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It's All about Supply and Demand

by Dr. John Riolo

In an excellently written, humorous irreverent satirical and even sarcastic spoof on psychotherapy, Further Archeological and Ethnological Findings on the Obscure, Late 20th Century, Quasi-Religious Earth Group Known as “the Therapists” (A Fantasy About the Future of Psychotherapy) by Scott D. Miller and Mark A. Hubble of Institute for the Study of Therapeutic Change poke a little good-natured fun at Psychotherapy but not for the sake of fun but to educate and to warn.

They touch upon many things in this article which if said on some internet discussion groups would be met with howls of lamentations. They would be called disrespectful and be subject of personal attacks of the most defamatory nature. 1 

Among the statements made in this spoof is,

“We believe that it is likely that overpopulation played a role in the decline and fall of the Truth deity. Between the 4th and 7th decade of the 20th century (Earth time) members of sub-sects who offered intercessions with the Truth deity grew by more than 1,100% while their psychiatry sub- sect colleagues members increased 760% (Herman, (Earth 1995). By the middle of decade 8 , Psychologists doubled in numbers every decade and Social Workers every fourteen and Psychiatrists every twenty years (Dawes, (Earth 1994). In the American continent new sects were created to meet the increased demand of those wishing to wear the Therapist mantle. Marriage and family therapists, Art and music Therapists, Addiction counselors, Pastoral counselors, Body Therapists, Licensed Professional counselors, Spiritual and Transpersonal Therapists appeared. In decade 8 alone, the number of people qualified to call themselves “Therapist” increased 275% (Duncan and Miller, 2000). We are unable to catalogue their forms, much less distinguish meaningful differences between them.”

Not only do Miller and Hubble have the audacity to call attention to that fact that some psychotherapist have turned what started out as a science into a religion and rigid one at that, but that there are just too many of us. We seem to be multiplying like lemmings and there can never be sufficient food supply for all. So some of us must either starve or take the plunge and Darwin ourselves which we seem to be hell bent on doing.

The fact is that at any given time there are only a certain number of people who want or need a therapist. People are remarkably resilient and can and have solved most of their problems throughout history long before Dr Freud or the "Truth Deity" or any of these variations. Despite our diversity we are a specialty and are competing for the same pool of potential patients or customers. There are only so many to go around Of course some of try to increase demand by education and that's good until the education becomes little more than hustling new customers by convincing them that they have problems they did not know they had. Unless psychotherapist can create new demand they will drown under the weight of their own numbers.

For the consumer this is both good and bad news. The good news is that whenever there is an over supply of any product or service the price goes down. The bad news is that whenever there is a glut on the market of any product or service the quality control is likely to be poor and it difficult to tell what is worth the price whatever it is.

The fact is the cost of a psychotherapy session has not increased substantially in years and actually gone down. Psychotherapists can be found to decry this fact almost incessantly. They will often complain that we are not respected for our true worth. Well the problem is the true worth of something is one thing but its market value is a function of supply and demand.

Psychotherapists are quick to blame insurance companies forgetting that no one is forced to take their third party insurance. The problem is there are so many psychotherapists that it is difficult if not impossible for all but a handful to make a living with out third party insurance. So even the ones who think managed care is evil join the panels and decry managed care to everyone, even their patients. But is this the patient/consumer’s problem? Should they be burdened by a therapist’s inability to bargain successfully on business dealings with insurance companies? The reality is that while there is no one single factor to explain the decline of cost of psychotherapy, the over supply factor cannot be dismissed.

Up to a point this is a very good thing for consumers. With the oversupply they are somewhat in the driver’s seat. They can bargain for the best deals and prices. They can demand discounts from therapists if they are willing to pay out of pocket that are at least as good as what insurance companies demand. If they pay cash there is no waiting time for the therapist to get paid and that can arguably be worth almost as much as the volume that being on an insurance panel can offer.

Insurance companies that are managed or have preferred provider panels do negotiate hard to keep rates down for their subscribers and customers. Of course providers see managed care companies as nothing more than greedy profiteers but the managed care companies do have a point. They have a their side of the story which can best be expressed by the following.

"Social workers and Ph.D.s share issues similar to those we face every day. Economic forces and competition are a fact in business today, whether one works for a behavioral health care company or has a practice. We labor to balance quality and cost as fierce competition constrains our pricing. Our clients want to provide the best care possible to their employees while keeping their costs in check so they can continue to operate productively.

This-the law of supply and demand-is at the root of the fees issue. There is a large supply of social workers and Ph.D.s and not enough corresponding demand to keep prices (fees) as high as providers might want. Value Options is obligated, professionally and morally, to help its clients get the most value from their investment. If the market determines that we can save money in one area, we must do so .2

So no matter how much psychotherapists choose to deny or decry the market forces the laws of economics do not stop if we do not understand them any more that the Darwinian laws of natural selection stopped because they were not comprehendible to the dinosaurs.

Will psychotherapist become totally extinct? Probably not, but if we do not evolve and adapt we may become relegated to isolated niches like the komodo dragons.

1. I can attest to that because I have said many of those same things to my colleagues although perhaps not nearly as well written.

2 Supplied by a vice president of value Options managed care organization.

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