Case Study:
Multi-Clinician Psychology Practice
The Challenge
A thriving multi-clinician psychology practice faced a serious threat to its financial stability when new state worker classification laws were introduced.
Legal counsel advised transitioning all contractors to employees—a move that would have increased costs by nearly a third and forced a complete restructuring of the business model.
Key challenges included:
- Complying with new worker classification laws without jeopardizing profitability.
- Maintaining contractor flexibility where legally feasible.
- Strengthening financial controls and forecasting systems.
- Correcting accounting errors that were reducing cash flow and clarity.
- Enforcing HIPAA and data compliance across a growing team.
The practice needed a way to stay compliant and financially stable while continuing to deliver quality care.
Objective
Solution
Maintain Financial Viability
Comply with updated worker classification requirements while protecting the practice’s profit margins and operational stability. The goal was to avoid a costly shift to an employee model that would have introduced unnecessary overhead and complexity.
Strategic Worker Classification
Conducted a detailed financial analysis showing that converting all contractors to employees would reduce net profit by 30%.
Developed an alternative contractor framework approved by legal counsel, preserving flexibility while ensuring compliance.
Created new MSAs, SOWs, and consulting agreements aligned with IRS and state labor laws.
Ensure Legal and Regulatory Compliance
Create clear, enforceable policies to satisfy both IRS and state labor rules, while maintaining airtight HIPAA compliance across all clinicians and administrative staff.
Governance and Policy Implementation
Developed 14 new policies covering worker classification, HIPAA compliance, and data protection.
Introduced mandatory HIPAA training and accountability protocols to ensure full compliance across the organization.
Restore Financial Clarity and Control
Build accurate budgeting, forecasting, and governance systems that gave leadership real-time insight into financial performance and allowed for better strategic decisions.
Financial Reorganization
Designed an annual budgeting and forecasting system with real-time performance visibility.
Identified and corrected accounting errors impacting cash flow, leading to better bookkeeping oversight.
Adjusted client billing schedules to stabilize cash flow and restore owner payroll.
RESULT
Protected Long-Term Profitability
Avoided a projected 30% profit loss by maintaining a compliant contractor structure instead of converting to employees.
Strengthened Compliance
Implemented clear governance and HIPAA policies that reduced risk and improved team-wide accountability.
Restored Financial Health
Corrected accounting issues, stabilized cash flow, and created long-term financial systems for sustained growth.
Conclusion
Through ScaleUpExec’s strategic operational leadership, the psychology practice navigated complex legal and financial challenges without sacrificing stability or independence.
By combining compliance, governance, and financial clarity, the practice not only survived a major regulatory shift but came out stronger, positioned for long-term, sustainable growth.
We continue to partner with the practice to strengthen these systems and ensure consistent success as the healthcare landscape evolves.
