Why Referrals Have Gotten Hard for Private Practice Therapists (and what to do about it)

Something is happening across private practice right now. Therapists with different niches, in different states, at different stages — all reporting the same thing. Referrals have dried up. Psychology Today isn’t converting the way it used to. Word of mouth has slowed. Practices that used to fill steadily now have empty chairs.

And almost universally, the question they ask is: is it something I’m doing wrong?

In some cases, no. Here are four things that actually changed (my theories).

Big Tech Saturated the Market — and Outspent You on Ads

Platforms like Alma and Headway have made it remarkably easy to enter private practice and accept insurance. That’s had two effects that compound each other.

First, it flooded the field with therapists. Where there were once 100 therapists in a market, there are now 1,000. Where there were 1,000, there are now 10,000. The referral pool that once felt reliable is now being split among far more providers.

Second — and this is the part people often miss — these same platforms have massive marketing budgets and they’re spending them on Google Ads. Psychology Today alone is running approximately 9,000 active ads in the therapy space right now. When you try to run a Google Ads campaign targeting keywords like “anxiety therapy” or “DBT therapist,” you’re bidding against companies with budgets you simply can’t match.

Google Ads works largely on willingness to pay per click. When Alma or Zocdoc or Psychology Today are willing to pay far more per click than a solo or small group practice, they win the auction — and their spending pushes prices up for everyone else.

To put a number on it: a campaign that I was running successfully a year ago recently came back at $30 per click. That wasn’t happening before. It’s the direct result of how much these platforms are spending. I had to turn it off and rethink my strategy.

AI Therapy Apps Are Advertising Aggressively

This one is newer and harder to quantify, but it’s worth acknowledging.

In New York City, AI therapy platforms are advertising everywhere — subways, sidewalks, online. These aren’t small startups quietly testing the waters. They have real marketing budgets and they’re running real campaigns targeting people dealing with anxiety, depression, and stress — the same people you’d be treating.

Is this definitively causing fewer referrals? Honestly, it’s still mostly anecdotal. But when a new category of alternatives is advertising at that scale, some of the people who might have booked with a therapist are going to try an app first. That’s a new dynamic that simply didn’t exist a few years ago.

Economic Pressure Is Tightening Budgets

When people face financial stress — layoffs, lost insurance, economic uncertainty — they make cuts. And therapy, as much as people value it, is often one of the first things that gets paused.

This isn’t a reflection of whether people care about mental health. It’s a reflection of affordability. When someone loses their job and their insurance with it, therapy isn’t just a lower priority — it can become genuinely out of reach.

The broader economic climate has had a direct effect on private practice volume: longer gaps between sessions, earlier discontinuations, clients who were previously consistent becoming sporadic.

The COVID Mental Health Surge Is Correcting

This one is important context, especially for practices that grew significantly during COVID times.

Mental health demand spiked dramatically during COVID. Therapists who had struggled to fill their caseloads suddenly had wait lists. Referrals came faster than practices could absorb them. For many, it felt like a new normal had arrived — like the field had permanently shifted to a place of high demand.

It hadn’t. That was a surge driven by specific, extraordinary circumstances. As life has stabilized, demand has corrected back toward pre-COVID levels. The practices that built their expectations around that peak are now experiencing a normalization that feels like a downturn.

What This Means

Four forces converged at roughly the same time: market saturation from tech platforms, AI alternatives advertising heavily, economic pressure, and the correction of a COVID-era demand surge. Any one of these alone would be noticeable. All four together may explain why therapists across the board are struggling — and why it’s not something they’re doing wrong.

None of this means the situation is hopeless. There are still ways to market a private practice effectively in this environment — it just requires being more intentional about it than was necessary a few years ago.

If you want to see what that marketing system looks like, I covered it in full detail in last week’s video. And if you want to talk through what it looks like for your specific practice, I want to invite you to join my free community where I will teach you this strategy personally. Click the link below.