fees for counseling services: why charge them?

Administration in MentaI Health Vol. 9 No. 2, Winter 1981

FEES FOR COUNSELING SERVICES: WHY CHARGE THEM?

Betty McMillan and James W. Callicutt

A B S T R A C T : This study examines selected factors that influence administrators in their decisions about charging fees for counseling services. The primary question studied was the relative importance of internal (interagency) pressure as against external (environmental) pressure experienced by administrators, and the effect of these pressures on decisions about the charging and collection of fees for service. General systems and decisionmaking theories were employed to provide a framework for understanding the basic concepts to be studied. Two of the more important findings of the study were that the greatest pressure fèh by administrators to charge fees came from environmental forces and that benefit to the dient is not a primary factor in the administrator's decision to charge fees.

OVERVIEW

Ques t ions regard ing the f inancing of counsel ing services have been of con t inu ing interest over the years in the Un i t ed States. These quest ions have

included the cons idera t ion of funds sources (public and pr ivate) , the value of

p a y m e n t for service by the client, and var ious models for the collection of fees.

In c o m m u n i t y men t a l heal th centers the collection of fees is c o m m o n l y

a s sumed to be rough ly related to agency survival . O n the o ther hand , family

service agencies have held the a s sumpt ion that the collection of fees has therapeu t ic va lue for the client.

Th is s tudy tested hypotheses abou t the effects of in ternal and e n v i r o n m e n t a l

factors on c o m m u n i t y men t a l heal th center ( C M H C ) and family service

agency admin i s t r a to r s ' approaches or or ien ta t ions to fees. These hypotheses address the a s sumpt ions related to bo th the survival of the agency and therapeu t ic benef i t to the client. H o w any individual admin i s t r a to r responds to this complex aspect o f m a n a g e m e n t reflects m a n y factors. Some of these factors, which are br ief ly discussed later , can be unde r s tood in the context of

systems theory and dec i s ionmaking theory.

Betty McMillan, Ph.D., is Executive Director of Women's Haven of Tarrant County, Inc., a residential £acility for battered women in Fort Worth, Texas. James W. Callicutt, Ph.D., is Professor and Associate Dean, Graduate School of Soeial Work, The University of Texas at Arlington. Reprint requests should be sent to Dr. Callicutt, Graduate School of Social Work, The University of Texas at Arlington, Arlington, TX 76019.

0090-1180¤81/1600-0100$00.95 1 00 © 1981 Human Sciences Press

Betly McMillan and araraes W. Callicu«t 101

The agencies surveyed for collection of data in this study included all C M H C s affiliated with the Texas Department of Mental Health and Mental Retardation as reflected in the state agency's 1977-1978 fiscal report, and all agencies in Texas affiliated with the Family Service Association of America. The choice of these agencies was based on the fact that they provide a similar counseling service, they differ substantially in structure, funding sources, and autonomy. This study examines the current status of these organizations in relationship to a number of variables whose consideration, from a study of the literature, appear to show the most promise of clarifying the question of what forces, both internal and external, promote or discourage the development of a fee structure. These variables can be summarized as follows:

1. Organization characteristics 2. Administrator characteristics 3. Client characteristics 4. Sources of funds 5. Value of fees to agency 6. Value of fees to client

In summary, this study explores the rationale for a fee structure in selected public and private human service organizations in one state through the use of specified interrelated variables.

BACKGROUND

Traditionally, social welfare services were provided for the poor by those in a society who were more fortunate. As long as social services were seen as primarily aimed at the poor, there was no need to consider the possibility of charging for services. The poor, it was assumed, could not be expected to pay. But in the 1930s and 1940s government policy moved toward greater tax supported assistance for the poor, and voluntary social work agencies had to examine their role in the welfare scheine. It became apparent to them that changes needed to be made in their functions if they were to continue to meet community needs. Thus, these agencies began to look at ways they might serve other segments of the society instead of, or in addition to, the lower socioeconomic groups.

At the time voluntary social work agencies became aware that if services were to be extended to a wider clientele and if much of the funding for services to the poor was to be dispensed by government through public auspices, then another source of funding for the agencies would be necessary. When the charging of a fee for counseling services began to be seriously considered in the 1940s it posed as many questions as answers.

But regardless of the possible negative reactions of clients, staff members, administrators, boards, and communities, it appeared to administrators that

102 Administration in Mental Health

charging fees might be an important way for the private agency to augment its income from sources like United Way and to make its services acceptable to middle classes in addition to continuing its role in serving the poor.

In the 30 years since private agencies began to charge clients for service (usually on a sliding scale), many articles have been written on the therapeutic value of fee charging in treatment, and on the attitude of service providers, of boards, of communities and of clients on the charging of fees. Saul Hofstein (1957) discusses the payment of a fee as an important symbol of self-sufficiency and regards its introduction into the counseling process as the introduction of social reality and the establishment of social status.

Attitudes of boards, workers, and the community have been described at length (Neumann .1952; Fizdale 1957; Levin 1963). These descriptions range from the specific to the philosophical. They touch on the ways in which board and staff members regard themselves and their questions about how others will regard them as they move from a philanthropic stance to one in which value is placed on the payment of a fee for services as a therapeutic tool. Such a change not only affects the ways in which involved persons see themselves, but also may change the ways in which the profession itself is viewed. Ruth Fizdale has said: :~The charging of a fee has conveyed the idea that the value of social work rests not in the giving of concrete services...but in the profession's knowledge and skill, and the method through which services are given" (1963). She continues to discuss how the historical period in which it developed, rather than any innate quality of the profession, identified social work for service to the poor.

From the beginning of the practice of fee charging for counseling services in family service agencies, the importance of the additional income to the operation of the agency was ignored or played down. In a Family Service Association of America study done in 1951, we find that: ::Only a third of the agencies saw increased income as a factor in instituting a fee policy and in only three of the agency studies did the income from fees provide five percent or more of the total cost of the agency operat ion" (Hofstein, 1957).

