a retrospective study of the problems …rand are lost on business ventures because of essentially...
TRANSCRIPT
A RETROSPECTIVE STUDY OF THE PROBLEMS
ENCOUNTERED BY SMALL BUSINESS OWNER-
MANAGERS IN THE HEALTH SECTOR
BY
J. O’CONNELL
SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF
MAGISTER ARTIUM
IN HEALTH AND WELFARE MANAGEMENT
IN THE FACULTY FOR HEALTH SCIENCES
OF THE NELSON MANDELA METROPOLITAN UNIVERSITY
SUPERVISOR: PROF. J. STRÜMPHER
CO-SUPERVISOR: DR. ELMARIE VENTER
JANUARY 2006
i
ACKNOWLEDGEMENTS I would like to express my thanks and gratitude towards:
• God Almighty for the strength and wisdom He gave me during this
study.
• Thys and my sisters for their unconditional love, encouragement
and support throughout the study.
• My friends for their continued support and encouragement.
• My friend and colleague, Jenny Richards, Nursing Manager of
Hunterscraig Hospital, who has been a pillar of strength during this
study
• Kevin Cragg, Sandy Human, Lungile Phakathi and all the other
staff of Hunterscraig Hospital for their continued support and
encouragement.
• Prof. J. Strumpher and Dr. E. Venter, my supervisors, for their
excellent guidance, supervision and support.
• Prof. Susan van Rensburg, without whose expertise, knowledge
and support I would never have completed this study.
• All the participants who were willing to share their problems and
views with me.
• To Life Health Care, for sponsoring my studies.
ii
ABSTRACT
It is estimated that the failure rate of small, medium and micro enterprises in
South Africa’s (SMME’s) are between 70% and 80%. As a result, millions of
rand are lost on business ventures because of essentially avoidable mistakes
and problems. Difficulties encountered by small business owner-managers can
be described as environmental, marketing, financial or managerial in nature.
The primary objective of this study was to investigate the nature and importance
of problems experience by small business owner-managers in the private health
sector.
The design that was used in this study was qualitative, descriptive, exploratory
and contextual in nature. This study fell within the broad framework of
qualitative research, as interviews were employed to do the research project
(Baker, 1999:247). A purposive sample was used to identify the participants
for inclusion. The target population was small business owner-managers
operating within the private health sector in the Nelson Mandela Metropole.
The sample comprised eight business owner-managers in the health sector
within the boundaries of the Nelson Mandela Metropole, purposely identified.
Before doing the empirical research, a pilot study was conducted with one small
business owner-manager that fulfilled the required criteria of the research
population.
Data was collected by means of naïve sketches and semi-structured interviews.
Data was analyzed according to the framework provided by Tesch (in Creswell,
1994). Guba’s model (in Krefting, 1991) was employed for data verification.
Interviews were conducted in both Afrikaans and English.
iii
Direct transcriptions from the tape-recorded interviews ensured that all data was
gathered and saved for reference when needed during the data analysis as
described by Field and Morse (1996:64). The researcher took observational,
theoretical, methodological and personal notes as described in Wilson (1989:
433-435). Transcriptions from sketches and interviews served as the database
for the study.
Only literature pertaining to the research process was consulted prior to the
data collection of the primary data, in order to establish an effective research
format.
The problems experienced by small business owner-managers in the health
sector were discussed under four major themes and several sub-themes
identified by the researcher and the independent coder.
The main themes that emerged from the study were: small business owner-
managers in the health sector lacked business skills and experience; had
financial problems regarding their businesses; had difficulty building a customer
base; and were uncertain in terms of their businesses’ future.
Conclusions were drawn from the findings of the study and limiting factors were
identified and acknowledged in the report. Recommendations that could assist
practitioners, educators and trainers were suggested.
iv
TABLE OF CONTENTS
ABSTRACT ii
CHAPTER 1: ORIENTATION AND OVERVIEW OF STUDY
PAGE 1.1 INTRODUCTION 1
1.2 LITERATURE OVERVIEW 2
1.3 STATEMENT OF THE RESEARCH PROBLEM 4
1.4 RESEARCH QUESTION 5
1.5 OBJECTIVES OF THE STUDY 5
1.6 KEY CONCEPTS USED IN THE STUDY 5
1.7 RESEARCH METHODOLOGY 6
1.7.1 Research design 6
1.7.2 Data collection 6
1.7.2.1 Sampling 7
1.7.2.2 Methods of data collection 7
1.7.2.2.1 Naïve sketches 8
1.7.2.2.2 Interviewing 9
1.7.2.2.3 Observation and field notes 9
1.7.3 Data analysis 10
1.7.3.1 Pilot study 10
1.7.4 Literature control 11
1.8 TRUSTWORHINESS OF THE STUDY 11
1.9 ETHICAL CONSIDERATIONS 11
1.10 CONTENT 11
1.11 CONCLUSION 12
v
CHAPTER TWO
RESEARCH MEHTODOLOGY
PAGE
2.1 INTRODUCTION 13
2.2 RATIONALE OF THE STUDY 13
2.3 OBJECTIVES OF THE STUDY 14
2.4 RESEARCH DESIGN AND METHODOLOGY 15
2.4.1 Research Design 15
2.4.2 Research Method 17
2.4.2.1 Research Population and Sampling 17
2.4.2.1.1 Population 17
2.4.2.1.2 Sampling Method 17
2.4.2.1.3 Inclusion Criteria 18
2.4.2.1.4 Role of the Researcher 19
2.4.2.2 Data Collection Methods 19
2.4.2.2.1 Naïve sketches 19
2.4.2.2.2 Interviewing 20
2.4.2.2.3 Data Analysis 24
2.4.2.1.5 Pilot Study 26
2.4.2.1.6 Literature control 26
2.5 TRUSTWORHINESS OF THE STUDY 27
2.5.1 Credibility 28
2.5.2 Transferability 29
2.5.3 Dependability 31
vi
2.5.4 Confirmability 32
2.6 ETHICAL AND LEGAL CONSIDERATIONS 34
2.6.1 Informed Consent 35
2.6.2 No Harm to Research Participant 35
2.6.3 Deception of Participants 36
2.6.4 Action and Competence of Researcher 37
2.7 CONCLUSION, LIMITATIONS AND
RECOMMENDATIONS 38
2.8 SUMMARY 38
vii
CHAPTER THREE
DISCUSSION OF RESULTS AND LITERATURE CONTROL
PAGE
3.1 INTRODUCTION 39
3.2 RESEARCH FINDINGS 39
3.3 DISCUSSION OF IDENTIFIED THEMES 42
3.3.1 Main Theme 1: Small business owner-managers in
the health sector lack business skills and experience 44
3.3.1.1 Small business owner-managers in the health
sector lack training in managing a business 45
3.3.1.2 Small business owner-managers lack
administrative skills 47
3.3.1.3 Small business owner-managers lack skills to manage
the human resource function of their businesses 48
3.3.1.4 Small business owner-managers in the health sector
expressed problems / challenges to cope with
family and business demands 49
3.3.1.5 Professionals are reluctant to make use of available
resources for assistance 51
3.3.2 Theme 2: Small business owner-managers in the
health sector experience financial problems 53
3.3.2.1 Small business owner-managers lack access to
finance 53
3.3.2.2 Small business owner-managers lack planning skills
or do not plan at all 55
3.3.2.3 Medical Aid Schemes do not pay accounts timeously 56
3.3.2.4 Tax rates are very high and
provisional tax needs to be paid bi- annually 57
viii
3.3.3 Main theme 3: Small business owner-managers
in the health sector experience difficulty in building
a customer base 59
3.3.3.1 Small business owner-managers experience problems
with marketing due to ethical constraints 59
3.3.3.2 Small business owner-managers experience problems
finding a niche in the market 62
3.3.4 Main Theme 4: Small business owner-managers in the health
sector experience uncertainty in terms of their businesses
future 62
3.3.4.1 Small business owner-managers are uncertain
regarding the future of their businesses after the
implementation of the “Certificate of Need” 63
3.4 SUMMARY 64
3.5 CONCLUSION 65
ix
CAPTER FOUR
SUMMARY, CONCLUSION, RECOMMENDATIONS AND LIMITATIONS
PAGE
4.1 INTRODUCTION 66
4.2 OBJECTIVES OF THE STUDY 66
4.3 FINDINGS OF THE STUDY 67
4.4 RECOMMENDATIONS 68
4.4.1 Education 68
4.4.1.1 Inclusion of business management modules
in training programmes 68
4.4.2 Research 70
4.4.2.1 The SACHP (South African council for health
practitioners) conference format should include
business as a standing sub-theme 71
4.4.2.2 The SACHP (South African council for health
practitioners) should liaise with government
about contentious issues 72
4.4.2.3 The SACHP (South African council for health
practitioners) should act as a nodal point between its
members and government about contentious issues 73
4.4.3 Practice 74
4.4.3.1The small business owner-manager should not
Carry the business alone 75
4.4.3.2 Innovative plans to establish contacts 75
4.4.3.3 Establishing and maintaining healthy family
x
relationships 75
4.5 LIMITATIONS 76
4.6 CONCLUSION 77
xi
PAGE
BIBLIOGRAPHY 78
ANNEXURE A: Participant consent form 82
ANNEXURE B: Biographical data 84
ANNEXURE C: Certificates of need are a recipe for chaos 85
ANNEXURE D: Health care transformation: Certificate of
Need is a tool for better health care provision 89
ANNEXURE E: Protocol for data analysis 92
ANNEXURE F: Sample of interview transcription 93
xii
LIST OF TABLES
PAGE
TABLE 2.1 SUMMARY OF CRITERIA AND STRATEGIES TO
ENSURE TRUSTWORTHINESS 33
TABLE 3.1 IDENTIFIED MAIN AND SUB-THEMES RELATING
TO THE PROBLEMS EXPERIENCED BY SMALL
BUSINESS OWNER-MANAGERS IN THE HEALTH
SECTOR. 43
1
CHAPTER 1
ORIENTATION AND OVERVIEW OF STUDY
1.1 INTRODUCTION
Small, medium, and micro enterprises (SMME’s) are globally regarded as the
driving force in economic growth and job creation (Levin, 1998:79; Lunsche
and Barron, 1998:1; Sunter, 2000:23). The South African Department of
Trade and Industry estimates that small businesses employ almost half of the
people employed in the private sector, and contribute to 42% of the country’s
gross domestic product (Levin 1998: 79).
The SMME sector has been described by the South African government as
having enormous economic potential and because of this, the government
has become increasingly committed to the promotion and growth of this
sector (Budget speech, 2001). Despite efforts by the government to
establish a support structure for the small business sector, to date these
efforts have not been met with much success. The Minister of Trade and
Industry admitted that his department had failed in its chief objective of
supporting and growing the small business sector in South Africa (Erwin
admits SMME sector failure, 2000:11).
With the importance of the small business sector becoming increasingly
apparent, the continued creation and survival of SMME’s is vitally important
to the “future of the South African economy and the creation of new
employment opportunities” (Macleod, 2004:16). However, it has been
estimated that the failure rate of SMME’s lies between 70% and 80%
(Barron, 2000:1, Ryan, 2003:13) and that a substantial amount of money
has being lost due to the occurrence of mistakes and problems that could
otherwise have been avoided. A number of structural constraints have been
2
cited as major reasons for the under development and the failure of the
SMME sector.
These include, amongst others, lack of access to finance, markets,
information and mentoring, business premises, business skills and a poor
infrastructure (Van Eeden, Viviers and Venter: 2003:22). Although the above
is the norm for small businesses in South Africa, very little is known about the
problems experienced by small businesses in the health sector and whether
they are the same as the problems experienced by their counterparts in other
sectors.
1.2 LITERATURE OVERVIEW
The failure rate among SMME’s is unacceptably high in South Africa. It is
estimated that between 70% and 80% of South African start-up businesses
fail within five years and millions of rand are lost (Barron 2000:1).
Lack of financial assistance is often cited as the major constraint facing small
businesses (Longnecker, Moore and Petty, 1994:46; Marx, van Rooyen,
Bosch and Reynders 1998:732; Van Aardt, Van Aardt and Bezuidenhout,
2000:191). However, it is harder to obtain business management skills,
mentoring and assistance for small businesses than actual capital. Budding
entrepreneurs lack skills and knowledge about how to start and manage a
business and one of the greatest needs of SMME’s is after-care support.
Most mentoring programmes stop at the point where finance has been
obtained (Barron 2000:1).
The founder of a business is usually struggling to build a new business.
