You did the hard part. You got licensed, built a caseload, maybe even became a supervisor. And somewhere along the way, you looked at your paycheck, looked at what your group practice was billing for your time, and did the math.
That math is why clinicians across the country are walking away from group practice to open IOP and PHP programs — and in many markets, it’s not even close.
The Group Practice Pay Gap Is Getting Harder to Ignore
Most clinicians working in a group practice earn somewhere in the $50,000–$85,000 range, with some W‑2 positions in high-cost metros pushing into the low six figures — but that’s usually the ceiling, not the floor.[^bls-psychologists][^bls-social-workers]
Meanwhile, it’s common for the practice owner to bill commercial insurance $150–$250 per session for your work, see 25–35 clients a week under your license, and keep a large share of that revenue after paying you. That easily puts the revenue you generate well into the low-to-mid six figures, even if your salary doesn’t come close to that.[^bls-psychologists][^bls-social-workers]
This isn’t a complaint — it’s a business model. The group practice owner took on risk, built infrastructure, and handles overhead. But once you understand the structure, you start asking a different question: What if I took on that risk myself?
Why IOP/PHP, Not Just Private Practice?
Most clinicians who leave group practice go solo. They open a private practice, see 20–25 clients a week, and in many markets can earn a solid six‑figure income, depending on their payer mix and rates. But it has a hard ceiling — your income is capped by the number of hours you can personally deliver therapy.
An IOP or PHP program breaks that ceiling entirely by shifting you from “I bill by the hour” to “I own the care model.”
The Math on a Clinician-Owned IOP
A typical intensive outpatient program (IOP) runs groups of 8–12 clients, around three hours a day, three to five days a week.[^samhsa-iop-advisory] Medicare now recognizes IOP as a distinct benefit and pays a per‑day rate, with 2026 national rates for hospital and rural health clinic IOP days in the low-to-mid $300s depending on the number of services delivered that day.[^cms-iop-2026][^fcso-iop-billing] Commercial payers and some Medicaid plans often pay within or above that range, though exact rates vary by plan and state.
Partial hospitalization programs (PHP) sit at a higher level of care. Medicare requires at least 20 hours of structured therapeutic services per week and reimburses PHP days at higher per‑diem rates than standard outpatient services, reflecting the greater intensity of care.[^noridian-php-billing][^cms-mental-health-coverage]
So, if you run a modest 10‑client IOP program operating five days a week and your blended reimbursement averages around $300 per client per day, the math looks like this:
Daily revenue: $3,000
Weekly revenue: $15,000
Monthly revenue: $60,000
Annual revenue: $720,000
Even after staffing, rent, billing costs, and overhead — which many operators target in the 50–65% of revenue range — it’s realistic for a single IOP location to net into the low-to-mid six figures annually for the owner. If you scale to 15–20 clients or add a PHP track with higher per‑diem reimbursement, you can be looking at seven figures in top‑line revenue from one site.
Compare that to trading hours for dollars in a group practice.
You Don’t Have to Deliver Every Hour of Care
This is the part most clinicians miss. In private practice, if you don’t show up, you don’t get paid. In an IOP/PHP model, you can hire licensed clinicians and clinical staff to deliver group programming, while you focus on leadership, quality, and key cases.
You’re building a business that generates revenue whether you’re personally running group that day or not. That shift — from clinician to clinical business owner — is the real economic unlock.
The Behavioral Health Market Is Pulling Clinicians Toward IOP/PHP
It’s not just the economics on the provider side. Demand is surging, and the market dynamics are reinforcing the opportunity.
Insurance Companies Are Pushing Toward Structured Programs
Payers have strong reasons to steer people toward structured outpatient programs like IOP and PHP instead of defaulting to inpatient stays, when it’s clinically appropriate. Research shows that well‑designed IOPs can deliver comparable outcomes to inpatient or residential care for many substance use and mental health conditions, while using fewer inpatient days and lowering total costs.[^samhsa-iop-advisory]
Medicare has now carved IOP into its benefit design and created specific payment codes and rates, signaling that structured outpatient programs are a core part of the continuum of care, not a niche add‑on.[^cms-iop-2026][^fcso-iop-billing] Commercial and Medicaid payers follow these trends closely, and many are actively contracting for more high‑quality IOP/PHP capacity in underserved areas.