In 1959, an article by Carl M. Shafer concerning the private practice of social work contains the comment thät: " T h e success of the private practitioner in attracting clients at higher fees for a service similar to that given by the family service agency strengthens the theory that agency income from fees could be increased substantially in most instances." But it was not until 1971 (Goldberg and Kovac) that the literature reports an agency's attempt to examine its fee charging practices with a view toward increasing agency income. Even then, this was listed as the second of two goals: ~~The agency had two goals in mind: (1) to question the relevancy of its fee policies to casework practice and (2) to determine the feasibility of revising the existing fee scale in order to produce additional income." Two years later the same authors reported that the new program had resulted ::in a significant increase in in~ome . . . . ' '

Belty McMillan and James W. Callicutt 103

In the area of c o m m u n i t y menta l heal th, the l i terature on the quest ion of the charging of fees is even more sparse than that of the family service agency. A review of all issues of the Communily Mental Health Journal for 11 years resulted in ident ifying only one article deal ing with the quest ion of fees, and this was ra ther incidental to the contents . In this article, Allan Biegel (1970) states:

Many Community Mental Health Centers have been unable to attract patients who can pay for the services provided .... It is beyond the mandate of the CMHC to insist that everyone in the catchment area comes to it for service nor would it be wise to think that the CMHC can treat everyone who needs help. Nevertheless, the CMHC, to promote its own solvency, must think of ways in which it can provide services which are unavailable in the private sector to those individuals who will pay.

RECENT MODELS OF FEE ASSESSMENT

Two models of fee assessment that have been implemented in different areas of counsel ing service illustrate a renewed interest in the quest ion of the p a y m e n t of fees as a means of economic survival for the organizat ion.

The Jewish Family and Chi ldren ' s Service in St. Louis, Missouri (Goldberg and Kovac 1971) began a s tudy of its fee charging practices in 1969. This involved looking at some of the basic assumptions of social work practice and evaluat ing their current use in the delivery of service as well as their

relat ionship to revenue needs of the agency. Those assumptions were:

1. T h a t the client will cont inue in t r ea tment for at least one year 2. T h a t shor t - term t r ea tmen t was regarded negatively 3. T h a t the agency must subsidize every client not able to pay the fuI1

cost of service 4. T h a t each client would use the same mode of p a y m e n t 5. T h a t every client expects and appreciates subsidization.

In contradict ion to these assumptions, this agency decided that: : :The d ien t should be charged the full cost of service when the annum ability to pay equal led the charge. It was also decided that client and agency together would de te rmine ability to p a y . "

Thus no client is subsidized until he has paid an a m o u n t equal to his annual ability to pay. Weekly p a y m e n t plans are worked out with those who need them, and p a y m e n t m a y cont inue after t r ea tment is te rminated . T h e authors of this plan, after three years of pract ice, believe it to be reliable and valuable both to clients and to the fundrais ing efforts of the agency.

Another significant model for the assessing of ability to pay has been developed by York C o u n t y Counsel ing Services, Inc. , in Saco, Ma ine (Andre et al. 1978). This agency has developed an economic assessment process designed to acquain t the client with the cost of service and to help hirn de te rmine what par t of that cost he can afford to pay. Cons idera t ion is given


both to the client 's own financial si tuation and to whatever third par ty p ay m en t

for which he might qualify. Eight months after the plan was implemented , an evaluat ion of the results

indicated the following tentat ive conclusions:

1. The major i ty of clients appeared to feel that the fee was reasonable 2. The assessment process was clear 3. T h e weekly budget paymeh t s were appropr ia te .

A n u m b e r of byproducts of the process were seen as benefits:

1 . . . . Clinicians...now feel that their therapy is valuable and is worth something, both to themselves and to the clients... 2. The client looks much more carefully for third party coverage .... 3. Fee collections have increased... 4. A fourth major benefit is the change in the community's image of the CMHC from 'another federn antipoverty program', a service only for the poor (meaning poor services) to that of a professional, high quality of service (Andre et al. 1978).

Such studies as these two suggest that it is t ime to take a new look at the quest ion of how fee programs are devised and implemented and that there are benefits to both clients and agencies in doing so. Genera l systems theory and decis ionmaking theory provide an appropr ia te conceptual f ramework for examin ing these forces and a way of placing them in perspective to the total opera t ion of the agency.

GENERAL SYSTEMS THEORY

As we look at the organiza t ion as an open system, vulnerable to influence, both f rom within and outside itself, we can bet ter unde r s t and some of the factors that impact the deve lopment of a fee s t ructure.

As early as 1963 we have some very specific definit ions of systems as they relate to organizat ions. Johnson , Kast , and Rosenzweig (1963) define a system as ::an organized or complex whole; an assemblage or combina t ion of things or parts forming a complex or un i ta ry w h o l e . " Later , R . L . Ackoff (1969) defines a system as : ' any enti ty, conceptual or physical, which consists of in te rdependen t p a r t s . " Carlisle (1976) defines a system as ::an ent i ty consisting of a composi te whole that is formed by in te rdependen t parts or e lements involving relationships, which contr ibute to the un ique characteristics of the w h o l e . "

A closed system is one in which the p r imary relat ionship is one involving the specific posi t ioning of the parts. T h e parts of a clock have a fixed relat ionship to each other . T h e r e is no exchange of mater ials or energy with anyth ing outside the clock itself. T h e env i ronmen t is not affected by the clock nor does it general ly affect the workings of the system.

Betty McMillan and arames W. Callicutt 105

On the other hand, an open system allows for permeation of the boundaries of the system with the exchange of energies and materials between systems and the environment. The environmental changes encountered by the open system may require it to adapt. However, the position of physical parts is not significant in an open system. Rather, the process by which it allows for exchanges indicating growth, decay, and adaptation are what typifies an open system.

Organizations are open systems. They are created by man to fulfill certain functions, but they evolve and change in response to formal and informal interactions between people and the environment, both within and outside the organization itself. Carlisle has outlined basic characteristics of open systems as follows:

1. There is an interdependence of all parts or elements in a system. 2. The whole is more than a summation of the individual parts. 3. The individual parts cannot properly be comprehended without

understanding the whole also. 4. The boundary relationships, or interfaces, with other systems have

special significance. 5. Social systems are made up ofhierarchies of systems so that supra and

subordinate systems exist for any specific system. 6. Open systems are changing, adaptive entities. 7. Open systems experience growth and decay processes.