Future planning is not always in the mind of the entrepreneur while he/she is
struggling to survive. However, planning and getting good advice from
outside the business is critical (Barron 2000:1). To be successful as the
3
owner-manager of the business, one does not necessarily have to be the
brightest in all aspects of the operation, but one has to be certain that the
best possible advice and information are obtained. Assistance, in the form of
advice and information, is available from various sources, amongst others,
from personal and professional acquaintances, the media, business service
providers as well as attending business-related courses and seminars. It is
maintained that one of the major reasons for small business failure is
managerial incompetence and a lack of business skills and knowledge. It
would thus seem logical to assume that, through making use of the
assistance available, managerial competence and business skills will
improve, and the failure rate can be reduced (Van Eeden, Viviers and Venter:
2003:22).
ABSA (the largest commercial bank in South Africa) recently announced its
commitment to the SMME sector by putting its financial weight behind an
entrepreneurship-training programme, named “Entrepreneurship for
beginners”. The bank felt there was no point in giving people money if they
did not know how to manage their own business (Van Aardt, Van Aardt and
Bezuidenhout, 2000:16).
To address the issue of managerial incompetence and lack of business skills,
it is still vital that the small business owner-managers be aware of and use
the assistance available to them. Having his/her own business places severe
restriction on the time of the owner. It is not always possible to leave the
business during the day to attend courses at formal educational institutions.
Many seminars, presentations and educational courses are, however, offered
after hours. When considering the variety of sources available to improve
business skills, knowledge and competence, it should not be difficult for the
small business owner-managers to identify sources that suit their time and
budget constraints. A vast amount of information concerning business issues
is available on the internet and in the printed media (Van Eeden, Viviers and
Venter: 2003:22).
4
1.3 STATEMENT OF THE RESEARCH PROBLEM
As seen from the literature study, small businesses fail due to a variety of
reasons, like managerial incompetence and a lack of business skills and
knowledge. Surveys on small business failure maintain that small business
owners-managers often have good ideas and are competent people but “they
do not have a clue on how to run a business and have no underlying
appreciation of business fundamentals” (Barron, 2000:1).
Given that the importance of the small business sector is being increasingly
recognized, it is vital that small businesses are able to survive and prosper.
Failure can be avoided by exploring the circumstances from which failure
arises. An awareness of possible past problems facing small business
owner-managers will enable them to be forewarned and pro-active in their
decision making. Starting a business is risky at best, but the chances of
success are enhanced if problems are anticipated, understood and
addressed prior to the business being started, or the problem arising.
The issue of the high failure rate of small businesses has been covered
extensively in research literature. The question therefore arises whether
another study on the issue is really necessary, even though most of the
literature sources focus on small businesses in general and not specifically
on the health sector. Much of the research in this field has also been
quantitative in nature. Considerably less attention has been devoted to
qualitative studies to get insights into the complexities and dynamics of small
businesses in the health sector or to the problems they encounter when
starting a new venture.
5
1.4 RESEARCH QUESTION
The researcher would like to have the following question answered:
• What are the problems experienced by small business owner-managers in
the health sector?
1.5 OBJECTIVES OF THE STUDY
The objective of this study will be to investigate and describe the nature and
importance of problems experienced by small business owner-managers in
the health sector.
1. 6 KEY CONCEPTS USED IN THE STUDY
• Small business owner-manager: Person who owns and manages a small
business.
• Small, medium and micro enterprise (SMME): In economic literature the
“smaller” business sector is commonly termed the SMME enterprise/
sector. For the purpose of this study, micro and small enterprises will
include those that are independently owned and managed, with an annual
turnover of less than R5 million. The study will be restricted to small
businesses in the health sector.
• Health sector: Sector specializing in health related fields, e.g. medical,
psychiatric, psychological, pharmaceutical, and nursing.
6
• Health practitioner: Professionally trained person who practices a
profession in the private health sector and who is registered with the
relevant Health Professional Council in South Africa.
1. 7 RESEARCH METHODOLOGY
In order to investigate a problem, suitable research methodology needs to be
selected.
1. 7.1 RESEARCH DESIGN
The design that will be used in this study is qualitative, descriptive,
exploratory and contextual in nature. This study will fall within the broad
framework of qualitative research, as interviews will be employed to do the
research project (Baker, 1999:247). Qualitative research concerns itself with
the nature (meaning) of a phenomenon (Roberts and Burke, 1989; Treece
and Treece, 1982:372; Patton in De Vos, 1998:253) and is a multi-
perspective approach utilizing different qualitative techniques and data
collection methods to describe, make sense of, interpret or reconstruct the
interaction between the researcher and the participants in terms of the
meanings that the participants attach to it (De Vos, 1998:240). A more
detailed discussion will follow in chapter two.
1.7.2 DATA COLLECTION
In order to carry out research in manageable proportions, the researcher
needs to clearly define the research population and delineate a number of
that population for the purpose of the research.
7
1.7.2.1 Sampling
The research population is the entire set of individual elements defined by
the sampling criteria established for the study (Burns and Grove, 1993:200).
Treece and Treece (1982:215) define the research population as the entire
number of units under study. De Vos (1998:190) cites Arkava and Lane’s
distinction between a universe (all potential subjects who possess the
attributes in which the researcher is interested) and a population (individuals
in the universe who possess specific characteristics).
A purposive sampling method will be used to identify the participants for
inclusion in the study. This type of sampling allows the researcher to use
especially purposive identified subjects who are perceived to be able to
provide rich, informative data (De Vos, 1998:253). The sample will comprise
six to eight business owner-managers (See Annexure B) in the health sector
within the boundaries of the Nelson Mandela Metropole, purposely identified
from the following categories (but not necessarily one from each category):
- Occupational Therapists
- Psychologists
- Pharmacists
- Medical Practitioners
- Physiotherapists
- Social Workers
- Audiologists & Speech Therapists
- Nursing Practitioners
1.7.2.2 Method of Data Collection
Data gathering will be done by means of sketches, interviews and field notes.
8
The participants will be approached to brief them on the envisaged research
and to obtain their willingness to participate. Appointments will be set up to
suit the participant’s schedules. Before conducting the study, each
respondent will be thoroughly briefed on the goals and objectives of the
study. The researcher will ensure privacy by ensuring a safe environment
where no interruptions will occur during the interview. Each sketch and
interview will be conducted in a private office in support of the ethical
considerations of privacy and anonymity and will be recorded on audio tapes.
Respondents will be ensured that the necessary precautions will be taken to
protect their identity from being revealed. Written, informed consent will be
obtained from the respondents prior to conducting the interview. (See
Annexure A).
1.7.2.2.1 Naïve sketches
A naïve sketch will be used to give the interviewees the opportunity to
prepare themselves for the interview. The sketch will consist of a set of
formulated questions. The questions will be as follows:
1. What are the most significant problems that you experienced when
you started your business? (Wat is die mees betekenisvolle
probleme wat jy ervaar het toe jy jou besigheid begin het?)
2. What did you do to overcome them? (Wat het jy gedoen om dit te
oorbrug?)
3. What types of problems are you experiencing at the moment? Please
elaborate why you say this. (Watter probleme ondervind jy op die
oomblik? Brei asseblief uit hoekom jy so sê.)
9
1.7.2.2.2 Interviewing
The interview will be conducted directly after completion of the sketch. Each
interview will be tape-recorded and transcribed within twenty four hours of the
interview. This is to ensure that the information surrounding the interview will
still be fresh in the researcher’s mind.
Transcriptions will serve as the database. Interviews will be conducted both
in Afrikaans and English. Direct transcriptions from the tape-recorded
interviews will ensure that all data is gathered and saved for reference when
needed during the data analysis as described by Field and Morse (1996:64).
The researcher will be receptive, attentive and listen non-judgmentally to the
participants in order to gain their trust (Field and Morse, 1996:77). The
researcher will listen carefully to the expectations and descriptions given by
the participants and will probe where the information is not clear or where the
researcher would like more detail (Field and Morse, 1996:77).
This interview format will provide the necessary structure and focus to
facilitate the analysis. The participants’ perspective on the topic will be
established but the researcher will still maintain a certain amount of control to
ensure that the purpose of the study can be achieved (Tutty, Rothery and
Grinnel, 1996:56). The structure of the interview will be consistent with the
conceptual framework for the study.
1.7.2.2.3 Observation and field notes
Field notes are a detailed reproduction of what has occurred. The researcher
will observe the non-verbal communication of the participants when they are
answering questions. The researcher will also take note of the tone and
10
voice of the participants when responding to the questions or talking about
their problems. The researcher will take observational, theoretical,
methodological and personal notes as described in Wilson (1993: 433-435).
These notes will be entered into a field journal and form part of the database.
These entries will be made immediately after each interview to reduce the
researcher’s dependency on memory and to ensure that no useful
information will be lost.
1.7.3 DATA ANALYSIS
The purpose of data analysis is to identify themes emerging from the data
(Brink, 1994:15). Data will be analyzed using Tesch’s model (1990 in
Creswell, 1994:153) of systematic description and theme analysis. Themes
can be defined as ideas or experiences that appear repeatedly as the
participants verbalize their thoughts (Woods and Catanzaro, 1988:438). The
researcher will use the steps described by Tesch to objectively and
systematically organize the content of the interviews. Sketches and
transcribed interviews will be read to identify common themes and sub-
themes. Words and sentences depicting themes will be underlined and color
coded. This procedure will be repeated in every transcription thereafter to
identify and categorize themes and sub-themes.
1.7.3.1 Pilot study
A pilot study is a small version of a proposed study conducted to develop or
refine methodology (Burns and Grove, 1993:560). Its main function is to
obtain information and assess the adequacy of the data collection plan as
well as the methodology that will be used to analyze the database.
A pilot study will be conducted with one small business owner-manager in the
health sector. The small business owner-manager will meet the specified
11
criteria in order to test the suitability of the interview questions and the
envisaged planned research techniques. Refinement/rewording of the
questions as well as revising the interviewing techniques envisaged, will be
done before the empirical research interviews are conducted.
1.7.4 LITERATURE CONTROL
The results will be discussed in light of the relevant literature and information
obtained from similar studies done by other researchers. This will be done to
establish to what extent other researchers’ findings correlate or differ in terms
of the themes and sub themes identified after analyzing the transcriptions of
the interviews.
1.8 TRUSTWORTHINESS OF THE STUDY
Using Guba’s model of trustworthiness as discussed in Polit and Hungler
(1995:362-363) will ensure the trustworthiness of this study. Guba’s model
consists of four criteria, namely credibility, transferability, dependability and
conformability. This will be discussed in detail in chapter two.
1.9 ETHICAL CONSIDERATIONS
The credibility of research findings is determined by the perception of the
ethical manner in which the data was acquired. The main areas of ethics
applicable to this study are privacy, self-determination, anonymity,
confidentiality and potential risk or harm to the respondent or his business.
The ethical considerations will be discussed in detail in chapter two.
1.10 CONTENT
The study will be reported in the following format.
12
Chapter 1 Orientation and overview of the study
Chapter 2 Research Methodology
Chapter 3 Data Analysis and Literature control
Chapter 4 Findings, recommendations, limitations and conclusions of the
study
1.11 CONCLUSION
In this chapter a general orientation to the study was presented. The
research design and method, ethical considerations, as well as the method to
ensure trustworthiness will be discussed in detail in chapter 2.
13
CHAPTER 2
RESEARCH METHODOLOGY
2.1 INTRODUCTION
The previous chapter provided an overview and orientation to the study. The
research problem was identified and described. A brief review was given of
the research design and methodology which will be used in this study.
This chapter will describe how the researcher arrived at the topic and the
procedure followed in undertaking this study. The following aspects will be
described in detail: the objectives of the study, the research design and
methodology, the ethical considerations and the strategies to ensure the
credibility (trustworthiness) of the findings.
The qualitative research method in which key practitioners are interviewed
were selected by the researcher as the most suitable method to identify the
areas of problems experienced by small business owner-managers in the
health sector.
2.2 RATIONALE OF THE STUDY
Small businesses fail due to a variety of reasons. Surveys on small business
failure maintain that small business owners-managers often have good ideas
and are competent people but “they do not have a clue on how to run a
business and have no underlying appreciation of business fundamentals”
(Barron, 2000:1).
14
Given that the importance of the small business sector is being increasingly
recognized, it is vital that small businesses are able to survive and prosper
(Timmons and Spinelli, 2004:14). Failure can be avoided by exploring the
circumstances from which failure arises. An awareness of possible future
problems facing small business owner-managers would enable them to be
forewarned, and be pro-active in their decision making. Starting a business
is risky at best, but the chances of success would be enhanced if problems
were anticipated, understood and addressed prior to the business being
started, or the problem arising.
Lack of financial assistance was often cited as the major constraint facing
small businesses. However business management skills, knowledge and
skills about how to start and manage a business were one of the major
problems identified in previous research.
Therefore the research problem was formulated as follows: What are the
problems experienced by small business owner-managers in the health
sector?
2. 3 OBJECTIVES OF THE STUDY
The issue of the high failure rate of small businesses has already been
covered extensively in research literature. The question therefore arises
whether another study on this issue was really necessary, even though most
of the literature was devoted to small businesses in general and not specific
to the health sector.
