The "Squeeze": Why Starting a Private Practice Is Harder Than Ever
Many therapists want to “make it” in private practice, and for good reason. When a private practice is stable, it’s more profitable for the therapist and less stressful than working in settings like community mental health or high-volume agencies.
As it goes, when everybody wants the same thing, that thing becomes more difficult to attain. Competition is one of the four factors that make up what I’m referring to as the “squeeze,” or the pressures that are closing in on therapists from realizing their dreams of private practice.
In this post, I’ll explain the four primary pressures making up the “squeeze” and what therapists need to do to make it in private practice in 2025 and beyond.
The four (additional) pressures facing private practice therapists
On top of the existing pressures therapists have always dealt with (inadequate pay, burnout, etc.), I believe that competition, the economy, tech startups, and AI in search are creating an even more difficult environment for private practices to grow.
Factor #1: Competition
It’s fantastic that more mental health professionals are choosing the entrepreneurial route, but that, of course, equates to increased competition.
In 2020 to 2021, during the mental health crisis, the industry could withstand competition since the demand for services was so high. But as things have leveled out, many private practice owners significantly struggled after demand decreased.
Decreased demand combined with 7% more competition in your area every year means that therapy-seekers have more options than ever, making it increasingly difficult for existing and nascent private practices to grow.
Factor #2: The economy
Everyone’s favorite topic! The economy.
The average cost of living is up significantly. $100 in December 2020 has the same purchasing power as approximately $123.50 in December 2024, reflecting a 23.5% cumulative increase in four years.
When groceries and gas are more expensive, optional services like therapy are deprioritized. Fewer people are in a financial position to work with a therapist (especially a private pay therapist), and with the looming threat of tariffs on the rise, consumers are more budget-conscious than ever.
Factor #3: Tech start ups
It’s no secret that mental health tech start ups are negatively impacting privately practicing therapists.
In my view, these start ups fall into three categories, each affecting therapists differently.
Category #1: Insurance matchers
Companies like Alma and Headway are making it easier than ever to find an in-network therapist. Accepting insurance used to be a differentiating factor in the private practice world, but with the help of over 1 billion dollars in VC funding, tech startups can optimize the therapist-matching experience more than ever.
These platforms of course benefit privately practicing therapists who pay to be listed, but therapists not on these platforms are struggling more than they used to to sign insurance-based clients.
Category #2: On-demand therapy platforms
You know the ones: Better Help, Talkspace, etc. Startups like these provide the 1-click checkout experience of therapy, which consumers love. As we know, these platforms cheapen therapy and pay therapists abysmally, further impacting society’s devaluation of mental health workers’ labor.
Category #3: AI therapists
If I see one more AI mental health start up, I think I’ll cry 🫠
Although there is promise in the efficacy of AI chatbots, it’s mindbending to consider that a chatbot is competing for the same dollars that a therapist is.
You and I know that AI cannot replace the healing that takes place in therapy, but it’s clear that chatbots will have their place in mental health treatment going forward. I’m sure some consumers will prefer this route (cheaper, “1 click checkout” accessibility, etc.), which chips away at privately practicing therapists’ share of the market.
Factor #4: AI in search
The prevalence of AI in search is something that my team and I think about and experiment with daily.
The use of ChatGPT and similar platforms as search engines is on the rise, and Google is clapping back with its own version, AI Mode. This isn’t necessarily a bad thing, and SEO certainly isn’t dead. But optimizing a practice’s digital presence is becoming more difficult and more time/resource-intensive. This means some forms of digital marketing (like SEO) are becoming less accessible to the everyday, privately practicing therapist.
How to make it in private practice in 2025 and beyond
So where does that leave therapists in private practice?
With choices.
Choice #1: In-network or private pay?
I predict that there will be a more dramatic stratification between in-network therapists that get the majority of their business from insurance-matching platforms like Alma and private pay practices (either solo or group) who get their business from referrals, directories, and digital marketing.
Going the insurance route will require less and less administrative work, but I doubt reimbursal rates will substantially increase.
Going the private pay route will continue to be more profitable, but costs associated with marketing will increase due to the “squeeze.”
Choice #2: Go big, or go home?
Therapists who want to grow private pay practices will need to go big with their digital marketing, or they will struggle to bring in enough leads (and trust me: you will need a high volume of leads).
The days of spending a couple thousand dollars on 30 days of SEO work are behind us. Therapists must commit to a digital marketing strategy for months or years and be willing to invest with results-driven professionals who focus on business results (like revenue generated), not deliverables and vanity metrics like increased traffic.
If you want the end result of a thriving, private pay practice, it will simply cost you more to get there.
I believe that building a successful, private pay practice is still completely possible, but fewer therapists will be able to reach this level of success. It’s a sad change to see; it wasn’t like this when I formed Place Digital (formerly TherapieSEO) five years ago. But there is absolutely a path forward. The question is, are you up for it?
Consult with us
We specialize in scaling private pay group practices. If this is a goal of yours, I highly recommend reaching out to our team.
We’ll assess what you currently have in place and make personalized recommendations for what to pursue going forward, whether that’s a potential partnership with us or another marketing strategy altogether.
We look forward to hearing from you!