To elaborate a bit on each of these concepts, let us look first at the interdependence of all elements in a system. If a social agency hires a new director, the whole structure of the agency changes. If it changes from serving primarily one group of clients, for example, couples with marital problems, to another, such as those with drug addiction problems, its staff, technology, and financial resources will change. No part can be changed without affecting and changing, to one degree or another, all other parts.

The second important concept of open systems is that of ~:synergy.'' The effect of all parts operating together is greater than the effect of all of the parts operating independently and in an unrelated way.

Frequently, in matters of new ideas, fresh thoughts, and the consideration of a problem from a new angle, what three people can do together is greater than the sum of what three people can accomplish individually. A work group in an organization can come up with a new method for handling intake interviews in a way that is more likely to succeed, since it is the result of shared ideas, than ean the individual members of the group thinking in isolation. In recent years we have seen some dangers in this process, the stifling of individual ideas and results in what has been termed ::group think." This is not the ereative use of synergy that one would hope for in organizations.


The third concept of an open system, that a part cannot be understood without a comprehension of what it contributes to the whole, is essential to the understanding of any organization. One cannot understand the function of the collection clerk in a C M H C without understanding the economic status of clients served, the financial resources of the organization, and the services offered.

To understand the organization as a system, one must be cognizant of its boundaries and its interfaces with other organizations and individuals in its environment. This is a fourth concept of an open system. Boundaries in open systems are permeable. Materials, energy, and information pass back and forth across these boundaries. The nature of the input into the system plays an important role in determining the nature of the output. A community health center may be better able by virture of its personnel and technology to deal with one type of mental illness than another. Therefore, who is admitted with what type of problem may in large part determine the success of the product that is the output. It behooves the organization to decide what output it is striving for and to be concerned then about its input boundary.

The fifth concept of open systems theory relates to the hierarchical structure of systems. Carlisle (1976) states: ::The hierarchy concept is significant, because it emphasizes that interaction not only takes place within a system, but with other systems on the same level and at higher levels of complexity."

The advantage of the hierarchy concept is that one is able to see different organizations as operating differently depending on the place they occupy in the hierarchy. Not all managers can operate in the same way. Each top level manager must be cognizant of the position his organization occupies in its hierarchy and where he fits into the suprasystem--a term used by Carlisle. He taust also be aware of how he interfaces with personnel in all levels of his subsystem. Each subsystem is a system of its own with relationships both horizontal and vertical. It is different from all others, and these differences taust be taken into consideration.

The sixth concept of open systems, that ::open systems are changing, adaptive entities," emphasizes the organic rather than the mechanistic view of organization structure. Organizations are flexible, they adapt as needs change.

The last concept of open systems to be considered here is their resemblance to organic systems as they display the growth and decay process called entropy. All organic systems move toward death. Organizations attain negative entropy as they, at least temporarily, arrest the process of decay through the transfusion of materials and energy into the structure. Chester Barnard in 1938 spoke of an ::innate propensity of organizations to expand." Carlisle regards this as a cuhural phenomenon and comments that organizations are seldom satisfied when they reach an optimal size for ease of management. Managers and employees are uneasy if the organization is not growing. This would appear to imply a belief that constant growth is necessary to prevent the onset of the process of decay.

Belty McMillan and James I4d Callicutt 107

As we a t tempt to relate systems theory to the m a n a g e m e n t of h u m a n service organizat ions we need to look in more detail at the quest ion of survival. We have seen earlier in a review of the l i terature on family service agencies that one of the early motivat ions for the deve lopment of fee systems was the fear that as government took over more of the financial bu rden for the poor in the 1930s and 1940s, there would be no role in the society for such agencies. Services would have to be expanded to a wider clientele and charging for services appeared to be a way to at tract a more affluent group of clients. Only by

at t ract ing this group could the agency survive. Two other aspects of this survival issue need to be touched on here. Selznick

(1948) expands his concept of organizat ional survival by stating:

• .organizational survival is intimately connected with the struggle for relative prestige, both for the organization and for elements and individuals within it. It may therefore be useful to refer to a 'prestige-surival motif' in organizational behavior as a shorthand way of relating behavior to needs, especially when the exact nature of the needs remains in doubt.

Prestige m a y be an impor tan t factor in the charging of fees in social agencies. T h e Amer ican people apparen t ly value what they pay for and to provide a service for which people will pay may provide higher status for the agency than to serve only the poor who have little choice about what service they receive and from where it comes.

Another impor tan t factor to be considered in the survival of the agency is that of the env i ronment . Social agencies, like other organizat ions, influence and are inf luenced by their env i ronment . T h e y m ay change their funct ion as differing needs become evident in their communi ty . Likewise, a change in funct ion ma y necessitate a change in the source of funds. It m ay also happen that this availabili ty of funds for a par t icular type of p rog ram- - se rv i ce s to the elderly, alcoholism, day c a r e ~ m a y dictate p rog ram decisions to the agency

that wishes to survive. For example , the am en d m en t s of 1975 to the Public Heal th Service Act m a n d a t e d par t icular services that must be made available by C M H C s if they were (to cont inue) to receive federal funds. Some organizat ions then had to add new services or face the necessity of f inding new funds for existing programs.

E m e r y and Tr is t (1960) discuss the ways in which an organizat ion is influenced by or influences its env i ronment . It m a y change its own structure and funct ion in order to deal with the : : lacks" and : :gluts" in the env i ronment . Since it can at tain its goals by m a n y differing m e a n s - - t o use Em e r y and Tr is t ' s term, "~ :equifinali ty ' ' - - i t is not l imited to par t icular methods of change. These two authors go on to stare that not only does an organizat ion meer the challenge of its env i ronmen t by internal change, bu t it m ay seem to t ransform its env i ronment . T h e organiza t ion is thus able to achieve its : :overr iding miss ion" of placing itself "~:in a position in its env i ronment where it has some assured condit ions for g r o w t h . "

Assuming an agency has decided that it must develop a change in its funding


sources in order to survive, to grow, and to meet the needs of its environment, how does it go about developing such a system? Finding new funds may involve searching for private or foundation monies. It may mean beeoming familiar with and meeting the requirements for third party payment sources, both public and private. And it may mean developing a system to insure partial or full payment of the cost of service by the client or his family. This study addresses itself primarily to the development and use of the latter two sources.