Much of the research in this field has been quantitative in nature.
Considerably less attention had been devoted to qualitative studies to get
insights into the complexities and dynamics of small businesses in the health
sector.
15
Therefore the objective of this study was to explore the nature and
importance of problems experienced by small business owners-managers in
the health sector.
2.4 RESEARCH DESIGN AND METHODOLOGY
In order to investigate the problems, suitable research methodology needed
to be selected. This included the research design, research method, data
collection, data analysis, literature control, trustworthiness and the ethical
considerations of the study.
2.4.1 RESEARCH DESIGN
The design that was used in this study was qualitative, descriptive,
exploratory and contextual in nature, as was discussed in the previous
chapter.
This study fell within the broad framework of qualitative research, as
interviews were being employed to collect data (Baker, 1999:247). Qualitative
research concerns itself with the nature (meaning) of a phenomenon
(Roberts and Burke, 1989; Treece and Treece, 1982:372; Patton in De Vos,
1998:253) and is a multi-perspective approach utilizing different qualitative
techniques and data collection methods to describe, making sense of,
interpret or reconstruct the interaction between the researcher and the
participants in terms of the meanings that the participants attach to it (De
Vos, 1998:240).
A descriptive study attempts to describe the existing behaviour, opinions and
attitudes of the group under study. One of the most important considerations
16
in a descriptive study is to collect accurate information or data in the domain
phenomena which are under investigation (Mouton & Marais, 1990:44). The
advantages of a descriptive study are that it is objective, specific, practical,
accurate, factual, enlightening and has a point of focus (Treece & Treece,
1982:146). The disadvantages, on the other hand, are that “there is no
method to control extraneous variables, no cause and effect conclusion can
be drawn and one cannot progressively investigate one aspect of the
independent variable after another to get closer to the real cause” (Treece &
Treece, 1982:198). This study was aimed at identifying and describing the
phenomenon of the nature and importance of problems experienced by small
business owner-managers in the health sector.
The best guarantee for the completion of a descriptive study was to be found
in the researcher’s willingness to examine new ideas and suggestions and to
be open to new stimuli. The major pitfall to avoid was allowing preconceived
ideas or hypotheses to exercise a determining influence on the direction or
nature of the research.
Exploratory research attempts to answer a question regarding a specific
phenomenon (Treece and Treece, 1982:175). In this study the question
asked was: “What are the problems experienced by small business owner-
managers in the health sector?
Contextual research aims to describe the phenomenon within the situation in
which it would normally occur. According to Mouton and Marais (1990:120)
the setting in which the research is conducted can have an important bearing
on the generalizability of the findings. It was important that both the
respondents and the interviewer felt comfortable during the data collection
period. To achieve this, interviews were conducted in the respondents’ own
offices. All participants were small business owner-managers in the private
sector.
17
2.4.2 RESEARCH METHOD
The strategies used include, acquiring the data by means of naïve sketches;
interviews and field notes; analyzing the data for dominant themes;
describing these themes and then comparing them with existing literature on
problems experienced by small business owner-managers in the health
sector.
2.4.2.1 RESEARCH POPULATION AND SAMPLING
2.4.2.1.1 Population
Treece and Treece (1982:215) define a population as a part of the whole that
is representative of that whole in quality and/or composition.
For the purpose of this study, the population comprised eight small business
owner-managers in the health sector operating within the boundaries of the
Nelson Mandela Metropole with private enterprises.
2.4.2.1.2 Sampling method
This study made use of purposive sampling to select the respondents
because of its efficiency, convenience and effectiveness. Treece and Treece
(1982:217) define purposive sampling as the selection of some special group
based on evidence that it is representative of the total population. Singleton,
in de Vos (1998:198), considers the purposive sample to be based entirely
on the judgment of the researcher in as much as the sample is composed of
18
elements that contain the most characteristic, representative or typical
attributes of the population.
This type of sampling allows the researcher to use especially purposive
identified participants who are perceived to be able to provide rich,
informative data (De Vos, 1998:253). The intended participants for the study
were health professionals in private practice whom the researcher is
acquainted with through the working environment, and were contacted
telephonically.
The selected participants were given basic information by the researcher
such as the researcher’s name, the objectives of the research, the method of
data gathering through the use of a naïve sketch and interview. Once their
agreement had been obtained, a confirmatory letter was sent to each
participant. Permission from the subjects was obtained in advance for the
use of a tape-recorder (See annexure A).
2.4.2.1.3 Inclusion criteria
.
The researcher determined that the participants should meet the following
inclusion criteria:
• The participant should reside within the boundaries of the Nelson
Mandela Metropolitan area where they were easily accessible for
interviews and follow-up interviews, should this be required;
• The participant should be a small business owner-manager or partner
in their own business;
• The participant should be a health professional; and
• The participant should be able to comfortably converse in English or
Afrikaans.
19
2.4.2.1.4 Role of the researcher
In a qualitative study the researcher is the primary instrument for data
collection and analysis (Cresswell, 1994:145).
Prior to commencing the interview, the researcher introduced herself to the
participant and explained the purpose of the interview and the objectives of
the study. The researcher explained to the participant that participation was
voluntary and that he or she may withdraw at any stage during the interview
and the research.
After being informed about the purpose and nature of the study, each
participant was required to read and sign consent form (See Annexure A),
declaring that they were aware of all the conditions involved in the study and
their willingness to cooperate. The researcher assured the participant that the
information supplied during the interview would be treated as strictly
confidential.
All interviews were conducted at a venue where the participant felt most
comfortable. For this reason the researcher recommended that the interview
took place in the owner-manager’s office where traffic flow and other
interruptions could be controlled. This reduced the inroads made into the
owner-manager’s time and absence from their normal duties and thus
increased their willingness to cooperate in the research.
2.4.2.2 Data Collection Methods
2.4.2.2.1 Naïve sketches
20
A naïve sketch was used followed by a semi-structured interview to collect
the information. The purpose of the sketch was to give the participants the
opportunity to prepare themselves for the interview. The sketch was handed
to the participant prior to the interview and consisted of formulated questions.
The participants were asked to answer the following questions on the paper
provided:
• What are the most significant problems that you experienced when
you started your business? (Wat is die mees betekenisvolle
probleme wat jy ervaar het toe jy jou besigheid begin het?)
• What did you do to overcome the problems? (Wat het jy gedoen om
die probleme te oorbrug?)
• What types of problems are you experiencing at the moment? Please
elaborate why you say this. (Watter probleme ondervind jy op die
oomblik? Brei asseblief uit hoekom jy so sê.)
The sketches were analyzed in the same manner as the interviews to identify
similar themes.
2.4.2.2.2 Interviewing
The semi-structured interview can be described as a guided interview where
the researcher uses pre-determined questions or key words to direct the
conversation (Tutty, Rothery and Grinnel, 1996:56). The interview was
conducted directly after completion of the sketch. The same questions that
were asked in the sketch were asked during the interview to all the
participants. Each interview was tape-recorded and transcribed within twenty
four hours of the interview. This was to ensure that the information
21
surrounding the interview was fresh in the researcher’s mind. Transcriptions
together with the sketches served as the database for the study.
Interviews were conducted in both Afrikaans and English. Direct
transcriptions from the tape-recorded interviews ensured that all data was
gathered and saved for reference when needed during the data analysis as
described by (Field and Morse, 1996:64).
Interviewing continued until data saturation was reached. Morse (in de Vos,
1998:262) stated that the data is saturated when the researcher finds that the
information gathered have become predictable and no new insights will be
gained. In this study data saturation occurred when the participants repeated
information given by previous participants and no new themes emerged.
The researcher was receptive, attentive and listened non-judgmentally to the
participants in order to gain their trust (Field and Morse, 1996:77). The
researcher listened carefully to the problems stated by the participants and
probed where the information was not clear or where the researcher would
have liked more detail (Field and Morse, 1996:77). Okun (1987:48) states
that the interviewer should use communication skills that involve hearing
verbal messages (the cognitive and affective content), perceiving the non-
verbal messages (affective and behavioral content) and responding verbally
and non-verbally to both kinds of messages.
Kvale (1996:113) describes questions that can be used during the
interviewing process to aid clarifying data as follows:
Introduction question: this is the opening question posed by the
researcher to the participant. This may yield spontaneous, rich
descriptions of part of the participant’s experience on the investigated
phenomena;
22
Follow-up questions: used to ensure that participant’s answers are
extended and clarified;
Probing questions: used by the interviewer to pressure answers
without stating what dimensions are to be taken into account;
Specifying questions: used as an attempt to get more precise
descriptions of statements to be used;
Structuring questions: the researcher may directly and politely break
off long answers that are irrelevant to the topic of the investigation and
a theme has been exhausted; and
Interpreting questions: rephrasing of what the participant has said to
ensure clarification of data obtained.
The following communication skills were also employed by the researcher
during the execution of the interview:
Paraphrasing: refers to the interviewer repeating in her own words the
ideas and opinions of the participants to make sure that she
understands (Okun, 1987:76);
Reflecting: refers to the process of returning on primary level that
which the participant communicates verbally or nonverbally (Okun,
1987:76);
Clarifying: gives the researcher the opportunity to verify information
(Okun, 1987:76);
Summarizing: is a communication technique used throughout the
interview and especially at the end to identify the most important
highlights of the interview (Okun, 1987: 76-77); and
Silence: used to allow the participant time to associate and reflect on
data shared and can be broken with new information (Kvale,1996:133-
135).
23
• Field Notes
Field notes are detailed reproductions of what has occurred. Polit and
Hungler (1995:436) define field notes as the notes taken by the researcher
regarding the unstructured observations that were made in the field. Field
notes are a written account of the things that the researcher hears, observe,
experiences and thinks in the course of collecting or reflecting on data in a
qualitative study. These notes help to supplement tape-recorded interviews
by portraying the physical and verbal communication in an observed
interaction (Field and Morse, 1996:91). The notes will be jotted down on a
small notepad to be used for cross-referencing with the tape-recorded
interviews. The researcher took observational, theoretical, methodological
and personal notes as described in Newman (1997:366). These notes
formed part of the database.
• Observational notes
Observational notes were a written description of events as they were
experienced through watching and listening. These notes serve as an exact
record of particular words, phrases or reactions (Newman, 1997:365). They
were written in a chronological manner with date, time and place on each
entry. In this study the observational notes reflected on the events that
occurred during the interview and the researcher made her own interpretation
and inferences from observational notes to build suitable analytical themes
for the study.
• Theoretical notes
Theoretical notes are purposeful attempts to derive meaning from
observational notes. The researcher thinks about the behaviour, infers,
24
interprets, hypothesizes and relates observation to it (Wilson, 1993:222). In
this study the researcher used theoretical notes to interpret the meaning of
the phenomenon as viewed by small business owner-managers in private
practice.
• Methodological notes
Methodological notes are instructions, for example, critiques of own
tactics inline with the methodological approaches. They serve as a guide
during the research, to ensure that the conduct during the interviews was
congruent with the proposed research design (Newman, 1997:365). In
this study the researcher used methodological notes to guide her during
the research study, ensuring congruency with the proposed research
design.
• Personal notes
Personal notes serve several purposes in helping the researcher. They
served as an outlet for the researcher, helping her to cope with stress, or as
a source of data about personal reactions or as a way to evaluate direct
observations or inferences made when the data is re-read after the interviews
(Newman, 1997:366). In this study the researcher kept personal notes in a
book to gain insight into the problems experienced by small business owner-
managers in the health sector.
2.4.2.3 DATA ANALYSIS
The purpose of data analysis is to code information so that categories may
be recognized, analyzed and behaviours noted (Field and Morse, 1996:181-
182). All information obtained from transcribed interviews and field notes
25
were used as a database and were written in exactly the same words used
by the participants. In this study the researcher analyzed the transcribed
interviews for recurring words, phrases and ideas and used these as themes
for further description. The data derived from the interviews were analyzed
according to the Tesch step of analysis as described in Cresswell
(1994:155). This method provided a systematic approach to the analysis of
volumes of text. Descriptions of the main features of this model were
tabulated below.
Compiling and organizing the data. Each interview was transcribed verbatim
immediately after the interview. The transcripts were read carefully and
compared in order to obtain an overview of the content.
Method of data analysis. The data was analyzed according to Tesch’s
method, namely:
(a) Careful reading of each transcript was done to obtain an overall view
of the content;
(b) One transcript at a time was read through and ideas that came to mind
were jotted in the margin as a preliminary categorization;
(c) All similar themes were grouped together and organized into
categories e.g. main themes, unique themes and other themes.
