Most people who want to open an IOP or PHP think the hard part is getting licensed or credentialed with insurance. It's not. The hard part is finding a clinical director you can actually build with.
The clinical director role isn't just a compliance checkbox — though it is that too. In most states, you can't get licensed or bill insurance without one. But beyond the regulatory piece, your clinical director is the person who sets the clinical tone of your program, supervises your therapists, co-signs treatment plans, and in many cases, is the face of your program to referral partners. And finding the right person is harder than ever: approximately 40% of the U.S. population — 137 million people — lives in a Mental Health Professional Shortage Area, and the behavioral health workforce is projected to face substantial shortages across nearly every clinical discipline through 2038. Who you pick matters enormously.
Here's what you actually need to know.
What a Clinical Director Does in an IOP/PHP Setting
Before you start recruiting, you need to be clear on the role. A clinical director in a behavioral health program is responsible for clinical oversight — that means supervising licensed staff, ensuring treatment plans meet medical necessity criteria, maintaining compliance with your state's behavioral health licensing standards, and in some programs, carrying a small caseload themselves.
They're also the person your utilization reviewers at insurance companies will interact with when there's a dispute. That matters more than you might think: initial claim denial rates across healthcare rose to 11.81% in 2024, with denials related to medical necessity questions increasing by 5% year-over-year. Behavioral health claims tend to face even higher rejection rates due to coding and documentation variance. A clinical director who can articulate medical necessity clearly on a peer-to-peer call can save you tens of thousands of dollars in denied claims annually.
In most states, a clinical director must hold a master's-level or doctoral-level license — LPC, LCSW, LMFT, or psychologist — with specific years of post-licensure experience. California, for example, requires that substance use disorder clinics designate specific licensed professionals (physicians, psychologists, LCSWs, LMFTs, or LPCCs) to oversee treatment planning and clinical documentation. Texas and Florida each have their own requirements, so verify your state's specific rules before you start searching.
The Two Models: Employee vs. Equity Partner
This is the first decision you need to make before you recruit anyone.
Salaried Clinical Director: You hire someone at a competitive salary, typically between $90,000–$140,000 depending on market and experience. For context, the Bureau of Labor Statistics reports a median annual wage of $117,960 for medical and health services managers as of May 2024, and behavioral health director roles specifically average around $97,000 nationally, with significant variation by geography. They're an employee. You retain full ownership. The risk is that good clinical directors are hard to find, expensive to keep, and if they leave, you can have a compliance gap that threatens your license and contracts. Behavioral health workforce turnover is believed to be high across the field, driven by low wages, burnout, and restrictive policies.
Equity or Revenue-Share Partner: You bring someone in as a co-founder or minority partner. They have skin in the game. You pay them less in salary but offer ownership upside. The risk here is that picking the wrong partner is harder to undo than firing an employee.
For first-time operators without deep pockets, the equity model is often the smarter path early on. A clinical director who believes in the vision will hustle in ways a salary can't buy.
Where to Actually Find a Clinical Director for Your IOP/PHP
Most people start on LinkedIn or Indeed. That's fine, but it's rarely where you'll find your best candidate. Here's where the real pipeline comes from:
Your existing professional network. If you're a licensed clinician yourself, you already know people. Think about former supervisors, colleagues from group practice settings, or people you've referred to over the years. The person you want probably isn't actively job hunting — they're working somewhere that's frustrating them. In a 2023 survey of 750 behavioral health professionals, 93% reported experiencing burnout, with 62% describing it as severe. There are strong clinicians out there looking for something better.
Behavioral health conferences and trainings. NAADAC, SAMHSA-sponsored events, state association conferences — these are where clinicians who care about the work show up. If someone is spending their weekend at a continuing education event on trauma-informed care, they're the kind of person worth recruiting.
Collegiate and supervisory relationships. If you trained at a program, reach out to your clinical supervisors. Many experienced clinicians in their 40s and 50s are tired of working for large systems and would jump at the chance to build something meaningful.
Referral partner networks. Detox centers, sober living operators, and hospital social work departments all know who the strong clinicians in your market are. Ask them who they'd trust to run a program.
Behavioral health-specific job boards. The NASW job board and similar niche platforms reach an audience that LinkedIn doesn't always capture.
What to Look for Beyond the License
The license is table stakes. What actually predicts success is harder to screen for.
Look for someone with experience supervising other clinicians, not just providing direct care. Running a program requires delegation, documentation management, and accountability conversations — none of which show up in a therapy session. Accrediting bodies like CARF and The Joint Commission both require that organizations demonstrate appropriate staff qualifications, training, and leadership governance — your clinical director will be responsible for making that happen.