During the 1940s, as we have seen earlier, agencies began to construct fee payment schedules, frequently on a sliding fee scale. At present, as funds become increasingly tight and costs rise, many agencies are looking for new or different ways to increase their funding.

DECISIONMAKING THEORY

Systems are so complex that decisionmaking becomes extremely difficult in most elaborate organizations. No one administrator can possibly be aware of all the factors that have an impact on his organization's structure and function. An understanding of the reasons that organizations decide to develop and use a fee schedule will be clearer, therefore, if we first look at some of the theory on decisionmaking. The reasons and ways in which an organization makes decisions can clarify some of the factors involved in its relationships both within and outside its own structure.

A number of theorists have looked at the art of decisionmaking in organizations. Decisionmaking is an art in that it requires the integration of the most reliablè facts available and the judgment of the decisionmaker based on knowledge and experience. Decisionmaking at best is not an exact science. The early scientific management theorists attempted to make it a science by specifying in great detail how a task should be done so that few decisions were left to judgment and affective elements seldom needed to be taken into consideration. 'More recent attempts at rational problem solving have been tried. Cost-benefit approaches are an example of such attempts. The problems with this approach for the social sciences are discussed by Rossi (1972). To use this approach one taust balance the anticipated costs and the anticipated benefits resulting from any specific policy decision. The problems come in attempting to determine the specific goals of a policy and ways to measure whether or not these are reached. In the social sciences, many goals are stated in ambiguous, broad, or idealistic terms. Affective interpretation is frequently made in order to get on with implementation.

Is the alternative to using a rational problem solving method that of relying completely on judgment and affective measures? Here, while decisions may be made more quickly and at less expense, one faces the danger of ignoring sound alternatives, and of relying too heavily on inadequate experience and data.

Betty McMillan and James W. Callicutt 109

L i n d b l o m (1961) discusses both approaches as well as some re f inements and provides a me t hod for looking at the whole quest ion of dec i s ionmaking as an

integral par t of the o rgan iza t iona l system.

Lindblom's point of departure is a denial of the general validity of two assumptions implicit in most of the literature on policy making. The first is that public policy problems can best be solved by attempting to understand them; the second is that there exists sufficient agreement to provide adequate criteria for choosing among possible alternative policies ....

Conventional descriptions of rational decisionmaking identify the following aspects:

a. clarification of objectives or values,

b. survey of alternative means of reaching objectives,

c. identification of consequences, including side effects or by-products, of each alternative means, and

d. evaluation of each set of consequences in light of the objectives.

However, Lindblom notes, for a number of reasons, such a synoptic or comprehensive attempt at problem solving is not possible to the degree that clarification of objectives founders on social conflict, that required information is either not available or available only at prohibitive costs, or that the problem is simply too complex for man's finite intellectual capacities.

H e goes on to discuss the fact that f requent ly it is not only necessary but

desirable to depar t f rom comprehens ive u n d e r s t a n d i n g and to consider o ther

avenues for set t ing or changing policy. These strategies are called : :disjointed i n c r e m e n t a l i s m " by H i r s c h m a n and L i n d b l o m and are listed as follows:

1. A t t empts at unde r s t and i ng are l imited to policies that differ only

incrementa l ly f rom existing policy. 2. Ins tead of s imply adjus t ing m e a n s to ends, ends are chosen that are

app rop r i a t e to avai lable or near ly avai lable means . 3. A relat ively small n u m b e r of means (a l ternat ive possible policies) is

considered. 4. Ins tead of c o m p a r i n g a l ternat ive means or policies in the light of

pos tu la ted ends or objectives, a l ternat ive ends or objectives are also

c o m p a r e d in the light of pos tu la ted m e a n s or policies and their

consequences . 5. Ends and means are chosen s imul taneous ly ; the choice of means does

not follow the choice of ends. 6. Ends are indefinitely explored, reconsidered, discovered, r a the r than

relat ively fixed. 7. At any given analyt ical point ( " :po in t " refers to any one individual

group , agency, or insti tution), analysis and po l i cymak ing are serial or successive; that is, p rob l ems are not : : so lved" bu t are repea ted ly

a t tacked. 8. Analysis and po l i cymak ing are r e m e d i a l - - t h e y move away f rom ills

r a the r than toward known objectives.


9. At any one analytical point, the analysis and policymaking are socially fragmented; they go on at a very large number of separate points simultaneously.

The agency that attempts to set up a fee system or to revise the one it has is likely to do so within the limits of its current knowledge. The new or revised system will probably closely resemble the old, with any new aspects simply adaptations of the old rather than anything radically different. Decisions are made on inadequate information because inadequate information is all that exists. A few agencies and administrators may venture out with new models but the distance they can go is limited by the reactions of their environment both within the organization and without.

Human service organizations, as open systems, are in constant interchange with their environment for input and disposition of output. To survive and maintain themselves, it is important that the organization be aware of the composition of its environment. Hasenfeld and English (1974) discuss the ::ecological, the sociocultural, and the economic-political" subsystems as essential parts of the environment with which an organization taust deal.

Of particular importance to the present study is the economic-political subsystem, including the fiscal resources. Decisions concerning policy, program, staff, or any other aspect of the organization are, to a large extent, dependent on the availability of financial resources.

HYPOTHESES

In order to determine the primary forces both external and internal which promote or discourage the development of a fee structure in a human service organization, the hypotheses below were tested. Those hypotheses relate to the organization as a system in that they touch both the internal structure and the impact of the environment within which the organization functions. They also show some of the factors that influence the decisions made by the administrator and thus tie in to decisionmaking theory.

Hypothesis 1 When the community believes there is value in clients paying for service, the

administrator will feel external or internal impetus to collect fees. No open system can exist without recognition of the impact of its

environment on its operation. The human services organization is dependent on its environment for clients as well as for funds. Funding sources, such as United Way, cannot be ignored.

Hypothesis 2 When the administrator sees the payment of a fee as of benefit to the client,

he/she will feel internal or external impetus to collect fees.

