Private Practice vs. Agency Work: The Honest Tradeoffs

The dream is common: No more productivity quotas. No more mandatory staff meetings that could have been an email. No more assigned clients who aren't a good fit. Just you, your ideal clients, and a comfortable office (or a comfortable home office).

But leaving agency work for private practice isn't just a job change; it's a shift from "employee" to "business owner." The safety net disappears, replaced by autonomy—and responsibility.

Who this is for

This guide is for agency clinicians (CMH, group practices, hospitals) who are burned out or feeling capped in their current role and are seriously considering the leap to solo private practice.

What you’ll walk away with

You’ll get an honest, side-by-side comparison of the four biggest trade-offs: Money, Admin Load, Clinical Autonomy, and Community. No hype, just the reality of what it takes to run your own shop, including the "First Year Dip" that no one warns you about.

1. The Financial Reality: Ceiling vs. Floor

This is usually the main driver for leaving agency work. The math is compelling, but the risk is real.

In agency work, the floor is high but the ceiling is low. You get a guaranteed paycheck, health insurance, paid time off, and maybe a 401k match. However, your salary is capped. You might get a 3% raise, but you will never double your income without working double the hours, which is physically impossible.

In private practice, the ceiling is high but the floor is zero. You set your rates, and the earning potential is significantly higher. However, if you don't see clients, you don't get paid. If you get sick, you don't get paid. You pay your own self-employment taxes (15.3% on top of income tax) and buy your own health insurance. You trade stability for potential. You must be comfortable with fluctuating income, especially in the first year.

2. The Admin Load: "Just Do Therapy" vs. "Do Everything"

In an agency setting, you have an intake department, a billing department, and an IT guy named Dave. Your job is to see clients and write notes. The downside is that you often have high productivity quotas (e.g., 30+ client hours/week) that lead to burnout. You have no control over the software you use or the processes you follow.

In private practice, you are the intake department. You are the billing department. You are the IT guy (sorry, you have to be Dave). You spend 20-30% of your time on unpaid admin work: returning calls, fighting with insurance (if paneled), marketing, and bookkeeping. The upside is that you set your own schedule. If you want to see 15 clients a week and focus on quality over quantity, you can (if the math works). You choose efficient software (like Soli) that minimizes the pain. You trade specialized support for control over your time.

3. Clinical Autonomy: Assigned vs. Chosen

In agency work, clients are assigned to you based on availability, not fit. You may be required to treat conditions you aren't passionate about or trained for. Treatment duration may be dictated by agency policy or funding sources, such as a strict "6 sessions max" rule.

In private practice, you choose your niche. You market to the specific population you love working with, such as "High-functioning anxiety in tech workers." You screen clients. If it’s not a good fit, you refer out. You decide the treatment modality and duration, within ethical and medical necessity limits. You trade a steady stream of referrals for the freedom to do your best work.

4. Community: Built-in vs. Built-by-You

In an agency, you have colleagues down the hall. You can debrief a tough session over lunch. You have built-in consultation and supervision. The downside can be office politics and toxic management that drain you.

Private practice can be incredibly lonely. You might go days without seeing another adult who isn't a client. You have to actively build your network. You join consultation groups, go to networking events, and schedule coffee dates. You trade social proximity for intentional community.

The "First Year Dip"

Here is the secret no one tells you: You will likely make less money in your first year of private practice than you did at your agency job.

This happens for three reasons. First, the ramp-up time: it takes 3-6 months to fill a caseload. Second, startup costs: you are buying furniture, a website, and a laptop before you have made a dollar. Third, credentialing: if you take insurance, panels can take 90-120 days to approve you. The solution is to not quit your job until you have a "runway" of savings.

Common Mistakes

One common mistake is undercapitalizing. Quitting your job with $0 in savings is dangerous. You need 3-6 months of living expenses saved. Another mistake is ignoring marketing, thinking "if I build it, they will come." They won't. You need a website, a Psychology Today profile, and a networking strategy. Also, do not undervalue your time. Setting fees too low out of guilt ("I can't charge $150!") often leads to realizing you can't afford to pay your rent and taxes. Finally, going it alone is a recipe for burnout. Not joining a consultation group leads to clinical drift and isolation.

Practical Next Steps

First, run the math. Calculate your "survival number" (minimum monthly expenses). Then calculate how many sessions at your ideal rate you need to hit that. Second, consider starting "hybrid." Many clinicians start private practice on the side (evenings/weekends) while keeping their agency job for stability. This lets you build a caseload before you jump. Third, find a mentor. Talk to someone who made the leap 2-3 years ago. Ask them what surprised them most.

The bottom line

Private practice isn't for everyone. It requires entrepreneurial grit and a tolerance for risk. But for those who value autonomy and want to build a career on their own terms, it is often the only path to long-term sustainability.

Sources

• (Based on general industry standards for mental health career development and self-employment tax guidelines.)