Ask how they've handled insurance denials or utilization review pressure in past roles. Mental health providers have cited low reimbursement rates and administrative burdens as primary reasons they don't participate in insurance panels. You need a clinical director who can navigate that reality, not avoid it. If they've never dealt with this, you'll be training them on the fly during your most vulnerable period as a new operator.
Pay attention to how they talk about clients. Clinical directors who lead with compassion but can also think in terms of measurable outcomes, length of stay, and step-down criteria are rare and valuable. You want someone who understands that running a viable program is part of serving clients well, not a compromise of it.
How to Structure the Clinical Director Partnership
Before you make any offer, get clear on three things: compensation structure, role scope, and decision-making authority.
Compensation should reflect whether this is a salaried role or a partnership. If you're offering equity, put it in writing — what percentage, what vesting schedule, and what happens if either party exits. Don't skip this conversation because it feels awkward.
Role scope matters because "clinical director" can mean wildly different things at different programs. Are they carrying cases? Supervising all clinical staff? Running group programming? Doing community outreach? Be specific, or you'll have a mismatch within six months.
Decision-making authority is the most important conversation nobody has. Who has final say on hiring clinical staff? On program curriculum? On clinical policies? Ambiguity here creates conflict later. It doesn't have to be contentious — it just has to be documented.
Red Flags to Watch For
A clinical director who insists on a high salary with no performance accountability is a warning sign. You want someone aligned with outcomes, not just showing up for a paycheck.
Be cautious with candidates who have no experience in an IOP or PHP setting specifically. Outpatient private practice is a different world from structured programming, and the learning curve can hurt you during the critical first year.
Watch out for anyone who's dismissive of the business side. The best clinical directors understand that financial sustainability and clinical quality are not in opposition. 65% of adults with mental illness and a perceived unmet need cite cost as a main barrier to receiving services — programs that can't stay solvent can't serve anyone. If someone rolls their eyes at conversations about billing, census targets, or payer mix, that's information.
FAQ: Clinical Director for IOP/PHP Programs
What credentials does a clinical director need for an IOP or PHP?
Requirements vary by state, but most require a master's-level or doctoral-level clinical license (LPC, LCSW, LMFT, or PhD/PsyD) with two to five years of post-licensure experience in a clinical setting. In California, DHCS certification standards specify the licensed professional categories eligible to provide and oversee SUD treatment services. Some states specifically require experience in substance use disorder treatment.
Can a clinical director work part-time at an IOP/PHP?
In some states, yes — particularly during the startup phase or for smaller programs. However, many payers and state licensing bodies require documented availability and active supervision. Confirm your state's specific requirements before structuring a part-time arrangement.
How much does a clinical director make at an IOP or PHP?
Salaries typically range from $90,000 to $140,000 annually for full-time roles in mid-size markets. The BLS reports a median wage of $117,960 for medical and health services managers, which is the closest federal benchmark for this type of role. In high cost-of-living areas like California or New York, compensation can exceed $150,000. Equity arrangements vary widely but often involve 5–20% ownership for a founding clinical partner.
Do I need a clinical director before I apply for my behavioral health license?
In most states, yes. Licensing applications typically require you to name a clinical director and provide their credentials as part of the submission. For example, California's DHCS requires applicants to identify clinical and medical leadership as part of the initial treatment provider application. You'll want this person identified before you start the licensing process, not after.
What's the difference between a clinical director and a medical director?
A clinical director oversees the therapy and counseling side of the program. A medical director — typically a psychiatrist or physician — oversees medical and psychiatric care. California, for instance, requires each substance use disorder clinic to designate a licensed physician as the SUD medical director. Some programs have both; others use a consulting medical director on a part-time basis. Not all states require a medical director for outpatient behavioral health programs.
What happens if my clinical director leaves?
This is one of the most common operational crises in behavioral health. The field already faces high turnover driven by burnout, low wages, and heavy caseloads, so you should have a succession plan in place before it becomes urgent. Document all clinical policies and supervision structures so they're not held in one person's head. Some state licenses require notification if your clinical director changes, and insurance contracts may include similar provisions.
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.
Citations used in this article draw from: HRSA National Center for Health Workforce Analysis (2025), U.S. Bureau of Labor Statistics (2024), California DHCS Certification Standards and Regulations, Becker's Payer Issues / Kodiak Solutions (2024), CARF/Joint Commission accreditation standards, PayScale compensation data, and SAMHSA-referenced research via the NSDUH.