Be#y McMillan and James ~4d Calliutt l l l

Social work literature reflects the long held belief that payment for service is therapeutic for the client and opens the way for a more productive use of time and effort. This rationale has been used since the early 1940s as the justification for a fee structure and is still a widely held value among those who deliver human services.

Hypothesis 3 When the administrator places strong emphasis on the growth of the agency,

he/she will feel internal or external impetus to collect fees. Open systems tend to see growth as the only way to avoid decay, and

organizations with their ~:propensity to expand" look for means of bringing in new energy or resources that will aid in such expansion. The development of a fee structure is one way to bring in new resources in the form of money and possibly clients.

Hypothesis 4 When the administrator sees other funding sources for the agency as

unstable or decreasing, he/she will feel internal or external impetus to collect fees.

The funding of human service organizations is often a highly erratic and political process. The administrator has little direct control--although his/her skills at lobbying and public relations can help or hinder-- the allocation of funds. He/she can control more directly what takes place within the structure of the organization, and this includes the charging and collection of fees from clients. This will, therefore, be seen as an important source of funds when community and government funding appears uncertain.

Hypothesis 5 When average client income is above $11,500 per year, the administrator

will feel internal or external impetus to collect fees. Both the client and the community will object if the organization attempts to

charge low-income clients for services. But again, being cognizant of environmental opinion, the community will object to the use of what is seen as tax dollars for the provision of services to those who could pay for them from their own pockets or through an insurance plan. So as client income level increases, the administrator will tend to see benefit to the client, the agency, and the community in a fee structure.

Hypothesis 6

When the total agency budget is large (as compared to similar agencies), the administrator will feel internal or external impetus to collect fees.

The maintenance and growth of the organization is of importance to the administrator. It is not only a marter of survival but of prestige in the

112 Administration in Menta[ Health

community structure as well as a career advantage for the administrator. The organization with a large budget must continue to increase that budget or at least to make sure it does not decrease. As mentioned earlier, the funding process is highly politicized and the administrator's area of greatest control in funding may be that of client fees. Therefore, this resource takes on great importance.

Hypothesis 7 When the agency has a large caseload (as compared to similar agencies), the

administrator will feel internal or external impetus to collect fees. The higher the number of people served, the greater opportunity there is for

client fees to be an important part of the agency budget. On the other hand, there is the possibility that a small elite agency may depend almost entirely on fees. This would tend to be the exception rather than the rule, but in those agencies for which it is true, it might tend to limit intake.

Hypothesis 8 When the administrator has been in an administrative position less than ten

years, he/she will feel internal or external impetus to collect fees. The early 1960s brought an abundance of Federal funds into the human

services field. As these funds have diminished in the 1970s, administrators have learned to look to other sources in their environment for the continued operation of agencies. Those who began their careers in administration during the 1970s would presumably look more favorably on the development of a fee structure than those who became administrators in earlier years and would find it necessary to develop new sources of funding for the organization. This change would relate to both sources of funds and philosophy about the fees.

Hypothesis 9 When the administrator has a master's or higher degree, he/she will feel

internal or external impetus to collect fees. This hypothesis and the one to follow relate to changes in social welfare

education in recent years with more emphasis on accountability, policy, and administration than was prevalent in the 1950s. An emphasis on good business practices among human service professionals in recent years has probably provided a new focus on the charging of client fees. This is typified by the increased influence of those trained in fiscal services rather than program content during the development of the Nixon policies in the early 1970s.

Hypothesis 10 When the administrator is 40 or younger, he/she will feel internal or external

impetus to collect fees. The discussion of difference in philosophy in Hypotheses 8 and 9 would also

apply here.

Betty McMillan and James W. Callicutt 113

METHOD

A questionnaire was sent to the total number (45) of administrators in C M H C s and family service agencies in Texas. The rate of usable returns was 84.44 percent.

The list of administrators of family service agencies was taken from the Directory of the Family Service Association of America. Of the 16 administrators in Texas, 15 returned the questionnaires, giving a rate of return of 93.75 percent.

Questionnaires were seht to the 29 administrators of C M H C s affiliated with the Texas Department of Mental Health and Mental Retardation ( T D M H / M R ) . These names were taken from the T D M H / M R report of fiscal year September 1, 1977-August 31, 1978, which was the most current report at the time data was collected. Responses were received from 26 of the center administrators. Three were not usable. One reported that it would be necessary to go through the agency's research committee for approval before the questionnaire could be completed. The amount of time and effort this would have taken rendered it impractical. One reported that the mental health counseling services were contracted out to other agencies and therefore the information requested was not available. One was received too late to be used. The remaining 23 centers were used in the study giving a usable return for C M H C s of 79.31 percent.

The questionnaire was designed to obtain data on the administrator, the financial structure, the number of clients and their income, and the opinions of the administrator about the value of fees. In order to provide a basis for analysis of the sample, indices were developed, not from a comparison of separate variables, but by comparison of separate opinion questions on the questionnaire.

Pearson eorrelation coefficients were run comparing each of the criteria statements on the questionnaire with each of the other opinion statements to determine where significant (above .05 level) relationships existed.

Variables

A review of the variables to be considered will help to clarify the procedures used and the results obtained and reported. These variables are:

Dependent Variables

1. The external impetus felt by agency administrators to collect fees 2. The internal impetus felt by agency administrators to collect fees.

Independent Variables

1. The type of setting 2. The age of the administrator 3. The highest academic degree of the administrator 4. The number of years the administrator has been in an administrative position 5. The total amount of the agency budget 6. The source of agency funds 7. The average dient income 8. The number of clients served 9. The client benefit rating (what the client gets out of a fee system)

RESULTS

E a c h i n d e p e n d e n t v a r i a b l e w a s c o n s i d e r e d in t u r n as it r e l a t e d to t h e t w o

d e p e n d e n t v a r i a b l e s . T h o s e t h a t p r o v e d to h a v e e i t h e r a d i r e c t o r i n v e r s e

r e l a t i o n s h i p s t a t i s t i c a l l y s i g n i f i c a n t wi l l b e r e p o r t e d h e r e .


