Why don't therapists get paid as much as engineers?

Why aren't therapists paid as much as their counterparts at the same company? 

In mental health tech companies, therapist pay is one of the most discussed topics. Whether you're a 1099 therapist or W2, it seems like everyone nowadays is discussing that clinicians can make so much more going into private practice.

Many clinicians online are arguing for higher pay because the software developers at the same company can make double if not triple the amount. Let's break down if that's actually the case.

In our mental health startup guide, we addressed that many startups were paying therapists anywhere from $40-$90 per session or a salary that could range from $60,000 to $120,000 depending on the level of experience, education, and location. If we said clinicians could handle 25 sessions per week and used $60 per session, that's $1,500 per week, which also falls well within that salary range. Psychiatrists and prescribers make much more, as high as $250 per session. However most of the time these level of clinicians were offered limited 1099 roles.

So how much do engineers make?

According to Glassdoor and company job postings, engineers in mental health can expect to make about $120,000-$220,000 depending on their level of experience and the company. We also expect more senior engineers to make even more that.

So if a therapist/clinician is the one actually seeing the client and earning the company money why aren't they at least paid the same as engineers? 

Supply and demand. 

Let's look at the demand portion first. The demand for an employee is based on the value they can create. A therapist's financial value to a company is limited and quite mathematical. If a therapist sees 25 clients per week, 50 weeks out of the year and at an average reimbursement rate of $120 then the therapist can bring in a total of $150,000 in annual value. If we bump the rate to $150 per session the therapist brings in $187,500. 

A company obviously can't pay the therapist $150,000 or $187,500 because there's other employees who must be paid, there are the EHR costs, telehealth platform, internal tech costs, and more. 

Unfortunately, the demand for therapists is extremely closely tied to healthcare and reimbursement rates provided by insurance. Unfortunately, insurance companies have created an artificial market rate for therapists. 

For engineers, there's no insurance to set an artificial market rate and the demand for engineers crosses every industry. Nearly every company that touches the internet has engineers and developers on staff. The demand for engineers is so high that some companies even hire developers in other countries with the countries often being Ukraine, the Philippines, and India. 

There's also a key difference in the skillset of the engineer. The complexity of the skillsets creates drastically different costs in hiring engineers and developers. A WordPress developer wouldn't get paid nearly as much as a machine learning engineer. 

When companies like Facebook, Amazon, Google, Microsoft, and Netflix are offering total compensation packages above $500,000 for high-quality engineers, healthcare is already at a disadvantage. In the second quarter of 2022, our team spoke with a patient engagement company that was struggling to find good engineers for this exact reason. The rise in remote work meant it was easier for high-paying tech companies to steal engineers away from health tech companies who simply couldn't afford to compete. 

With many therapists being underpaid, why can't we lower the salary for developers and other roles to increase the salary of therapists? Well, we should increase the pay for therapists. Our purpose in writing this isn't to argue to keep therapists' pay low. We absolutely should find ways to better compensate therapists; but, that's not going to come from lowering developers' salaries or other roles and the reason is the market demand. The #1 place to look for raising rates to therapists is going to be insurance - not coworkers.

If there are enough higher-paying roles elsewhere, people won't work for healthcare companies. Or, health tech companies will get employees with less experience or employees who quantifiably aren't as good. In an industry where security and reliability on tech are paramount, that's not an option. A health tech company has to have a good enough IT and development team to ensure the platform doesn't crash because the therapists are in the middle of seeing clients. If the platform crashes then the visit stops, cuts the client's time with the provider, frustrates the client and provider and could affect how the practice can bill for the session. It could also lead to a security breach which can totally shut down a company if patient information is exposed and leaked.

From United Health Group's Q2 2022 earnings statement. ^

In the second quarter of 2022, United Health Group distributed more than $4 billion to shareholders through stock repurchases, dividends, and an increase of 14% to their dividend. $4 billion dollars is enough to provide a $20 rate increase to 200 million therapy sessions. 

Let's keep fighting for better compensation in mental health.