(d) Identified themes were color coded and a list of all the themes that
were present in each transcript formed a summary;
(e) Descriptive wording for the themes were used as categories and
interrelated categories were grouped together;
(f) A final decision on these categories were made and arranged
alphabetically; and
(g) A preliminary analysis on collected data in each category was done
and existing data was recorded if necessary
26
(h) Possible quotes in the original text were marked (Tesch in Creswell,
1994:155)
The trustworthiness of the findings were assured by providing an expert in
qualitative data analysis, hereafter called the independent coder, with the
original transcripts and a description of the steps followed during the
analysis. The independent coder was asked to analyze the transcripts
following the same strategy used by the researcher in identifying themes,
followed by a discussion with the researcher to reach consensus. The
researcher and the coder met to compare notes and discuss differences.
The aim was to reach consensus on the interpretation of the themes and
sub-themes as reflected in the transcripts. The methods used to ensure
trustworthiness will be discussed in more detain in 2.5.
2.4.2.1.5 PILOT STUDY
A pilot study is a small version of the proposed study to develop or refine
methodology (Burns and Grove, 1993:560). Its main purpose was to obtain
information and assess the adequacy of the data collection plan as well as
the methodology that was used to analyze the database.
One interview was done with a participant that fulfills the suggested criteria of
the research population. The interview was transcribed and analyzed to
ensure that the proposed research question elicits the information the
researcher was interested in, and a proposed analytical method were used to
identify themes and categories.
2.4.2.1.6 LITERATURE CONTROL
Roberts and Burke (1989:112) state that a review of the available literature
27
will help in the design and data collection and analysis phases of the study
while Burns and Grove (1993:141) state that literature control will help to
generate a picture of what is known or not known about a particular situation
or phenomenon.
While these authors felt that the review may be done before, during or after
conducting the study, the researcher decided to defer the in-depth review of
literature pertinent to the actual topic until after the data collection and
analysis had been completed to reduce possible contamination of the
interpretations. Only literature pertaining to the research process was
consulted prior to actual data collection in order to establish an effective
research format. The literature control relating to the topic under study was
used to compare the themes and sub-themes with the literature, searching
for similarities or differences. This helped to explain or clarify the findings
and guide the study. If no literature was found to support statements, the
researcher mentioned it during the discussion of the results (Streubert &
Carpenter, 1995:46).
2.5 TRUSTWORTHINESS OF THE STUDY
Trustworthiness of this study was ensured by using Guba’s model as
discussed in Polit and Hungler (1995: 362-363) and Krefting (1991:215).
Research findings must be seen to be relevant, valid and dependable if they
are to bring about significant changes in practice. Guba’s description of the
trustworthiness of any qualitative research study provides four criteria.
These criteria are (a) credibility (truth value), (b) transferability (applicability),
(c) dependability (consistency) and (d) conformability (neutrality). A
description of each criterion based on Krefting’s interpretation follows and its
application is summarized in Table 2.1.
28
2.5.1 CREDIBILITY (TRUTH VALUE)
This refers to the confidence in the truth of the data (Polit and Hungler,
1995:362). The researcher had to demonstrate that findings were believable,
by using multiple references to draw a conclusion about the truth in the
interviews, field notes and literature control.
Truth value or credibility asks whether the researcher has established
confidence in the truth of the findings for both the subjects and the context in
which the study was undertaken (Polit and Hungler, 1995:362). It establishes
how confident the researcher is with the truth of the findings based on the
research design, informants and context Guba in Krefting (1991:215). Truth
value can be ascertained qualitatively by checking more than one source of
data and by selecting the subjects who are most likely to have and to share
knowledge of the phenomenon under study (Roberts and Burke, 1989:175).
Guba and Lincoln (1991:7) suggest a variety of techniques of improving and
documenting the credibility of qualitative research. In this study the
researcher used the triangulation data gathering technique, authority of
researcher strategies and member checking. These strategies are described
by Leininger in Guba in Krefting (1991: 7-12) as follows:
• Triangulation
This strategy is based on the idea of convergence of multiple perspectives for
mutual confirmation of data to ensure that all aspects of a phenomenon have
been investigated (Guba in Krefting, 1991:9).
• Unique authority of the researcher
29
Miles and Huberman in Krefting (1991: 251 explain this as viewing the
researcher as a measurement tool using the following identified
characteristics to assess trustworthiness:
- The degree of familiarity with the phenomenon and the setting
under study; and
- Good investigative skills, which were developed through literature
review, course work, and experience in qualitative research
methods.
• Member checking
This involved consulting the participants to check on research findings to
ensure the truthfulness of what they themselves experienced. This was direct
way of improving the credibility of the study. The researcher did follow up
interviews with the participants, and gave them a chance to review the data
collected (Guba in Krefting, 1991:10).
• Peer examination
This was based on the same principle as the member checking, but involves
the researcher’s discussing the research findings with impartial colleagues
with experience in the phenomenon investigated (Guba in Krefting, 1991:10-
11). In this study the researcher consulted with research supervisors as well
as the independent coder.
2.5.2 TRANSFERABILITY (APPLICABILITY)
Transferability referred to the generalization ability of the data, that is, the
extent to which the findings from the study were transferred to another setting
30
or groups (Polit and Hungler 1995: 362). As the research population was
quite small, generalizations could not be made. The researcher provided the
sufficient descriptive data to enable someone interested in applying the
findings to another context.
Guba in Krefting (1991:220) is of the opinion that applicability only becomes
an issue if the researcher plans to generalize the findings to a wider group,
while Woods and Catanzaro (1988:453) state that transferability can be
enhanced by clearly stating the working hypotheses, the time and the context
in which the findings were found to hold true.
• Nominated sample
Field and Morse in Krefting (1991:12) define this strategy of sample selection
as being how the selection of participant’s representative of the phenomenon
being studied, may determine the uniqueness of the situation in the study.
The participants were selected by using the sampling criteria.
• Dense description
Dense description refers to the researcher providing dense background
information about the informants, the research context and setting as well as
the methodology used in the research study to allow others to assess how
transferable the findings are (Guba in Krefting, 1991:12). This also involves
a complete description of the methodology, literature control, transcribed
interviews and field notes of interviews discussed to maintain clarity.
2.5.3 DEPENDABILITY (CONSISTENCY)
Dependability refers to the stability of data over time and conditions (Polit and
Hungler, 1995:362). The key in qualitative work is to learn from the
31
participants rather than to control them. Instruments that assess for
consistency in qualitative research are the researcher and the participants,
both of whom could vary greatly within the research project (De Vos,
1998:331). The researcher used the code-recode procedure and
triangulation strategies as described by Lincoln and Guba in Krefting
(1991:13), to establish dependability.
Dependability depends on the ability of the data-gathering device to obtain
consistent results, that is, whether the findings would be consistent if the
enquiry were replicated with the same subjects or in a similar context (Guba
in Krefting, 1991:216). Therefore Krefting recommends that the exact
methods of data collection, analysis and interpretation be described to
provide information as to how repeatable the study might be. Woods and
Catanzaro (1988:454) endorse this view. These authors recommend the use
of an inquiry audit to assess and authenticate the process of the inquiry and
to determine the acceptability of that process.
• Code-recode procedure
After coding a segment of data, the researcher should wait at least two
weeks and then return to recode the same data and compare the results
(Guba in Krefting; 1991:13). The researcher, together with the independent
coder did the coding and recoding of the data to ensure correct findings at
the end.
• Triangulation
As discussed previously.
32
2.5.4 CONFIRMABILITY (NEUTRALITY)
Conformability refers to the objectivity or neutrality of the data (Polit and
Hungler, 1995:363). Neutrality is defined as the freedom of bias in the
research process result. Woods and Catanzaro (1988:454) described
conformability as the use of raw data, data reduction and analysis, data
reconstruction and synthesis, process notes, intentions, disposition and
instrument development to confirm the analysis process. Guba in (Krefting,
1991:221) described this as the audit strategy.
• Confirmabilty audit
This strategy involved an external auditor who attempted to follow through
the natural history or progression of events in a project to try and understand
how and why decisions were made. The auditor considered the process of
research as well as the product, data findings, interpretations and
recommendations (Guba in Krefting, 1991:14).
• Triangulation
As discussed previously.
33
TABLE 2.1 SUMMARY OF CRITERIA AND STRATEGIES TO ENSURE TRUSTWORTHINESS
CRITERION
STRATEGY
APPLICATION IN THIS STUDY
Credibility
(Truth value)
Triangulation of
data gathering
Information was gathered by using sketches,
interviews, field notes and literature control.
Inter-relatedness of the information provided by
the sketches and interviews were determined.
Field notes and a literature study were used as
controls.
Unique authority
of the researcher
The researcher incorporated information from
the course work previously done in
entrepreneurship and research methodology.
Authority of the researcher was ensured by the
expert supervision of two experienced
researchers, one specializing in business
management and the other an expert in
qualitative research.
Member checking The researcher consulted with participants to
check on truthfulness of the findings.
Peer examination Research was done with experienced study
leaders.
An independent coder was used to reach
consensus on identified themes.
34
Transferability
(Applicability)
Nominated
sample
The researcher used the sampling criteria to
identify and select participant’s representative of
the sample population to ensure that data of
high quality was collected.
Dense
description
The methodology used throughout the research
study was described in detail, as well as the
findings.
Dependability
(Consistency)
Code-recode
procedure
The researcher coded a specific segment of
data during the analysis phase, and then
returned approximately two weeks later to
recode the same data and compare results. The
results indicated that the most important themes
were identified.
Triangulation
Confirmability of analyzed data was ensured by
quoting supportive extracts from interviews.
Confirmability
(Neutrality)
Confirmability
audit
The field journal and paper trail were made
available to the independent coder to check the
analysis.
2.6 ETHICAL CONSIDERATIONS
Ethics in research is defined as “a set of moral principles which are
suggested by an individual or group, are subsequently widely accepted, and
which offers rules and behavioral expectations about the most correct
conduct towards experimental subjects and respondents, employers,
sponsors, other researchers, assistants and students” (De Vos, 1998:24).
35
The ethical acceptability of the study was considered throughout the research
process. De Vos (1998:63) stipulates various aspects that needed to be
followed to cover ethical and legal considerations. Ethical considerations
were a part of the entire research process from the development of the
research proposal to the final draft of the report. The researcher attempted
to maintain the highest ethical standards in all stages of this study. While
many aspects of ethical research were found in the literature, only those
pertaining to this study will be discussed.
2.6.1 INFORMED CONSENT
Roberts and Burke (1989:195) specify that subjects can only provide
informed consent if they are aware of the potential risks or harm to their
emotional, physical, mental or social well-being associated with their
participation in the research. Areas of potential risk to the participants in this
research study could be emotional, as they were exposing their beliefs and
problems about their businesses to a stranger. However since prior
agreement from the selected respondents were obtained before commencing
the interviews, the danger of such risk was minimized.
Freedom to choose to participate in any aspect of a research study is implicit
in the protection of human rights (Roberts and Burke, 1989:194; Woods and
Catanzaro, 1988:80). This criterion was met by only including those
informants who had personally agreed to be interviewed in the study. They
were given information regarding the goals and objectives of the study and
the research process. The participants were also informed that the interview
would be recorded on a tape recorder to facilitate the analysis.
2.6.2 NO HARM TO RESEARCH PARTICIPANTS
36
The right to remain anonymous is closely related to the protection of privacy
and dignity (Roberts and Burke, 1989:193). The research was designed in
such a way that it was not possible for anyone other than the researcher to
know who was involved in the study. Any identifying comments made were
eliminated from the transcripts and the tapes were destroyed as soon as the
transcripts had been made.
Privacy and dignity are individual values that have far-reaching effects on
everyone concerned with the research. The researcher was not always in a
position to judge when a person feels that his or her privacy or dignity had
been compromised (Roberts and Burke, 1989:192). Sieber in De Vos
(1998:67) defines privacy as that which normally is not intended for others to
observe or analyze. The right to privacy is the individual’s right to decide
when, where, to whom and to what extent his or her attitudes, beliefs and
behaviour will be revealed (De Vos, 1998:67).
It was the researcher’s responsibility to manage private information shared
by the participants with confidentiality. No other unauthorized person gained
access to any information divulged by the participants. The researcher
ensured that the comfort, dignity and privacy of the participants were
considered at all times.
Privacy was assured by conducting the interviews in a private office with no
audience. Only those questions that were pertinent to the study were asked
and the subjects were assured that they could refuse to discuss any aspect
that they felt uncomfortable with. The questions were neutral to ensure that
the respondents would not experience any discomfort or embarrassment. It
was the researcher’s responsibility to manage private information shared by
the participants with confidentiality.
2.6.3 DECEPTION OF PARTICIPANTS
37
Deception of participants is described in De Vos (1998:66) as deliberately
misrepresenting facts in order to make another person believe what is not
true, violating the respect to which every person is entitled. According to
Corey in De Vos (1998:66), deception involves withholding information or
offering incorrect information in order to ensure participation of research
participants when they would otherwise have refused. However, it is
important to distinguish between deliberate deception and deception of which
the researcher was not aware, or which may later have crept into the
investigation unwittingly.
