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Creating a Cancellation Policy that Fits Your Practice

As mental health professionals, we are not usually trained to talk about money with our clients. However, setting early expectations within our practice is essential, both for the sustainability of our business and for developing a mutually respectful therapeutic relationship with our clients. 

For many therapists, it can be difficult to draw hard lines in the sand, as psychotherapy often requires us to be flexible to the needs of our clients. Therefore, coming up with a policy that outlines how and when we charge clients that do not meet  agreed upon attendance expectations can feel like a complicated process. But it does not have to be; with some simple planning and expectation management during intake, you can set the stage for a healthy business model.

Exploring the value of your time

The first step to creating a cancellation policy that fits your practice is to calculate and understand the value of your time. When a client does not attend a session, you are losing revenue by no fault of your own. Whether the client is paying out of pocket or you are getting reimbursed through insurance, there is almost never a reimbursement method for a missed session unless you create one. 

The truth of it is, very few clinicians I have worked with say they are in this business purely for financial gain; however, financial stability is a key in our businesses’ survival, which enables us to continue to give care.

 Types of cancellations

24 hours or more of notice

When it comes to a client cancelling an appointment, it can happen in a number of different ways. The first is ideal; the client gives you ample notice. For most clinicians, there is no fee associated with a client who gives at least 24 hours’ notice.  Within 24 hours, the clinician has an opportunity to find another client who could use that time slot. If a client is continuously cancelling, even with 24 hours’ notice, this may be something worth exploring with the client, as it might be indicative of other issues within the client’s life. This is where a reliable EHR system can assist you in being able to quickly identify and explore attendance. 

Less than 24 hours’ notice and no-shows

The second category of attendance issues are when clients cancel without giving you 24 hours’ notice. These types of cancellations are why a policy needs to be in place, as it’s more unlikely that you will find someone else to fill that time slot, which results in loss of income. 

A no-show occurs when a client does not inform you that he/she does not plan on attending. This can be the most taxing form of attendance issues, as you are unable to do any supplemental work such as collateral calls or insurance verifications due to the uncertain nature of the appointment. 

In my experience, many practitioners have a similar fee for both no-shows and cancellations that do not give 24 hours’ notice because both have a high potential to cost you time and money.

Understanding the pros and cons of having high cancellation fees

There are a few things to consider when you’re deciding how much you will charge for a missed appointment. The first is considering the population you are working with. If your clients are affluent and can take a hefty hit for not attending a session, it’s possible to charge your full out of pocket fee for a missed session. However, those working in community health or with low income individuals may notice that clients are reluctant to continue working with a practitioner with a high cancellation fee due to fear that an illness or scheduling error may lead to a charge they cannot afford. These are just factors to consider.  You get to decide what amount makes the most sense for your practice and population. 

Creating a short and concise statement

When it comes to the nuts and bolts of writing a cancellation policy, it does not have to be complicated. In fact, the more straightforward, the easier it is for clients to understand and feel non-threatened.  In general, it should include these elements: 

  • The time frame to cancel to avoid being charged
  • Method of cancellation (call, email, etc.)
  • Policy exceptions and the number of times they will be made (i.e. 1 missed session will be forgiven for illness)
  • The amount that will be charged for late cancellation/no-show
  • Who is responsible for payment
  • When payment is expected

Luminello users have access to a complete Forms Library that includes a cancellation policy.

Download our sample cancellation policy

Although the cancellation policy is generally very black and white in nature, it does not have to be enforced that way. For example, if a client is suddenly, severely ill or has an understandable, extenuating circumstance, you can use your discretion to make an exception. A colleague once said, “I would rather lose the session fee than have myself get sick because a patient forced himself to come in when he was unwell.  Then I might be out of a full week’s pay because I am at home recovering.” 

How to talk about it with your clients

Your cancellation policy is best discussed at intake.  This sets expectations early enough that the client does not feel blindsided when you have to enforce it. If you have any points of flexibility within your policy, such as allowing clients to miss one session if they are severely ill, you can also express it at this time. 

In my experience, most clients understand why such policies have to exist. However, it is wise to have some answers prepared in case a client enquires about why the policy is needed. Here are a few helpful ways to discuss it.

  1. Verbalizing that regular attendance is an important aspect of successful treatment.
  2. Explaining that when a client cancels or no-shows without giving you adequate notice, a time slot that could be used to assist another client is not being utilized. 
  3. Finally, that your time has value, and one way to ensure you maintain it is through a mutual agreement.

Though I have yet to meet any mental health physicians who’ve declared they went into practice strictly for financial gain; financial stability is a key to our ability to survive in this livelihood and continue to give care. Agreements such as a solid cancellation policy are one way to work towards this stability.

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Sample Cancellation Policy

We hope you find this sample policy helpful.
Best of luck in developing your own cancellation policy!

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