There Aren’t Enough Programs to Meet Demand
On the patient side, the gap is massive. In SAMHSA’s latest national survey, more than 18% of people age 12 or older met criteria for a substance use disorder in 2024 — over 52 million people — yet only about 10 million received treatment, meaning roughly four out of five people who needed substance use treatment did not get it.[^samhsa-nsduh-2024] For mental health, an estimated 61.5 million adults had any mental illness in 2024, and only about half received any treatment in the past year.[^samhsa-aha-2024]
A huge part of that gap is the lack of accessible, step‑down levels of care like IOP and PHP, especially outside major metro areas.[^nsumhss-2022] When you open a quality program with solid clinical programming and insurance contracts in the right market, referral sources — hospitals, ERs, therapists, primary care, and payers — are often eager to send people your way.
What Holds Clinicians Back (And Why It Shouldn’t)
If the economics and demand curves are this clear, why isn’t every clinician doing it? Because opening an IOP or PHP program involves a set of skills most clinicians were never trained in.
Licensing and Compliance
Every state has its own requirements for facility licensing — and these requirements are very real. Many states require a specific behavioral health facility license issued by the Department of Health or behavioral health authority, periodic inspections, and documented policies and procedures around clinical care, quality assurance, and safety.[^nsumhss-2022]
On top of that, payers and referral partners may expect or even require third‑party accreditation such as CARF or Joint Commission for certain levels of care, especially PHP and higher‑acuity services.[^carf-bh-standards][^tjc-bh-accreditation] Some states and payers also require medical director oversight for programs providing higher levels of care, particularly PHP.
The regulatory landscape is real — but it’s also learnable and manageable with the right guidance.
Insurance Credentialing and Contracting
Getting credentialed and contracted as a facility is a different process than getting paneled as an individual provider. Facility‑level credentialing with Medicare and Medicaid requires entity enrollment (including facility NPIs and tax IDs), appropriate licenses, and often site reviews.[^cms-enrollment] Commercial payers usually follow with their own facility applications, checklists, and contracting timelines that can easily run 90–180 days.
If you’ve only ever filled out individual provider applications, the facility version is more intense — but it’s a one‑time build that sets you up to bill at higher per‑diem and program rates.
Billing and Revenue Cycle Management
IOP/PHP billing is more complex than standard outpatient claims. Medicare, for example, pays IOP using specific ambulatory payment classifications, with one rate when you deliver three services in a day and a higher rate when you deliver four or more services.[^cms-iop-2026][^fcso-iop-billing] PHP billing requires reporting the right revenue codes and HCPCS/CPT codes, documenting medical necessity, and meeting minimum hours of service per week.[^noridian-php-billing][^cms-mental-health-coverage]
If you don’t manage authorizations, concurrent reviews, documentation, and coding correctly, you risk denials, underpayment, or future clawbacks. It’s not impossible — it just requires some intentional learning or the right support.
Staffing and Operations
Running a program means hiring clinicians, managing schedules, maintaining documentation standards, and making sure your clinical programming aligns with payer expectations and level‑of‑care criteria.[^samhsa-iop-advisory][^noridian-php-billing] You’re thinking about census, group mix, risk management, and quality metrics — not just your own caseload.
None of these barriers are insurmountable. But stacked together, they’re enough to keep talented clinicians stuck in roles where they’re underearning relative to the value they create.
The Clinicians Who Make the Jump Share a Few Traits
The people who make this leap aren’t necessarily the ones with MBAs or business degrees. They’re the clinicians who looked at the economics, saw the demand data, and decided that the discomfort of learning the business side was worth the upside.
They tend to start an intensive outpatient program in a market they know well — a city where they already have referral relationships, understand the payer mix, and can see gaps in the existing treatment landscape. They build lean, often starting with one or two groups and adding capacity as census grows, rather than overbuilding on day one. And in many cases, they partner with operational experts who help with licensing, billing, and back‑office infrastructure so they can stay focused on clinical quality.
The clinicians who succeed in this space aren’t just good therapists. They’re clinicians who decide to own the business model, not just participate in it.
FAQ
How much does it cost to open an IOP program?
Startup costs for an IOP program often fall somewhere in the $75,000–$200,000 range, depending on your lease, staffing model, build‑out needs, and whether you pursue accreditation or higher‑acuity medical services. That’s still dramatically lower than opening an inpatient or residential facility, which typically requires real estate, 24/7 staffing, and capital expenditures that can easily reach into the millions.
What licenses do you need to open an IOP or PHP?