External Impetus to Collect Fees

Looking first at the external impetus to collect fees, one notes that first, there is a significant relationship between this variable and the type of agency (r = .44, p< .05). Administrators of C M H C s experience more pressure from their environment to collect fees than do administrators of family service agencies. One factor that could help to explain this finding is the fact that a number of C M H C s were established under grants destined to run for a specific number of years with funding to become the responsibility of the community at the end of that time.

The second variable, that of units of service, also shows a positive relationship (r = .37, p< .05). The larger the units of service, the more pressure the administrator feels from his/her community and/or funding sources to collect fees. This statement is consistent with those made concerning the previous independent variable in that C M H C s have significantly higher caseloads than do family service agencies.

A further positive relationship is that between the external impetus to collect fees and the total expenditure of the agency for counseling services (r = .36, p< .05). The higher the expenditure, the more pressure the administrator feels from his/her environment to collect fees. However, when these two variables are compared by each type agency separately, the relationship disappears. Administrators of family service agencies with large budgets do not feel significantly more external pressure to collect fees than do family service agencies with small budgets. Neither does the relationship hold for administrators of C M H C s . This apparent discrepancy can be explained by the fact that the relationship becomes apparent only with a large n. The n is so small when the two groups are separated that the relationship disappears.

In a fourth comparison of relationship some interesting trends become apparent. As sources of funds are related to the external impetus to collect fees one can note a positive relationship between the dependent variable and the amount of funds received from Medicaid (r = .32, p< .05), Medicare (r = .34, p< .05), and state government resources (r = .38, p < .05). This apparently indicates that state legislation and the Federal legislation governing the use of Medicaid and Medicare funds as administered by the state government or by private contractors are felt by administrators to encourage them to collect more fees from clients. The more funds they receive from these sources, the more pressure they feel to collect fees. Furthermore, the mechanism in place for the collection of Medicare and Medicaid funds has similar utility for the collection of client fees.

On the other hand, one finds an inverse relationship between the amount of funds an agency receives from United Way (r = - . 5 2 , p< .05), and from client fees (r = .33, p< .05). It would appear, therefore, that agencies do not feel pressure from United Way to collect fees. At least these statistics indicate that the higher the amount of funds received from this source, the less pressure

Betty McMillan and James Œ Callicutt 115

is felt to collect fees. One could wonder if this indicates that those agencies receiving large amounts from United Way feel secure in the fact that they can continue to receive such funds. Another possibility is that since it is almost exclusively family service agencies what are highly funded by United Way and these particular agencies do not feel the external pressure to collect fees felt by CMHCs , this finding is of no great importance.

As was indicated earlier, the higher the amount of funds received from client fees, the Iess the amount of pressure felt by the administrator to collect, for perhaps, to increase fees. One might surmise from this that those agencies receiving a significant portion of their budget from fees feel satisfied with the fee structure they have devised and therefore believe they are meeting the demands of the community.

The fifth variable, that of the number of sources from which an agency receives funds, proves to be positive in its relationship to external impetus to collect fees. The higher the number of sources, the greater the pressure the administrator feels to collect fees (r = .36, p< .05). One could ask if this indicates that administrators who are receiving funds from many sources and who presumably believe that all these funds are necessary to maintain the agency, also feel somewhat insecure about the continuation of all of them and therefore are interested in gaining a more secure financial base through increasing client fees.

The sixth variable, that of high client income, proves to have an inverse relationship with the external impetus to collect fees. The higher the number of clients in the high income group (those earning over $11,500 per year), the less

the external pressure felt to collect fees (r = - .46, p< .05). At first glance this is a surprising finding in that clients with higher incomes would presumably be expected to pay more fees. It is not surprising, however, when one remembers that the dependent variable being considered here is the external pressure felt to collect fees. This pressure would not be felt by the agency administrator who has a high number of clients earning incomes sufficient to pay a fee and a fee structure that allows such fees to be collected.

The last variable, that of the educational level of the administrator, proves to have an inverse relationship to the external impetus to collect fees. The Iower

the educational level of the administrator, the more pressure he/she felt from the environment to collect fees (r = - .33, p< .05). That is, the administrator whose highest degree was a B.A. or B.S. felt more pressure from the community and/or funding sources than did the person holding a Ph.D. or other advanced degree. One might surmise from this one of two things: Either the person with the lower level of education feels less confident and is, therefore, more susceptible to feeling community pressure; or, there are more persons in administrative positions in C M H C s whose highest degree is a bachelor's than there are in famüy service agencies (which actually is the case), and therefore the difference in the amount of pressure felt is really due to the difference in type of agency. One notes above that C M H C administrators feel


more external pressure to collect fees than do administrators of family service agencies.

The other independent variables proved not to relate significantly to the external impetus to collect fees.

Internal Impetus to Collect Fees

When one turns to the internal impetus to collect fees, it is apparent that there are only two independent variables showing a significant relationship and both of these are inverse relationships.

The first of these variables to be considered is units of service. The higher the number of clients served, the less the internal impetus to collect fees (r = - .45 , p< .05). The administrator with a high caseload, therefore, apparently

does not feel that it is necessary to increase fees from the standpoint of maintenance and growth of the agency itself. This could be due to the fact that he/she believes that the agency is already accounting for a reasonable percentage of the budget through fees.

The second variable that shows a significant relationship with internal impetus to collect fees is that of funds from Federal government sources other than Medicare and Medicaid. Thëh igher the percentage of Federal funds, the less the internal impetus to collect fees (r = - .30, p< .05). While these Federal funds were not defined in the questionnaire, it is presumed that they are received in the form of grants, perhaps from particular programs or projects. They may, therefore, not be seen by administrators as an essential part of the ongoing budget and not tied to the structure. This is not to suggest that there are no pressures to collect fees and third party payments when Federal grant monies are received.

It is important that no other variables related significantly to internal impetus to collect fees. Of particular importance here, in light of the literature cited earlier, is the fact that client benefit was not seen as significant. Most literature cites the therapeutic value of fees to the client as a primary reason for charging fees.

In summary, the above findings would appear to indicate that external pressures to collect fees are more orten a real force in the agency's development of a fee structure than are any perceived benefits to the agency itself or to the clients. This distinction may be more apparent than real, however, since administrators may, from a very practical standpoint, see survival of the agency and therefore service to the client as dependent on pleasing those persons or institutions in the environment who are perceived as controlling the source of funds, the lifeblood of the agency and its program.