The Nelson Mandela Metropolitan University has an Advanced Degrees
Committee that assessed each research proposal for any potential ethical
problems before a researcher is permitted to commence the research. The
research proposal was submitted to this committee for final approval and
participants were informed, before they agreed to be interviewed, that the
researcher had the approval of the Advanced Degrees Committee of the
Faculty of Health Sciences to continue with the study.
2.6.4 ACTION AND COMPETENCE OF RESEARCHER
Researchers have a responsibility to ensure that they are competent and
skilled to undertake the investigation they have in mind (De Vos, 1998:31).
The researcher had attended courses on qualitative research methodology
and had been associated with the health services for nearly 25 years. Two
experienced researchers monitored the study, one of whom is an
acknowledged expert in qualitative research whilst the other is a recognized
expert in business management. They provided ongoing guidance to ensure
that ethical aspects were borne in mind throughout the study.
38
2.7 CONCLUSIONS, LIMITATIONS AND RECOMMENDATIONS
Conclusions were drawn from the findings of the study and limiting factors
were identified and acknowledged in the report. Recommendations that
could assist practitioners, educators and trainers were suggested.
2.8 SUMMARY
This chapter described the research design and method as well as the
strategies to ensure the trustworthiness of the research process. Attention
was also given to the ethical requirements. The following chapter will
describe the findings, themes and sub-themes derived from the analysis and
will be supplemented by literature control.
39
CHAPTER 3
DISCUSSION OF RESULTS AND LITERATURE CONTROL
3.1 INTRODUCTION The previous chapter described the research design and methods followed to
obtain information from small business owner-managers in the health sector
in the Nelson Mandela Metropole. In this chapter an analysis of the data will
be presented, followed by a discussion of the main themes as well as the
literature which either confirm or contradict the findings of the study. The
data was analysed by the researcher and an independent coder according to
Tesch’s model (in Cresswell, 1994:154) in order to identify themes and sub-
themes. The identified themes derived from the data collected will be
supported by quotes from the transcribed interview analysis and relevant
references from literature.
The participants were aware that they could withdraw from the research at
any time and the ethical principles of research were maintained during the
study. All the participants appeared keen to talk about their experiences. The
researcher explained the use of a tape recorder to the participants and they
all gave consent to participate in the study.
3.2 RESEARCH FINDINGS The researcher conducted interviews with eight small business-owner
managers in the health sector. The participants met the set selection criteria
as follows:
40
• All participants were small business owner-managers in private practice in
the Nelson Mandela Metropole;
• Seven participants were independent practitioners and one was in
partnership;
• The age range was between 30 to 75 years;
• Three participants were males and five were females;
• Five participants were English and three Afrikaans speaking;
• Two participants were registered nurses with a diploma in nursing
science, the other six participants comprised a physiotherapist; an
occupational therapist; two psychologists; one pharmacist and one
audiologist/speech therapist. All the participants have a relevant degree
in their field of expertise; and
• The participants have been in private practice for a period ranging
between one year and fifty years;
A pilot study was done. A naïve sketch and interview was done with a
participant that fulfilled the suggested criteria of the research population. The
pilot study was done in order to identify any problems that may be
encountered during the actual study. The participant met the sampling
criteria as described in chapter two. The following questions were asked in
the sketch and during the interview:
• What are the most significant problems that you experienced when you
started your business? (Wat is die mees betekenisvolle probleme wat jy
ervaar het toe jy jou besigheid begin het?)
• What did you do to overcome the problems? (Wat het jy gedoen om die
probleme te oorbrug?)
• What types of problems are you experiencing at the moment? Please
elaborate why you saying this. (Watter probleme ondervind jy op die
oomblik? Brei asseblief uit hoekom jy so sê.)
41
The pilot interview was transcribed, and together with the sketch analyzed to
ensure that the proposed research question elicits the information the
researcher was interested in. A proposed analytical method was used to
identify themes and sub-themes. The pilot sketch and interview were
conducted at the participant’s office at her request. No problems were
experienced and the information obtained from this interview was so valuable
that it was included in the final analysis of all the data.
The sketches and interviews of the other seven participants were conducted
in both English and Afrikaans according to the preference of the participants.
Afrikaans quotations cited from the transcripts were followed directly by the
English translation in brackets. The researcher, independent coder and the
research supervisors are bi-lingual and did not experience any problems to
interpret the data.
The interviews were audio taped and each interview lasted until the
participants started to repeat themselves and each other. The researcher
made brief field notes after each interview to reflect the immediate
impressions of the participants. Verbatim transcripts were made from the
audiotapes. The researcher analyzed the transcripts according to the
method described by Tesch (in Cresswell, 1994:154). Copies of the
transcripts and of the guidelines for analysis (Annexure E) were given to an
independent coder with qualitative research experience. Consensus was
reached with the independent coder that the data was saturated and no more
interviews needed to be conducted, as there were no new themes emerging.
Themes were identified and confirmed by the independent coder and the
supervisors of the study.
A literature control was done to recontextualise the identified themes within
the existing literature. The nature of the data allowed four main themes with
a number of sub-themes. These themes are reflected in Table 3. 1.
42
The researcher will discuss each of these main themes with their associated
sub-themes. Quotations from the transcribed interviews will be used to
clarify the sub-themes and help to put facts into perspective.
3.3 DISCUSSION OF IDENTIFIED THEMES The problems experienced by small business owner-managers in the health
sector (hereafter being referred to as participants) will now be discussed
under the four major themes and sub-themes identified by the researcher
and the independent coder.
The main themes are:
• Small business owner-managers in the health sector lack business skills
and experience;
• Small business owner-managers in the health sector experience financial
problems;
• Small business owner-managers in the health sector experience difficulty
building a customer base; and
• Business owner-managers in the health sector experience uncertainty in
terms of their businesses’ future.
43
Table 3.1 IDENTIFIED MAIN AND SUB-THEMES RELATING TO THE PROBLEMS EXPERIENCED BY SMALL BUSINESS OWNER-MANAGERS IN THE HEALTH SECTOR.
Main themes Sub themes
1. Small business owner-managers in
the health sector lack business skills
and experience.
1.1 Small business owner-managers
lack training in managing a
business.
1.2 Small business owner-managers
lack administrative skills.
1.3 Small business owner-managers
lack skills to manage the human
resource function of their
businesses.
1.4 Small business owner-managers
expressed problems / challenges
to cope with family and business
demands.
1.5 Small business owner-managers
are reluctant to make use of
available resources for assistance.
2. Small business owner-managers in
the health sector experience financial
problems.
2.1 Small business owner- managers
lack access to finance.
2.2 Small business owner- managers
lack planning skills or do not plan at
all.
44
2.3 Medical Aid Schemes do not pay
accounts timeously.
2.4 Tax rates are very high and
provisional tax needs to be paid bi-
annually.
3. Small business owner-managers
in the health sector experience
difficulty in building a customer base.
3.1 Small business owner-managers
experience problems with
marketing due to ethical
constraints.
3.2 Small business owner-managers
experience problems finding a
niche in the market.
4. Small business owner-managers in
the health sector experience
uncertainty in terms of their
businesses future.
4.1 Small business owner-managers
are uncertain regarding the future of
their businesses after the
implementation of the “Certificate of
Need”.
3.3.1 Main Theme 1: Small business owner-managers in the health sector lack business skills and experience
A lack of business experience was identified as one of the main themes and
problems experienced by participants in this study. The lack of knowledge
45
and experience by health professionals jeopardizes entrepreneurial health
care businesses and contributes towards the high failure rate of small
businesses in South Africa. As a result of the following quotes, the
researcher draws the conclusion that the participants lack business skills and
experience and the “know how” of managing a business.
“Vir my was dit om die insetkostes te bepaal, ek het nie vooraf
ondervinding van die privaatsektor gehad nie” (For me it was to
estimate the start-up costs, I did not have any experience in the
private sector)
“What I discovered was, I was inexperienced in terms of medical
aids, a specific business slant, how to deal with medical aids and how
to get payment”
“When I started, I struggled a lot, but that was a learning curve…some
people do a course, but I learned by trial and error”
Baron (2000:344) defines experience as”…the process of gaining knowledge
or skills by doing and seeing things.” Timmons and Spinelli (2004: 65) also
believes that many small business owner-managers (entrepreneurs) do not
have prior business experience and states,” …research studies suggest the
role of experience and know-how is central in successful venture creation.”
Surveys on small business failure maintain that entrepreneurs often have
good ideas and are competent people but “they do not have a clue on how to
run a business and have no underlying experience of business
fundamentals” (Baron, 2000:1).
3.3.1.1 Sub-theme 1: Small business owner-managers in the health sector lack training in managing a business
46
Although each professional undergoes an intensive training course in order
to develop the skills of his/her profession, and to qualify in their chosen
discipline, training pertaining to business skills and management are often
not included. This poses a problem as a large percentage of today’s health
professionals choose to set up a private practice. Having made this decision
to start and manage their own business, the participants encounter numerous
problems due to the lack of skills and experience.
The quotations cited below illustrate the various problems, which the various
health practitioners experience due to the lack of administrative and business
management skills and knowledge.
“Ek dink dit is ‘n baie groot leemte in ons kursus, ons leer om
audioloë te wees en mense se gehoor te toets, maar niemand leer ons
ooit iets van besigheid nie. Ek dink hulle moet dit in die kursus inbou,
want baie terapeute begin hulle eie besigheid en het geen kennis van
besigheid hoegenaamd nie.” (I think it is a great deficiency in the
course. We learn how to be audiologists and to test people’s hearing,
but nobody ever teaches us something about business. I think it needs
to be built into the course because many therapists start their own
businesses and have no knowledge whatsoever about business.)
“One thing I would say, I would like to get more training about setting
up a practice, and especially being assertive about being in a
business…”
The following literature supports the above statements: “Many entrepreneurs
lack business skills and knowledge about how to start and manage a
business” (Johansson, 2001:13). Similarly Glynn (2000:12) argues that there
is a shortage of people capable of managing relatively small, rapid-growing
businesses and lack of business skills is even more of a problem than
obtaining finance.
47
ABSA (the largest commercial bank in South Africa) announced its
commitment to the SMME sector by putting its financial weight behind an
entrepreneurship-training programme named “Entrepreneurship for
beginners”. The bank felt there was no point in lending people money if they
did not know how to manage their own business (Van Huyssteen, 2000:16).
3.3.1.2 Sub-theme 1.2: Small business owner - managers lack administrative skills
When considering the lack of management and basic administrative skills
among participants, one should take into account that small businesses are
often established for survival reasons and once in operation, owners live day-
by-day providing their services. In essence little time, if any, is available to
do much else, including obtaining the necessary administrative and time
management skills.
The lack of administration skills was one of the major problems participants
experienced due to a lack of skills as can be seen from the following quotes:
“Huge problems with administration, because both of us were not
great administrators. We had to get a very effective filing system
going… ”
“There is a tremendous amount of admin work to do these days, you
have to employ bookkeepers, special people to do your accounts and
paperwork, everyday we get papers to fill in, we get questionnaires to
fill in….there is a lot of admin work….to check the medical aids, about
10% doesn’t get paid, so you have to phone them and ask them why
the account was not paid, queries that you have to answer….”
“… I battled with my admin…I had to learn to do proper admin,
specifically the accounting side…but I had to learn over the years that
the admin was really what was keeping the business together…”
48
It is maintained that one of the major reasons for small business failure is
managerial incompetence and a lack of business skills and knowledge. It has
been estimated that the failure rate of SMME’s lies between 70% and 80%
(Baron, 2000: 1 and Ryan, 2003:13) and that a substantial amount of money
is lost due to the occurrence of mistakes and problems that could otherwise
have been avoided. Numerous reasons for this high failure rate were cited,
including unfamiliarity with established business practices and a lack of
managerial expertise in business management, including good administrative
skills.
3.3.1.3 Sub-theme 1.3: Small business owner-managers lack skills
to manage the human resource function of their businesses
South Africa lost top quality staff to overseas countries, leaving small
business owner-managers with a much smaller pool of people to choose
from when they have to appoint new staff. Staff form the back bone of a
business, and is not always easy to manage, especially by the inexperienced
business owner-manager. The following quotations from interviews illustrate
respondents’ concerns about managing and obtaining quality staff that was
committed to providing high quality service within their businesses:
“….because of the brain drain……..and we cannot compete or
compare salaries with overseas ……and we are losing our top girls to
overseas…….that is a huge problem…”
“Ja, die dinamika tussen mense is soms moeilik om te hanteer. Ek het
gelukkig ‘n sielkundige wat ook ‘n vriend is, ek gaan na hom om te
ontlaai en van my frustrasies ontslae te raak. Hy help my ook baie
met die hantering van personeel.” (Yes, the dynamics between people
is difficult to manage. Luckily I also have a psychologist who is also a
friend. I go to him to get rid of my frustrations. He also assists me a lot
with handling staff.)
