 jobs. She is helping 15 therapists accrue hours toward licensure. Once the associates are licensed they can open their own solo practice and, if they wish, grow into a group practice and run it however they want. She damn well earned whatever profit she keeps for herself, whether it's $20 a year or $20 million a year. Profits in a business are basically just a deserved reward for good, hard work in a business.

On the other hand, there are likely fervent anticapitalists who think that while there may be some tiny amount of exploitation going on in the microscopic little world of psychotherapy group practices, that this is not an interesting or strategic area of capitalism worth scrutinizing. We’re only able to buy cheap stuff on Amazon today because most workers in the global south are paid a penny a day— and Amazon warehouse workers are getting near minimum-wage all over the world. Shouldn’t we give a shit about real economic injustice?

Here are income disparities across S&P 500 companies that show what extreme income disparity can look like. In this graphic from the AFL-CIO “paywatch” website below you can see ratios not of 2:1 or 20:1 for bosses to workers, but disparities as wide as 10,377:1, 6076:1, 3769:1.

Most people likely feel there’s something wrong with a 10,000:1 pay ratio simply based on the sheer scale. Does anyone need to make 10,000 times more money than someone else? Should this even be allowed?

But for anyone who agrees that 10,000:1 is an unethical ratio and 2:1 is perfectly ethical, it’s important to wrestle with the why. Is it just the scale?

An easy picture to paint could be that in the 10,000:1 pay ratio situation, the average employee in the company is barely making rent and feeding their family, but the executives at the top are multi-millionaires. If the executives are millionaires specifically because they’re paying their workers so little, explaining why this is unethical is obvious. Labor exploitation as a concept is being defined before our eyes. Someone is benefitting by taking from someone else, and in a way that gives a great quality of life to the exploiter and a miserable one for the exploitee.

But even at a 2:1 ratio there is still an ethical dilemma to entangle, even if we agree that on paper a 2:1 ratio is numerically 5,000 times less terrible than a 10,000:1 ratio.

If an associate therapist is getting $3500 a month and the owner is making $7000 a month (or 42k/yr vs. 84k/yr, respectively), this could be a considerable difference in quality of life. If the associate is living in an expensive city with high rents, some medical expenses, and especially if they have children, $3500 a month may equate to relative poverty. Whereas, the differential in what the owner is making could be keeping them out of poverty and in a relatively comfortable place. There are plenty of other variables to consider in this hypothetical, but we can see from this that even a 2:1 ratio might be considered either unethical or at least worth our consideration.

A simpler way to think of the 2:1 ratio as ethically concerning, just for the sake of philosophical argument, would be to think of a family that lives in a house together. The father of the family built the house with his own hands, having paid for all the building materials with his own hard-earned money. The women in the family (mother, grandmother, aunt, two daughters) do all the cooking and cleaning, and the father gets a 2:1 ratio of certain allowances — because he built the house everyone labors in. He’s allowed to eat twice the amount of food, can have two pets (everyone else can only have one), and can spend twice the amount of time using the living room TV.

Some readers may just want me to stop philosophizing and say what I think about the situation — do I think a 2:1 ratio is unethical or not? Are group practice owners exploiting their therapists or not! 

What I think is that I really don’t know, but I don’t think therapists are wrestling with this enough. Lately I’ve begun agreeing with the sentiment that if all our cheap commodities are cheap due to dirt wages in poor countries, who cares about some 2:1 ratio in some highly educated, professional, middle class American situation. Really, who cares? 

But I also think there’s something significant about the 2:1 ratio because I think there’s an important relational dynamic to when someone gets twice as much money as someone. If that gap brings up resentments and anxieties for some, or defensiveness and ridicule by others, there’s something worth exploring more so we can get to the bottom of it.

So here I am wrestling with the issue, hopefully stoking emotion and thought from whoever has found this essay.

But zooming way out, what I find more interesting is that we aren’t trying to “conceptualize” the labor exploitation issue here with any coherent theoretical orientation. The obvious reason is we were only given theoretical orientations for understanding the human psyche in therapy school. How many of us know how to do case conceptualization of economic relationships and systems?

Case conceptualization of economic relationships and systems

We all love a good case conceptualization. Conceptualizing a new therapy case and doing it well is like trying to solve a puzzle in service of holistically understanding another human being in order to help them.

But conceptualization leans heavily on theoretical orientation, and not every theory is compatible with every other one. A strictly EMDR therapist doesn't necessarily think about “defense mechanisms.” An IFS therapist may not necessarily assess someone's “attachment style.” A psychoanalyst and a CBT therapist may not even speak the same language!

For all of us looking at a therapy group practice and asking what kinds of pay ratios are or are not ethical, how are we conceptualizing the case?

If we look beyond a therapy group practice at other businesses, industries — capitalism as a whole on the global scale! — what theoretical orientation are we using to understand this?

In the next part of this series I’m going to explore an unconscious theoretical orientation that I think most therapists are using to think about most matters of social issues, economics, and politics. It’s a concept written about by late British philosopher Mark Fisher and it’s called Capitalism Realism. After we thoroughly understand Capitalist Realism and how most of us are under its influence, we’ll explore other and arguably more helpful ways to conceptualize capitalism.

After we do that, we’ll have some theoretical bearings to understand whether psychotherapy group practice owners are exploiting their employees, and what can be done about this and similar issues within the field and beyond.

Read Part 2 here.