SUPPORTED HYPOTHESES

The findings of this study indicate agreement or disagreement with the original hypotheses to varying degrees. In some cases, the hypothesis is

Betty McMillan and ]ames W. CaEicutt J17

supported completely by the evidence; in others, there is no evidence to support the hypothesis. It may be as important to know which hypotheses are not supported as to know which are.

Hypothesis 1 When the community believes there is value in clients paying for service, the

administrator will feel internal or external impetus to collect fees. The findings of this study definitely indicate the importance the agency

administrator attaehes to the pressure felt from the environment to collect fees. As was seen earlier, five of the nine independent variables related signitScantly to the external impetus to collect fees that was reportedly experienced by the administrator. This is consistent wih the earlier theoretical discussion of open systems--that no organization in an open system can exist without recognition of the impact of its environment on its operation.

Hypothesis 2 Unsupported.

Hypothesis 3 When the administrator places strong emphasis on the growth of the agency,

he/she will feel internal or external impetus to collect fees. The evidence from this study would tend to support this hypothesis. Size of

caseload, total expenditure, funding sources providing a high percentage of the budget, and the number of different funding sources all correlate highly with the external impetus to collect fees. All of these variables would indicate a value on the part of the administrator to increase and grow, or at least to maintain the current status of the agency and its services. These facts are consistent with the earlier theoretical discussion of the importance placed on growth in open systems.

Hypothesis 4 ~¢Vhen the administrator sees other funding sources for the agency as

unstable or decreasing, he/she will feel internal or external impetus to collect fees.

A part of the impetus to collect or increase fees would appear to come from the administrator 's belief that he must please his funding sources, particularly those he sees as not only powerful but subject to arbitrary changes. There was a signifieant relationship between impetus to collect fees and funding from either state government or Medicaid and Medicare sources. These sources are highly dependent on legislative action and legislative action cannot be predicated from year to year.

There was a negative relationship between the amount of funds received from United Way sources and client fees and the pressure felt to collect or


increase fees. One could surmise that this fact indicates the greater amount of confidence the administrator feels in both the stability of these two sources and in the amount of control he/she has over them.


Hypothesis 6 When the total agency budget is large (as compared to similar agencies), the

administrator will feel internal or external impetus to collect fees. The data of this study support this hypothesis. The higher the total

expenditure of the agency for counseling services, the more pressure was felt by the administrator to colleet fees. These findings are consistent with those reported under Hypothesis 3 where it is contended that the administrator sees as desirable that his/her agency maintain or increase its size and the level of services it provides. In the earlier discussion of the conceptual framework, one can see the importance of growth to the administrator in an open system.

Hypothesis 7 When the agency has a large caseload (as compared to similar agencies), the

administrator will feel internal or external impetus to collect fees. As seen in the discussion of Hypothesis 6, size is of value to the

administrator. Adequate funding is necessary to maintain or increase the numbers of clients served. The findings in this study show that the larger the caseload, the more pressure the administrator feels to collect fees.




IMPLICATIONS FOR POLICY AND PRACTICE

This study was undertaken to clarify for both administrators and policy makers the factors which, in the opinion of the administrators, are of most importance in his/her decisions concerning the charging of fees for counseling services to clients.

Betty McMillan and James 14d Callicutt 119

It was anticipated that such a study would provide a position from which administrators could consider their own opinions and practices. From such a position, they could then come up with a clearer understanding of the factors that influence them in their decisions about this important area of financing services. This would enable them to translate their decisions more effectively to staff and clients, thus taking away some of the uneasiness and mystery that clouded the question of fees in many agencies.

For policy makers, it is anticipated that a clarification of the issues, most of them economic, surrounding the charging of fees for services, would make better communication possible with administrators and increase acceptance of the facts of funding in the 1980s.

This study indicates that the greatest amount of pressure experienced by the administrator to collect fees comes from external sources-- the community and funding sources. This is not surprising. The agency is part of several larger systems; since it does not exist in a vacuum, it cannot survive alone.

Another important factor is that acceptance of counseling services for all economic classes of society has become more widespread. We all live in a stressful world and many individuals or families, at certain periods, need counseling or mental health services to deal with some aspect of stress in their lives. This has led to the proliferation of professionals in these fields offering private services for a fee and has made it more acceptable for higher income groups to seek help from agencies and to pay at least a part of the cost of the service they receive. The community, therefore, has grown to expect that agencies providing counseling services will collect fees.

As administrators develop more realistic fee schedules in order to collect the maximum appropriate amount, they will at the same time more nearly meet the demands of the environment. While a fee schedule appears to be an economic necessity, it can still be used as an integral part of the therapeutic process. It would appear, frorn the opinions expressed by administrators in this study, that the primary reason for a fee schedule is that fees are essential for the continued existence of the agency. For example, the statement on the questionnaire, ~~The collection of fees is important financially to the continuation of services to our agency," elicited 26 responses of complete agreement--17 from C M H C s and nine from family service agencies. Of the remaining 12 responses, only two were in disagreement with the statement; the others were in partial agreement or checked the position of neither agreement or disagreement. This finding is important in light of the fact that much of the literature cited earlier indicated that at least those administrators in social service agencies who were publishing articles believed that the primary justification for fees was therapeutic value to the client. Since this opinion has been widely expressed in the literature and has been written from the standpoint of family service agencies, it was speculated that there might be a real difference between the two types of agencies on responses to questions


concerning client benefit. Perhaps C M H C s would see less client value in fees than would family service agencies. A review of the five questions pertaining to fees, however, indicated that this was not true.

It appears that while administrators tend to agree that the client places a higher value on service for which he pays and that fees are not a barrier to service, there is no strong opinion either way about the role of fees in screening out unmotivated clients or in keeping them in counseling once they have begun. Neither is there agreement nor disagreement in seeing benefit to the client as the primary reason for a fee structure.

Further exploration of the question of whether or not the charging of a fee actually does screen out clients would be of value. While this study indicates that in the opinion of administrators this does not happen, a study of the actual experiences of clients might produce different results.