49
“Yes, they will tell the patients to wait till Monday; they don’t want to
work on a Friday afternoon, so that sort of things cause problems……”
One participant stated that he was confronted with problems associated with
theft and that it took a long time before he noticed it. Therefore selecting the
appropriate quality staff is very important. The following quote from an
interview supports this problem statement:
“The right staff is important, we had staff for years and then found out
they were stealing our goods…lots of problems with staff.”
South Africa has numerous laws that regulate employee/employer
relationships in the workplace. However, the legislation does not provide
express solutions to all workplace problems. Hayward in Your Business
(2004:56) advised the employer to turn to the CCMA, Labour Court and
common law for guidance on how to interpret and deal with issues relating to
employment conditions and performance standards
3.3.1.4 Sub-theme 1.4: Small business owner-managers in the health sector expressed problems / challenges to cope with family and business demands A direct implication of change within the country and the economy is that
small business owner-managers need to be given the tools for coping with
different challenges and demands. It is also important to know how to adjust
to these changes when conditions, customer requirements and laws change.
Some participants had better coping skills in place while others are still
struggling in this regard. The participants indicated a need for the
development of capability in dealing with balancing increasing workloads and
family demands.
Various participants emphasized that managing a business cannot be
separated from the demands made on family life. The participants expressed
50
feelings of anxiety and stress about trying to provide for their families and
keeping the business going at the same time. Some participants made the
following statements during their interviews:
“We used to work only till five. Now to survive, pharmacies have to be
open till six, half past seven, and eight o’clock, sometimes till nine. We
are now open Saturday afternoons and Sundays. That we did not do
previously.”
“… I use to locum for other practices, in the first year, in Greenacres
Hospital; I used to work Saturdays and Sundays. So you get another
income…”
Self-management is one of the characteristics of a mature adult, somebody
who knows how to adjust to change and cope with new demands. To stay
successful it is of the utmost importance that the owner-manager is able to
conduct him or herself in such a way that he or she is able to retain the
goodwill of the clients and the customers. However, it is not always easy to
please everybody.
The following quotation illustrates this aspect:
“This is a very strange problem, because it is a blessing in disguise, I
find it quite difficult to balance my work and my relaxation time,
because I have a busy practice, and of course, my referral sources put
pressure on me to see their patients and my old patients put pressure
on me to see them. They want me to see them quickly, and that is not
always possible…I am not complaining, but it puts quite a lot of
emotional pressure.”
As the central figure in managing a business, the small business owner-
manager must be prepared to engage in a critical self-analysis in order to
identify potential personal strengths and limitations, and develop strategies to
51
deal with it. McFarland, Leonard and Morris (1994:77) list an awareness of
one’s value system, a realistic appraisal of one’s abilities, and an
understanding of one’s perceptions of self and others as critical in managing
a business.
3.3.1.5 Sub-theme 1.5: Professionals are reluctant to make use of available resources for assistance
In today’s complex and fast paced business world the demands for
knowledge, expertise, and innovation are at times overwhelming. The
question can be asked:
How are the small businesses owner-managers of today supposed to meet
all of these demands? Fortunately, there are many resources of assistance
available to businesses to help overcome their own lack of knowledge and
expertise. These include, amongst others, obtaining advice and assistance
from personal and professional acquaintances, business consultants,
business-related service providers, as well as attending formal business
courses and seminars, to mention a few.
Some participants realized after a while that to be successful as the owner-
manager of the business, one does not necessarily have to be the brightest
in all aspects of the operation, but one has to be certain that the best
possible advice and information is obtained. The participants realized that
financial support and guidance was of crucial importance in the success of
their business. However, sometimes it took a long time before they realized
it, or obtained the correct resources.
One participant made the following statement about making use of
resources:
“Ek het eers probeer om my boeke self te doen, maar ek het baie
gesukkel. Ek het later besluit om my boeke vir iemand te gee wat weet
wat hy doen. Ek sal sê, kry iemand wat weet hoe die finansies werk,
52
dan hoef jy nie nog daaroor ook bekommerd te wees nie.” (At first I
tried do do my own accounts, but I struggled a lot. I then decided to
hand over my books to someone who knows what he is doing. I will
say, get someone who knows how finances work, then you do not still
has to fret over this.)
The greatest value and usefulness of a consultant comes in the role of
change agent. Goldstruck quoted Einstein in Your Business (2004: 54) by
saying, “No problem can be solved from the same level of consciousness
that created it.” Your inclusion of a consulting resource can raise that
consciousness to new levels allowing you and your company to achieve
wondrous things.
Sometimes it is not an unwillingness to use available resources, but it is not
always easy for someone starting a new business to find the best option
available, as can be seen from the following quote:
“I used “X” tax (specific accounting firm), but again, that was a big
mess up, because the person that I was using did not give me the
correct information and using the right procedures for saving tax, but
as you go on in business you meet other people and they tell you what
is best to do, so that is also a problem to a new person.”
The lack of financial assistance is often cited as the major constraint facing
small businesses (Longnecker, Moore and Petty, 1994:46; Marx, van
Rooyen, Bosch and Reynders 1998:732; Van Aardt, Van Aardt and
Bezuidenhout, 2000:191). However, what is harder to come by than capital
are business management skills, mentoring and assistance for small
business (Baron, 2000:12). Budding entrepreneurs lack skills and knowledge
about how to start and manage a business (Johansson, 2001:13). One of the
greatest needs of SMME’s is after-care support. Most mentoring programmes
stop at the point when finance has been obtained (Johansson, 2001:129).
53
It would thus seem logical to assume that through making use of the
assistance available, managerial competences and business skills will
improve, and the failure rate can be reduced. In addition to the activities the
consultant can perform, comes the added value of cost effectiveness. The
ability to select experience and expertise on an “as needed basis” is
extremely attractive (Johansson, 2001:19).
3.3.2 Main theme 2: Small business owner-managers in the health sector experience financial problems
The participants of this study expressed concerns about the financial aspects
of managing a business. Because of the high failure risk that financial
service providers attach to new businesses, problems were encountered in
obtaining finance to start a new venture. Participants also experienced
financial stressors due to slow payment of accounts by medical aid funds,
causing cash flow problems. They also stated that the tax rates are very high
and that they have to pay provisional tax bi-annually. The participants were
willing to make personal financial sacrifices to keep their business financially
sound. These sub-themes will now be discussed.
3.3.2.1 Sub-theme 2.1: Small business owner- managers lack access to finance
There are quite a few structural constrains in setting up a business and
managing it. One of the most important of these is getting the necessary
funding.
The following quotations illustrate the participants’ struggle to acquire the
necessary start-up finance or to keep their businesses financially viable:
“I think finance, that was a big problem, hmm…, you know there was a
large capital deposited into the business, and that was gobbled up
54
quickly just with setting up the business, and we did not really
generated an income at the end of the day, which was a problem to
both of us, because we both needed to support families, so that
remains a challenge.”
“I was a bit lucky you know, because I bought into a practice. It was
an existing practice with two people who said they might need a third
person, but the only problem then is that you have to pay goodwill,
they call it an establishment fee, which is basically very high.”
“The initial main problem was the finance, going from bank to bank,
because you don’t have any assets. You are just starting without a
house; you don’t have any guarantee for the bank. Some of the banks
are not interested, but some banks will give you a loan. But now you
have to pay high interest because to them it is a high risk factor
according to them. So that was the major, or one of the major
problems.”
One of the major reasons for the under development and high failure rate of
small businesses are the lack of access to finance. The inability to obtain
sufficient funds is often cited as a major obstacle experienced by many small
businesses (Ryan 2003:10).
Access to capital, which is key to economic growth and the development of
the SMME sector, has been identified as being difficult for the majority of
South African small businesses. Despite the government’s attempts over the
past few years to remedy the problem, access to funding continues to plague
the small and medium sized business sector and conflicting views exist as to
why this is (Driver, Wood, Segal and Herrington, 2001:44).
55
3.3.2.2 Sub-theme 2.2: Small business owner- managers lack planning skills or do not plan at all
Planning is one of the most critical aspects in managing a successful
business and forms a very important aspect of setting up a viable and
successful business. Some of the participants had a business plan before
they started their venture, while others just started the business without any
form of planning or experience. The following comments were made in this
regard.
“The main problem was managing the finance and to pay salaries on
time, you need to know what to generate per month, your expenses
and expected income.”
The first step in starting a business is to draw up a business plan which can
serve as a tool that could be used as a road map throughout the day-to-day
operations of the business. According to Black in Your Business (2005: 12)
the business plan, considered a “bible” by some, needs to be continuously
modified in order to ensure that the entrepreneur is on the right track. A
business plan also serves as a planning document for the small business
owner-manager, and is an important document to obtain access to financing.
One of the participants described how he tried to overcome the problem of
insufficient cash flow when he first started his business:
“You see, the major thing we did the first year, I told my wife cut
expenses, you see, lifestyle expenses, we had an old, old car, I mean
I had a car that was leaking…so try and spend little, very, very little,
you cut all luxury items because your income is not very stable, it goes
up and down. What I decided the first year, no luxury things, no
holidays, so in that way I could pay back the loan”
56
Future planning is also of vital importance to safeguard the business from
failing, as can be seen from the following quote:
“Another problem is you have to maintain the standard of your
practice, which is another major problem, because, basically you have
to render the same service to the patients…So physical equipment
should be there, you need to plan for it “
The founder of a business is usually struggling to build a new business.
Future planning is often not in the mind of the entrepreneur, because
basically he/she is just surviving, managing the business on a day-to-day
basis (Baron 2000:1). However, planning and getting good advice from
outside the business are simply critical (Johansson, 2001:40).
3.3.2.3 Sub-theme 2.3: Medical Aid Schemes do not pay accounts timeously The participants expressed their concern about the waiting period for the
Medical Aid Schemes to pay the professionals who delivered the service.
Some participants struggled to stay financially sound, especially for the first
couple of months. This was clearly stated or implied by all the participants as
indicated by the following extracts from the transcripts:
“…. after getting the finance, my partners carried the expenses for the
first two months until my money started coming in. You see, you have
to get patients and then it takes two months for the medical aids
(Medical Aid Schemes) to pay, but in the meantime you have to pay
your receptionist and other bills… “
Another participant said, “…I negotiated with the different hospitals
that as soon as I invoiced them, to pay me immediately…and also
took a second bond on my home…as you know, as a sort of backup.”
57
Baron (2000: 20) is of the opinion that young businesses often fail as a result
of having flawed business ideas, a lack of energy and commitment by the
owner(s), as well as problems associated with negative cash flow. He stated:
“Negative cash flow today will certainly catch up with you tomorrow”
3.3.2.4 Sub theme 2.4: Tax rates are very high and provisional tax needs to be paid bi-annually
Being an employee, tax can be a relatively simple issue. As a small business
owner-manager, managing tax can be very complicated. It is therefore very
important for an owner-manager of the business to understand taxation and
the tax law, even if this side of the business will be managed by an
accountant. Participants expressed concern and even frustration about tax related issues.
Some participants felt that the rates that they have to pay are very high.
Quotations from interviews supported this:
“At the moment, one of the major problems…you see, we pay a huge
amount of tax, and the rate is quite high…”
Another participant made the following comment:
“ It just doesn’t feel right, it feels as if I am just working to pay tax, the
more I work, the more I pay”
The perception that small business owner-managers pay high tax rates can
be due to not properly understanding the tax system and therefore they have
misperceptions about tax rates. In South Africa, every individual, every
partner in a partnership, and every company and close corporation that
derives taxable income is liable to pay tax. According to Macleod (2004:194)
the Income Tax Act, Act 58 of 1962 requires individuals to pay tax at
progressively increasing rates until the maximum (currently 40%) is reached,
58
while companies and close corporations generally pay a flat rate of 29%. If a
company or closed corporation pays a dividend, STC (secondary tax on
companies) of 12, 5% is payable.
Income tax is assessed on the taxable income earned in any one-tax year.
The taxable income of a company and closed corporation is calculated in the
same way as it is for an individual: by deducting from the gross income any
expenses (apart from capital expenses) incurred in the production of income
during a given tax year (Macleod , 2004:194).
The above is the same when earning a salary or having a business, the only
difference is that when earning a salary, tax is deducted monthly.
Another pressing issue was paying provisional tax bi-annually, as one
participant commented in this regard:
“…but my main problems I would say, number one is tax…especially
the provisional tax that you have to pay every six months …”
It is difficult to estimate mid-way through the year the exact income of a
business and how much the full year’s profit will be, therefore tax have to be
paid provisionally, hence the name provisional tax. This tax is an upfront
payment based on the estimate income of the business based on the
previous year’s assessment. Only when the year is over and the books show
how much profit the business actually made, can a final tax payment be
made to the South African Revenue Services (SARS).
