The politics of survival in private practice
A number of changes taking place in the therapy industry are precursors of future trends that will have to be taken into account by psychologists who wish to survive in private practice. In this, the first of a series of articles on strategic positioning, private practitioner and consultant Tim Barry imports apparently discordant ideas from ecology and business (Colinvaux, 1980, and Porter, 1985) into the therapy industry and suggests ways in which competion can be avoided through practitioners and agencies differentiating themselves from one another.
As ecologist Paul Colinvaux notes in Why Big Fierce Animals are Rare (1990), animals specialise and differentiate them selves in order to avoid competition. "When we find many animals apparently sharing a food- supply, we do not talk of struggles for survival; we watch closely to see by what trick the animals manage to be peaceful in their coexistence" (p 128). In the economic world, this trick is called competitive advantage and the way in which competition is avoided is called strategy.
Michael Porter, a leading thinker in business and marketing strategy, suggests that the manner in which an individual or firm conceives of itself and how it positions itself in an industry will have a large bearing on its performance. He looks at five forces that he believes impact on the overall health of an industry and advises that firms adopt very specific strategies in order to get the best fit between the organisation's competencies and environmental demands. What makes private practitioners and agencies successful is not only clinical skill, but the strategic positions they fill in an increasingly open and competitive market. His five forces can be represented as follows:If one contextualises these five forces to the psychology industry, there are a number of pending changes that could redefine the way in which psychologists see themselves.
New entrants
Certain bodies have recently suggested lowering the barriers to entry for prospective psychologists with the proposed B. Psych degree (Lindegger, 1997). This may allow for the introduction of more psychologists into the industry with a range of specific competencies.
Determinants of Supplier Power
Traditionally psychologists have used informal referral agents (such as general practitioners, psychiatrists, homeopaths) as a form of supply. This form of supply is often concentrated in certain areas and may have limited psychologists' scope of action. Supplier bases have also often been seen as a potential threat as the suppliers themselves have the right to do psychotherapy. In addition, managed health care may radically change the entry points of patients and the manner in which psychology is practised (as has happened in the USA).
Determinants of Buyer Power
Increasingly, consumers of psychological services are becoming more price sensitive. This allows for the emergence of agencies that attempt to facilitate the relationship between medical aids and providers of services. Agencies such as NMED (an organisation that links practitioners, medical aids and clients and potentially does away with the need for ongoing liaison between practitioners and medical aids) have invited the practitioner to redefine through technology the way in which they see their relationships with medical aids. In addition, changing buyer volume, concentration and changing access to information (e.g. the internet) may have a marked impact on the power of consumers.
Rivalry determinants
Psychologists have to deal with the rivalry seen in any profession, but the concentration and lack of diversity of individuals within the profession may aggravate competition. Because barriers to entry have been high in the past, psychologists may have difficulty in exiting the profession, reducing the fluxes often seen in other professions e.g. accounting. Furthermore, psychologists are often concentrated in developed areas and have trouble signalling the different services they provide (hinted at by the proposed dropping of registration categories), which may make it difficult for practitioners without clear strategies to signal to consumers what they provide. In addition, consumers of psychological services have had difficulty in knowing the differences between psychiatrists and psychologists, and PsySSA's call for the Health Profession's Council to recognise psychology as an entity separate from the medical profession may reflect the growing dissatisfaction among psychologists to how they have been statutorily defined, The introduction of prescription rights for psychologists may complicate this process further by increasing the rivalry within the mental health field (Lindegger, 1997), and merging previously distinct functions.
Substitutes
A number of agencies that offer psychological assistance are being used as substitutes for psychologists, e.g. FAMSA, ATICC, Life Line, complementary health professionals, social workers. The democratisation of knowledge through the Internet may also indicate another potential substitute, especially because it may offer a cost-effective alternative for people wanting psychological information.
Generic strategies
In an industry that is having to redefine itself because of possible lower barriers to entry, emerging managed care, a potential influx of new entrants, attractive substitutes and more cost conscious consumers, the strategic position that a practitioner adopts may have as much to do with success as skill. Porter goes on to say there are four generic strategies that can be adopted by firms. They can compete on the basis of either cost or specialisation and, at the same time, they either align themselves to cater for a broad bandwidth of people or a very narrow segment of people with particular needs. Provided that they choose different generic strategies, a number of firms can do very well in the same industry. It may be useful to translate Porter's generic strategies into a context with which the South African reader is more familiar, such as vehicles (based on Loewen, 1997).
A low cost strategy must begin with a good product, although it may not have some of the special features of competitors' products or services. Successful cost competitors are often successful because they are able to signal the merit in their product that leads to low cost.
A differentiated strategy starts with being unique in some way. With reference to psychology in particular, it is important to distinguish between a practitioner who is different and one who is differentiated. To be differentiated, the client has to understand the value added by the practitioner being different. Differentiation results from both actual uniqueness in creating value and from the ability to signal that value so that buyers perceive it (Porter, 1985).
Being valuable and different in a manner that is not signalled means putting energy into an adaption that does not increase the "goodness of fit." Clearly the cost of being unique means that a premium price is asked from consumers. A narrowly focused strategy identifies a particular segment of the market and fashions the service or product around that particular need.
New Therapist
Indispensable survival guide for the thinking therapist