It would appear that while administrators believe that fees have some benefit for the client, this is not the primary consideration for the administrator who is considering how best to finance his/her agency. This has implications for staff development, for staff-client relationships, for administrator-staffrelationships and for board policy.

If board members, administrators, and agency staff are informed of the results of this study, then the rationale for collecting fees may be thought through afresh and with a different perception. This thinking is predicated on the recognition that the collection of fees (based on the responses of administrators in this study) is not primarily for the therapeutic benefit to the client. This is not to say that fees cannot play a part in the counseling process. They may be an important part of helping a client deal with the ways in which he accepts and uses help, and with the ways he deals with financial responsibility. It is to say that the agency must at least challenge, if not reject, the primary rationale of therapeutic client benefit for the collection of fees.

A second important area that was considered in this study and proved not to be significant was administrator characteristics--age, education, and tenure in the position. It was believed that these questions could have important implications for both educators and boards in preparing and hiring administrators for human service agencies. While these factors did not correlate significantly with the development and use of fee structures, it is possible that further study may help to answer a number of questions about other aspects of administration such as: How much and what kind of experience is most important for the administrator who is to work effectively with funding agencies? Is there a ::best" type of education to prepare an administrator in a human service agency to balance his/her responsibilities to the environment with those to the staff and the clients? If so, what is it? Is an administrator an administrator regardless of his/her field of education or should the human service administrator be oriented to human services during the educational process? Is there a ~difference in the way a younger

Betty McMillan and James W. Callicutt 12J

administrator views his/her role in the agency and the community from that of the older administrator? These questions can have important bearings on the ways in which administrators are trained and are placed in positions.

The above comments pertain to the five hypotheses in this study that were not supported by the data. It is appropriate, also, to look at those hypotheses that were supported, in terms of further research that might be undertaken to develop them.

External pressure to collect fees is strongly felt by administrators in this study. Further research might be done with funding sources to see how much of this perceived pressure is actually a part of their policy in funding. Do the United Way and other funding sources state, either in written or implied form, that their continued funding of an agency is dependent on that agency's collecting a certain percentage of its budget from fees? Whether the actual pressure and the perceived pressure are equal or not can have implications for the financial administration of the agency.

The clientele of an agency may determine the type of services it offers, its image in the community, the particular qualifications required of staff members, and the make-up of the board. Conversely, these agency characteristics may also determine who the clients are. It is important for an agency to determine as rationally as possible who it is going to serve and the best ways to serve this client group. The percentage of the budget that can be accounted for by client fees or by third party payment is presumably related to the circumstances of the clients served. This is a fiscal question, perhaps a question of agency survival, and needs much further study. This study does not address questions of the relationship of client income to percentage of the total budget made up by client fees. This needs to be done. A study of the relative financial value to an agency of serving high versus low income groups would also prove of interest. For example, are more funds available from insurance and client fees from the high income groups, or from Medicare, Medicaid, and other sources to serve those with lower incomes? Can an agency effectively serve both groups? What part does community pressure play in determining the clientele an agency serves?

While the only client characteristic considered in this study was that of income, there a r e a number of other facts about clients that might influence an administrator 's opinion about his/her fee structure--race, age, sex, ethnic background, economic standing in the community, education, religion, etc. Further research in these areas could have a significant impact on an agency's policy and practice.

One difficulty encountered in this study had not been anticipated--that of the dissimilarities between the two types of agency studied. This made a combined analysis difficult. While both agencies provide a similar kind of service, namely, counseling, the differences in size, in amount of budget, and in sources of funding cause problems in comparisons between them. It would


be useful in further research to take the data from this study for each type agency separately and relate it to similar agencies in a wider geographic area. This should give valuable information to both administrators and policy makers.

REFERENCES

Ackoff, R.L. Systems, organizations, and interdisciplinary research. In F.E. Emery (ed.), Systems Thinking. Middlesex, England: Penguin Books, Ltd., 1969.

Andre, P. Kane, T.J., and Meyer, J., Jr. Economic assessment: A model for assessing ability to pay. Administration in Mental Health, 6:118, 1980.

Bardnard, C.I. The Functions of the Executive. Cambridge, Massachusetts: Harvard University Press, 1980. Beigel, A. Planning for the development of a community mental health center, 1. Catchment area

administration, continuity of care, staffing and funding. Community Mental Health Journal, 6:273, 1970.

Carlisle, H.M. Management Concepts and Situations. Chicago: Science Research Associates, Inc., 1976. Emery, F.E., and Trist, E.L. Sociotechnical systems. In C.W. Churchman and M. Verhults (eds.),

Management Science, Models and Techniques, Vol. 2. Elmsford, New York: Pergamon, I960. Encyclopedia of Social Work, 17th issue. Vol. 1. Financing social welfare: Voluntary organizations, by

Michael J. Murphy. Fizdale, R. A new look at fee charging. Social Casework, 38:63, 1957. Goldberg, A., and Kovac, D.C. A new concept of subsidy in determining fees for service. Social Casework,

52:206, 1971. Hasenfeld, Y., & English, R.A. (eds.). Human Service Organizations, A Book of Readings. Ann Arbor: The

University of Michigan Press, 1974. Hirschman, A.O., and Lindblom, C.E. Economic development, research and development,

policy making: Some converging views. Behavioral Science 7, 1961. Hofstein, S. Fee payment in social work counseling. Social Casework, 36:314, 1955. This same attitude can

seen in Feldman, Frances Lomas. The Family in a Money World. New York: Family Service Association of America, 1957.

Johnson, R., Kast, F.E., and Rosenzweig, J.E. The Theory and Management of Systems. New York: McGraw- Hill Book Company, 1963.

Levin, H. A reappraisal of fee-charging. Social Casework, 4.508-515, 1963. Neumann, F. Administration and community implications of fee charging. Social Casework, 33:272, July

1952. Rossi, Peter H. Testing for success and failure in social acfion. In Rossi and Williams, Evaluating Social

Programs, Theory, Practice and Politics~ New York: Seminar Press, 1972. Selznick, P. Foundations of the theory of organizations. American Sociological Review, 13:25-35, 1948. Shafer, C.M. The family agency and the private casework. Social Casework, 40:535, 1959.

fees for counseling services: why charge them?

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