Paying provisional tax once a year could result in having to pay a large lump
sum at the end of each financial year. In order to avoid this, SARS uses a
system according to which companies, closed corporations and individuals
with uneven income pay provisional tax. This simply means you pay tax
twice a year instead of monthly like a person working for a salary (Macleod,
2004:193).
59
Income tax can be difficult to understand, and every year slight changes are
made to the tax system, sometimes with significant implications for small
businesses. It is therefore important to keep up to date with reports in the
press, and to approach SARS or an auditor for the most recent information
on tax related issues.
3.3.3 Main Theme 3: Small business owner-managers experience difficulty in building a customer base
There is a huge difference between building a customer base in the health
sector and doing it in other business sectors. Small business owner-
managers in the health sector have to find alternatives to direct marketing
and building up a clientele base.
Participants reported that a lot of time and effort went into building up a
customer base or to establish relations with doctors for a steady flow of
referrals.
3.3.3.1 Sub theme 3.1: Small business owner-managers in the health
sector experience problems with marketing due to ethical constraints
One of the major drawbacks of establishing a private practice in the health
profession is that there are restricting ethical issues which prevent the
practitioner from advertising. A health practitioner owning a business may
not, in contrast with other new businesses in other sectors, do direct
advertising, as can be seen from the following quotes.
“Ja, advertering is ‘n ander groot probleem. Volgens ons etiese kode
mag ons glad nie adverteer nie. Ek mag byvoorbeeld nie ‘n oor op my
besigheidskaartjie hê, of op die bord buite nie, al wat ek mag sê is dat
ek ‘n oudioloog is. Die probleem daarmee is dat almal weet wat ‘n oor
60
is, maar baie ken nie die term oudioloog nie. Ek mag glad nie in
koerante of tydskrifte adverteer nie, so dit is moeilik. Ek kan nie sê dat
ek nuwe gehoorapparaat het wat baie effektief is nie. Dit is moeilik om
die praktyk te bedryf as ‘n besigheid, omdat ons gebind word deur
etiese reëls waaronder ander besighede nie onderworpe is nie.” (Yes,
advertising is another great problem. According to our ethical code, we
may not advertise at all. For instance, I may not have an ear on my
business card. All that I may say is that I am an audiologist. The
problem with this is that everyone knows what an ear is, but many do
not know the term audiologist. I may not advertise in newspapers or
magazines at all, so it is very difficult. I cannot say that the new
hearing apparatus that I have is very effective. It is difficult to run the
practice as a business, and to be bound by ethical rules that do not
apply to other businesses.)
The Health Professions Act articulates ethical principles and standards of
professional conduct including advertising that are statutorily binding on all
persons registered with the Board. In view of the above, the practitioner
needs to be innovative and look for other creative, more indirect forms of
marketing, like the following example from a participant:
“Yes, when we first started, we had a little four wheel motor car, with
sign writing all over it; we went with it all over town…and all the people
wanted to know who is this funny man with the funny motor car.”
The various types of strategies that worked actively or passively include the
following:
“I started going from the one GP (general practitioner) to the
next…you go to them and tell them what you do, so I went to about
seventy, eighty GP’s, explain to them what I can do and what
physiotherapy is.”
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“Just word of mouth…I am in the business since 1996 and people
know me by now.”
“I went to see doctors, bare footed in the street, I went to see doctors,
tell them what I was interested in, what I did during my internship.”
“O, we also visited the nursery schools, we visited about every single
nursery school in Port Elizabeth, mmm …mostly in areas that could
obviously afford this kind of teaching and courses, and we follow up
regularly with institutions per fax and e mail.”
Other problems cited were people’s loyalty to their service providers, stigma
related to mental illness and doctors (as a referral base) using their
“favourites” to refer to:
“People are accustomed to frequent to one pharmacy or one business
at a time. People don’t like change. They would like to stay with the
people they started with…you know, but we just offered a better
service and we offered good deliveries, we put ourselves out, we were
good to people…so we established a very good business”
“Inisieel was dit hoofsaaklik die stigma wat gekoppel is om ‘n
sielkundige te gaan sien.” (Initially it was mainly the stigma attached to
see a psychologist.)
“The other problem was to build up a referral system that was
problematic in the beginning. You know, doctors have their favourites
and you sort of have to build up a personal relationship with them,
before they start trusting you to see their patients.”
This problem is unique to the health sector and no research literature
pertaining to small businesses in the health sector could be found on this
specific issue regarding problems due to advertising constraints.
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3.2 Sub-theme 3.2: Small business owner-managers experience problems finding a niche in the market Market research is the first stage to embark upon the process of finding a
niche market. Market research will enable the entrepreneur to establish
whether there is a “demand” for the service he/she will be offering to the
specific target market.
Regarding this problem, participants responded as follows:
“Ja, ’n ander ding wat vir my moeilik was is, ‘n mens moet uitvind of
daar ‘n niche in die mark is, en of daar nie ‘n niche in die mark is nie. “
(Yes, another thing that was difficult was that one has to establish if
there is not a niche in the market or not).
"It was quite a difficult task as there are other existing businesses
already doing what we set out to do, it was difficult for us to get into
the market”
Health professionals need to be specialists within their specialty to
encourage more referrals and to stay competitive, than perhaps their peers
who are not as specialized. In starting a new business, it is important to find a
niche market, because markets are often saturated (Macleod, 2004: 68).
3.3.4 Main Theme 4: Small business owner-managers in the health sector experience uncertainty in terms of their businesses future
The health sector experienced several changes during the past couple of
years. Health professionals experience the above as a direct threat to the
future of their businesses. What has surfaced so far in terms of the
envisaged “Certificate of Need” (Annexure C and D), is that the aim of it is to
63
address the health rights and needs of all the citizens of our country, but not
to balance it with the democratic rights of the health practitioners themselves.
3.3.4.1 Sub-theme 4.1: Small business owner-managers are uncertain regarding the future of their businesses after the implementation of the “Certificate of Need”
In various interviews it transpired that health practitioners were concerned
about what possible ramifications the relatively new official “Certificate of
Need” (Annexure C and D) could have on their businesses. In brief, a
“Certificate of Need” entails the following:
Health professionals will be required to apply for a licence to practice. This
licence is known as the “Certificate of Need”. According to Johan Biermann
(Annexure C), the “Certificate of Need” is a form of an administrative planning
tool to ensure equitable distribution of resources (health establishments,
human resources, and health technology) and to ensure provision of better
quality of services. The introduction of the “Certificate of Need” is fully
supported by the Health Professions Council of South Africa and a number of
other health bodies. The purpose of the “Certificate of Need” is ostensibly to
control the distribution of health care services and the kind of services that
may be offered in any particular area. (For an in-depth explanation of the
“Certificate of Need” (see Annexure C and D).
The participants are unsure of the impact that the “Certificate of Need” will
have on their practices and future, as can be seen from the following
statements:
“Die nuwe wetgewing, die moontlike implimentering van die “certificate
of need”… as hulle ons gaan uitplaas, na se nou maar die platteland,
gaan hulle kyk na mense wat dit net deeltyds vir ‘n stokperdjie doen,
en ander wat broodwinners is?”
64
The new legislation, the implementation of the certificate of need, if
they are going to place us, for instance to the rural areas, will they
consider whether people only want to do it part-time as a hobby, and
other that are breadwinners.”
“I don’t know how the certificate of need is going to affect me”
Small business owner-managers experience anxiety as they cannot
anticipate exactly what effect the implementation of the “Certificate of Need”
will have on their businesses, however, the onus rests on all small business
owner-managers to take charge of their destiny, go ahead, and make the
best out of it. The road to success has never been a smooth one, and it
takes hard work and dedication to make things happen.
3.4 SUMMARY
It is evident from the above discussion that important themes emerged, some
consistent with previous research findings, while others are apparently
unique.
The findings were compared to relevant literature and similarities and
differences were identified. The themes emerging from the interviews with
health practitioners in private practice, by large correlate with findings on
reasons for failure / setbacks in other small businesses. Therefore, this
sector can take note of what research in other sectors has revealed.
The similar themes to problems experienced by small businesses in general
are as follows:
• Business owner-managers in the health sector lack experience; and
• Small business owner-managers in the health sector experience financial
problems
65
The following problems were unique to small businesses in the health sector
due to different laws and ethical constraints that did not affect small
businesses in general.
• Small business owner-managers experience difficulty in building a
customer base; and
• Small business owner-managers in the health sector experience
uncertainty in terms of the future due to the implementation of the
“Certificate of Need”.
3.5 CONCLUSION
In this chapter the researcher explored the problems encountered by small
business owner-managers in the health sector. Data was analyzed and
described. Themes identified from the data were supported by means of
literature control. Field notes were also incorporated. The researcher will not
attempt to generalize any of the findings, as this is neither the practice in
qualitative research (Strauss & Corbin, 1990:96), nor was it the objective of
the present study.
This research study indicates that small business owner-managers in the
health sector experienced numerous problems running their own businesses.
It was also revealed that their training is not sufficient to help them to start
and manage their own businesses. Furthermore it emerged that that they did
not have sufficient knowledge of business and financial administration. The
literature consulted referred mostly to small businesses in sectors other than
health.
In the concluding chapter of this study, the limitations of the study will be
discussed, recommendations will be made and conclusions will be drawn.
66
CHAPTER 4
SUMMARY, CONCLUSION, RECOMMENDATIONS AND LIMITATIONS
4.1 INTRODUCTION
In chapter three the findings related to the problems experienced by small
business owner-managers in the health sector were discussed. The findings
were compared to existing literature and similarities and differences were
highlighted and discussed. This chapter will include the summary,
conclusion, recommendations and limitations of the study.
4.2 OBJECTIVES OF THE STUDY
The objective of this research study is as follows:
To investigate and describe the nature of problems experienced by small
business owner-managers in the health sector. In the opinion of the
researcher the objective was achieved as the nature of the problems
experienced by small business owner-managers were investigated by means
of interviews. The themes that emerged were identified and under these
themes the problems experienced were described.
The following themes were identified from the interviews conducted with
small business owner-managers in the health sector, namely:
• Small business owner-managers in the health sector lack the
necessary practical experience to address the business challenges
they are confronted with;
67
• Small business owner-managers in the health sector experience
financial problems with regard to their businesses;
• Small business owner-managers experience difficulty in building a
customer base; and
• Small business owner-managers in the health sector experience
uncertainty in terms of their businesses future.
4.3 FINDINGS OF THE STUDY
After having conducted and completed the research documented in the
previous chapters, the following findings emanated from the study:
• Small business owner-managers in the health sector lack the necessary
experience and skills to manage a business;
• Health professionals lack relevant business training;
• Small business owner-managers in the health sector experience various
problems, which are often financial in nature;
• Financial planning from the onset is often not sound, because of a lack of
knowledge in this regard;
• Getting access to start-up finance is a major problem;
• Health practitioners need financial guidance, as they are not trained in
this area during their professional studies;
• It takes up to six months before medical aid funds pay accounts, resulting
in cash flow and other financial problems;
• Tax rates are very high and they need to pay provisional tax bi-annually,
putting more pressure on them financially;
• Problems are experienced because of a lack of support systems;
68
• Personal and family sacrifices are made in order to cope with financial
pressures, leading to various forms of stress;
• Small business owner-managers in the health sector expressed problems
/ challenges to cope with family and business demands simultaneously;
• Small business owner-managers in the health sector experience a sense
of helplessness to cope with staff problems, due to a lack of staff
management training and experience;
• Small business owner-managers in the health sector experience
problems with marketing;
• Small business owner-managers in the health sector are constrained with
advertising because of legislation pertaining to ethics which restricts what
information may be used in an advertisement;
• Problems are experienced with finding a specific niche in the market; and
• Small business owner-managers experience anxiety as they cannot
anticipate exactly what effect the implementation of the “Certificate of
Need” will have on their businesses.
4.4 RECOMMENDATIONS
Against the backdrop of the research conducted in this study, as well as the
subsequent data analysis and findings which emerged, the following
recommendations are made:
4.4.1 EDUCATION
4.4.1.1 INCLUSION OF BUSINESS MANAGEMENT MODULES IN TRAINING PROGRAMMES
69
Higher Education Institutions which train health practitioners should take note
of the fact that socio-economic circumstances have changed, compelling
many professionals to go into private practice. Therefore suitable business
management modules should be designed or used from other disciplines as
part of the curriculum that is focused on health professions. It is
recommended that such modules should be customized to suit the needs of
the health profession, equipping these professionals with knowledge and
skills of how to start and manage their own businesses successfully.
Should staffing be an aggravating factor to the already stretched budget of a
faculty, it could be considered to buy in and make use of on-line modules
already designed elsewhere. It is suggested that faculties that train health
professionals across the country join hands to design suitable modules and
use it on line collectively.