Requirements vary by state, but most IOP/PHP operators need a behavioral health or substance use facility license from their state health or mental health authority, along with business registration, NPIs, and appropriate liability coverage.[^nsumhss-2022] Some states and payers also require or strongly prefer accreditation (CARF, Joint Commission) and medical director oversight, especially for PHP and co‑occurring or higher‑acuity services.[^carf-bh-standards][^tjc-bh-accreditation]
How long does it take to start an IOP/PHP program?
From initial planning to admitting your first patient, 6–12 months is a realistic planning window for most markets. The longest lead times are usually facility licensing (often several months, depending on inspections and backlog) and insurance credentialing and contracting, which can add 3–6 months or more, so it helps to start those processes in parallel.[^cms-enrollment]
What are IOP/PHP reimbursement rates?
Medicare’s national IOP payment rates for 2026 are a little over $300 per day for three services and over $400 per day for four or more services, with specific amounts varying slightly by provider type.[^cms-iop-2026] PHP per‑diem rates are higher than standard outpatient payments and reflect the minimum 20 hours of therapeutic services per week required under Medicare policy, with commercial and Medicaid plans setting their own fee schedules above or below those benchmarks.[^noridian-php-billing][^cms-mental-health-coverage]
Can I open an IOP without being a physician?
Yes. Many IOP and PHP programs are owned by independently licensed behavioral health professionals such as psychologists, LPCs, LMFTs, and LCSWs, subject to state ownership rules. You’ll typically need a physician or psychiatrist serving as medical director for PHP and for any program that prescribes or manages medications, but that role can often be filled on a contracted, part‑time basis.[^noridian-php-billing][^cms-mental-health-coverage]
Do I need to quit my current job to start an IOP?
Not necessarily. A lot of clinicians handle the upfront work — market research, licensing applications, payer enrollment, lease negotiations, and initial hiring — while still employed, then transition as the program approaches launch and early census grows. Others stay in a more strategic role and bring on a program director or clinical lead to manage day‑to‑day operations once the doors are open.
ForwardCare is a behavioral health MSO (Management Services Organization) that partners with clinicians, sober living operators, healthcare entrepreneurs, and investors to launch and scale behavioral health treatment centers. We handle the business side — licensing support, insurance credentialing, billing, compliance, and operational infrastructure — so our partners can focus on growth and clinical quality.
If you’re serious about opening or expanding a behavioral health treatment center but don’t want to navigate the business side alone, ForwardCare may be worth a conversation.
[^bls-psychologists]: U.S. Bureau of Labor Statistics. “Psychologists.” Occupational Outlook Handbook, 2024.
[^bls-social-workers]: U.S. Bureau of Labor Statistics. “Social Workers.” Occupational Outlook Handbook, 2024.
[^samhsa-iop-advisory]: Substance Abuse and Mental Health Services Administration. “Substance Use Disorder Treatment for People With Co‑Occurring Disorders.” Advisory, 2020.
[^cms-iop-2026]: Centers for Medicare & Medicaid Services. “Rural Health Clinic & Intensive Outpatient Program Payment Rates: CY 2026 Update.” MLN Fact Sheet, 2025.[web:6]
[^fcso-iop-billing]: First Coast Service Options (Medicare Administrative Contractor). “Intensive outpatient program (IOP) billing requirements for institutional services.” 2025.[web:12]
[^noridian-php-billing]: Noridian Healthcare Solutions. “Hospital-based Partial Hospitalization Program (PHP) Billing Guide.” Medicare JF/JE Part A.[web:7][web:10]
[^cms-mental-health-coverage]: Centers for Medicare & Medicaid Services. “Medicare & Mental Health Coverage.” MLN Booklet.[web:4]
[^samhsa-nsduh-2024]: U.S. Department of Health and Human Services, SAMHSA. National Survey on Drug Use and Health (NSDUH) 2024 highlights.[web:8]
[^samhsa-aha-2024]: American Hospital Association summary of SAMHSA NSDUH 2024 results.[web:11]
[^nsumhss-2022]: SAMHSA. “N‑SUMHSS 2022: Data on Substance Use and Mental Health Treatment Facilities.”[web:14]
[^carf-bh-standards]: CARF International. Behavioral Health Standards Manual (facility licensing/accreditation expectations summarized in N‑SUMHSS and state references).[web:14]
[^tjc-bh-accreditation]: The Joint Commission. Behavioral Health Care and Human Services Accreditation Program (referenced by state and payer licensing resources).
[^cms-enrollment]: Centers for Medicare & Medicaid Services. “Medicare Provider-Supplier Enrollment” and OPPS/PHP/IOP data resources.[web:13]