It is recommended that such modules should cover the following:
• Factors that shape the present socio-economic situation in South Africa;
• Knowledge, skills and attitude development to be self employed;
• The influence of the macro and market environment (political, social and
economic environment) on practicing as a health professional
entrepreneur;
• Scenario building on the future of the health profession and the
preparation of students to cope with these scenarios;
• Medical Aid Schemes: types, various plans, rules, impact on the
practitioner, how to access rule changes, dealing with offices of medical
aid schemes, hands-on exercises on how to cut unnecessary time loss
when communicating with medical aid offices;
• Screening potential high-risk clients (financially) before accepting them as
clients; and
70
• Strategies for successful private practice: start-up, cash flow, maintaining
momentum, expansion of the business and sustainability; and
Health professionals need to understand small business management
principles in order to become better managers themselves. To address this
issue of managerial incompetence and lack of business skills, it is vital to
make small business owner-managers aware of the assistance available to
them. For example, information concerning business issues is available on
the internet, printed media, universities, consultants and networks. By
regularly using these sources, a vast amount of knowledge can be obtained
and managerial competence can be improved. Many ad-hoc seminars and
short courses are also offered by tertiary institutions that could assist these
small business owner-managers in starting and managing their own
businesses.
As time is often a constraint in consulting these sources of assistance,
existing information could be made available in an “instant, mini reference,
easily understandable format” as an on-line support for practicing health
professionals. This information could also be made available on a web site,
assisting full-time business owner-managers who cannot take time to study
or devote a lot of time to sift through relevant information. In order to
implement this suggestion, resourceful persons could take up the challenge
to study what is freely available on various websites and then compile one
abridged and user-friendly version that could cut the time needed to navigate
various sites in order to find quick solutions to various challenges.
4.4.2 RESEARCH
4.4.2.1 THE SACHP (SOUTH AFRICAN COUNCIL FOR HEALTH PRACTITIONERS) CONFERENCE FORMAT SHOULD INCLUDE BUSINESS AS A STANDING SUB-THEME
71
Annual professional conferences often fall into the trap of perpetuating the
pattern that has been followed over many years. While it is vital to be
exposed to research on the various aspects of health, the time has arrived to
accept that transformation has had a tremendous impact on the profession,
forcing many to go into private practice. Therefore it is suggested that the
South African Council for Health Practitioners should choose conference
themes which include business-related topics.
An effort can also be made to circulate conference details to persons who
specialize in business management and encourage them to present
workshops and papers at such conferences. Opportunities like this will further
stimulate them to undertake research in this field or to encourage post-
graduate students to do research in business related areas.
The NRF (National Research Foundation) can be approached for funding of
such research as it will have bearing on the sustainability of South Africa’s
health practitioners in private practice, and the valuable contribution they
render to the wellness of the physical, emotional and mental health of the
national workforce, which is vital to the economic prosperity of the country.
4.4.2.2 SACHP (SOUTH AFRICAN COUNCIL FOR HEALTH PRACTITIONERS) SHOULD LIAISE WITH GOVERNMENT ABOUT CONTENTIOUS ISSUES
Traditional functions of this council for professionals, inter alia, include
keeping a compulsory register of practitioners and students studying towards
a qualification; monitoring standards of training by various means; seeing to it
that its code of conduct are adhered to; disciplining its members for
transgressing such conduct; and holding annual conferences under its
auspices. Under “normal, predictable circumstances” in a long established
72
democracy a health practitioner thus has a clear understanding of how the
government views the profession and why it requires this council to act in a
regulating and monitoring capacity.
However, at present we have entered the second decade of democracy in
our country. We now see that politicians and their advisors operate according
to a certain paradigm of what they deem democracy to be. One such
example is the underlying principle of the envisaged “Certificate of Need”
(which is already in an advanced stage before implementation) which aims to
address the health rights and needs of all the citizens of the country, but not
to balance it with the democratic rights of the health practitioners themselves,
for example, to be free to practice their profession where they want to.
At present a great deal of uncertainty and anxiety is rife amongst health
practitioners of the implication that the implementation of the “Certificate of
Need” will have on their businesses and family life. The “Certificate of Need “
places the emphasis on a socialist provision of citizens’ health needs. This is
done at the cost of persons who are practicing or in training for the health
profession, or those considering enrolling for studies in the health
professions.
There are numerous examples of what have already been the ramifications in
other professions, e.g. the teachers and policemen. Families are being
strained because a mother or father is forced to work in a geographical area
where work is not available for the other spouse or where there are not
suitable schools for the children to attend. This means that one parent has to
take up employment away from the core family unit, which could result in
family and other problems.
It is therefore suggested that practitioners registered with this council should
be pressurizing its Executive to take the issue of the “Certificate of Need” up
73
with the relevant national minister. If the Executive of the Council does not
stand up for the rights of its members, new legislation will be forced upon its
members. This will cause hardships like financial ruin (if the income of one
spouse is forfeited to keep the family unit together) and family disintegration
(if the family unit is split to ensure that both spouses can earn an income),
causing eroding of the morale of practitioners even further than it is right now.
It is thus inevitable that when faced with a one sided democracy, such
persons will seek greener pastures in other countries. Students will not enroll
for these professions, faculties at universities will not have clients, causing
the collapse of the sustainability of the profession and catering for the health
needs of the nation. This will also have dire consequences for the already
strained economic workforce, stressed by the consequences of the unfolding
of the new democracy, as well as the scourge of the HIV /AIDS pandemic.
4.4.2.3 SACHP (SOUTH AFRICAN COUNCIL FOR HEALTH PRACTITIONERS) SHOULD ACT AS A NODAL POINT BETWEEN ITS MEMBERS AND GOVERNMENT ABOUT CONTENTIOUS ISSUES
Health practitioners should actively respond to calls from their council for
inputs on legislation in draft form relating to them. Such action will ensure
that their voice is heard and they are not merely at the receiving end, once
legislation has been finalized. Such input applies to both seasoned
practitioners and newcomers to the profession.
The effectiveness of suggestions reaching the Council can be enhanced if
the latter establishes a network of its members, with certain people acting as
“anchors” (key liaison persons) or “up-lines” (persons liaising with others who
are hierarchically placed under them as a grouping). They can then alert
persons falling under them of pending legislation and encourage them to
send comments to them. They, in turn, can collate such comments and feed
74
it to the Council. The Council can then disseminate the suggestions and call
for a meeting with the Minister of Health.
There can also be a structured line of communication between students and
lecturers of various Higher Education Institutions to feed their input to the
Council at national level. It is vital that persons from grassroots level be
actively involved, so that Government can be brought to understand the
needs of the individual practitioners in this field.
4.4.3 PRACTICE
4.4.3.1 THE SMALL BUSINESS OWNER SHOULD NOT CARRY THE WHOLE BUSINESS ALONE
It emerged from the interviews that many practitioners tried to save money by
performing all the tasks in the business themselves. However, this leads to
all kinds of additional stress in the business. It is therefore advised that a
specific person be employed that can take care of tasks like answering the
telephone, making appointments, sending and receiving electronic mail,
relaying messages to other health practitioners and taking care of patient
requests.
Furthermore, the employment of a financial advisor is recommended. In
return for the costs incurred, a sound financial plan can be drawn up that sets
direction and saves a lot of expensive mistakes one can make if you manage
on your own. Beyond this, the advisor can also assist with other financial
advice, as this person is a professional who knows his area of specialization
as well as the latest version of the tax laws and how it impacts on the
business.
75
4.4.3.2 INNOVATIVE PLANS TO ESTABLISH CONTACTS
The research indicated that many small business owner-managers resorted
to themselves in expanding their clientele. Not only do they not have the
necessary expertise at the onset of a career, but they also do not have the
time to do this. It is therefore recommended that they make use of existing
contacts to set up more contacts to refer patients to them. One such example
is to make use of the expertise of representatives of various pharmaceutical
companies that visit them on a regular basis. Such persons are versed in
social skills to relate to people. They often have access to budgets for
entertainment which can be harnessed for workshops. These workshops can
serve as a contact base with other health practitioners, like medical doctors
and specialists, for referrals.
4.4.3.3 ESTABLISHING AND MAINTAINING HEALTHY FAMILY RELATIONSHIPS
The various respondents indicated that being a small business-owner caused
that family relations were stressed and sacrifices had to be made. This
causes various kinds of break downs in the family relations. In this regard,
the following recommendations can be offered:
• Families should plan when to spend time away from their home and
businesses. In order for recreation not to erode income, this should be
structured around periods when the business does not have the
opportunity for large income;
• Families should have a weekly time-table with time slots that are
reserved for family time. Nothing should be allowed to upset this
scheduling. One such example is putting all cell phones off and not
entertaining any other incoming calls;
76
• After a day’s work, no work should be taken home. The family
members will then know that they are at liberty to enjoy family life and
communicate socially the moment when the working mother or father
gets home. This will also enhance the upbringing of the children as
they will feel free to turn to such a parent with all the various questions
that arise while growing up; and
• Such a regular schedule will also bring more stability in the husband-
wife relationship. There will be more open communication lines on
what is work time and what is leisure time, thus eliminating
unnecessary suspicions of a partner working “late” because he / she
operates according to an unstructured, re-active modus of operandi,
which may be interpreted as infidelity away from home.
4.5 LIMITATIONS
Seeing that this study is research relating to the requirements of a treatise,
only a few interviews were conducted in the Port Elizabeth area. The findings
are therefore only valid for a limited geographical area and cannot claim to be
similar to larger research undertaken nationally.
For the purpose of this research qualitative research methods were used. In
order to further the study it is recommended that a quantitative study with a
larger representative sample of respondents be undertaken to validate the
findings on a broader scale,
Furthermore, research of this nature is fairly new to the health sciences and
a limited amount of directly applicable resources could be found in various
database searches. The researcher therefore had to rely on traditional
business management literature rather than literature focusing on health
sciences.
77
4.6 CONCLUSION
It has been established that small business owner-managers in the health
sector have a lot of problems similar to small businesses operating in other
sectors, like the lack of management and business skills. Other problems
like advertising constraints and laws affecting health care are quite unique to
small business owner-managers in the health profession. This research has
indicated that there is a dire need for health care professionals to receive
training pertaining to business management before qualifying in their chosen
discipline. It is clear that starting a small business demands more than a
desire to control one’s destiny and a willingness to help people.
The following quote from Johan Biermann (Annexure C) captures the very
essence of what authentic democracy entails and the way forward to ensure
fairness for all (citizens as patients on the one hand as well as private
practitioners on the other hand):
“As we go into the 2005 legislative session, I sincerely hope we can look
objectively at some of the issues and obstacles facing into bigotry or
unthinking intolerance. If we truly value individual freedom and responsibility,
limited government, open markets, the free exchange of ideas, and safe,
robust communities, then we need everyone at the table treating each other
with respect. No exceptions.”
The health sector should be seen in its interrelatedness to all the other
systems that constitute the new South Africa, as a democracy with vision for
its sustainability and future prosperity, within the total realm of the many
facets of global challenges we inevitable have to face up to.
78
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ANNEXURE A
PARTICIPANT CONSENT FORM
Dear Madam / Sir
CONSENT SOUGHT TO BE INTERVIEWED
I am a Masters student of Health and Welfare Management in the Faculty of
Health Sciences at the Nelson Mandela Metropole University, currently
undertaking research entitled:
A RETROSPECTIVE STUDY OF THE PROBLEMS ENCOUNTERED BY
SMALL BUSINESS OWNER - MANAGERS IN THE HEALTH SECTOR.
Information will be obtained by means of open-ended questions to which
participants will respond during an interview. The transcription thereof will be
submitted to you to validate if it is a true reflection of what you said. I
undertake to ensure confidentiality of your identity as well as your responses
during all phases of the research as well as the dissemination of the findings
thereof in published material.
I require your informed consent in writing if you agree to participate in this
study but you retain the right to withdraw from the study at any stage. Please
note that you are under no obligation to participate in this research.
Please also indicate in your consent letter whether you are interested to
receive a summary of the results of this study on the completion thereof.
Thank you,
83
J. O’Connell
Unit Manager: Hunterscraig
CONSENT YO PARTICIPATE IN RESEARCH
I __________________________________________ (name of participant)
hereby give my consent to be interviewed for the purpose of the study.
Indicate by circling your choice: I am interested / not interested to receive a copy of the results of the study.
Signed on this _____________ day of ______________________2005 at _____________________________________________________________ Signature: ____________________________________
Witness: _____________________________________
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ANNEXURE B
BIOGRAPHICAL DATA
Please complete the following:
1. Sex……………………………………………………………………………
2. Age…………………………………………………………………………..
3. Highest qualification obtained………………………………………………
4. Have you ever attended / studied a course in Business Management?
………………………………………………………………………………
5. If yes, specify………………………………………………………………..
……………………………………………………………………………….
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ANNEXURE C
Certificates of need are a recipe for chaos
Johan Biermann
The National Health Bill stipulates that no person may establish, construct,
modify or acquire a health establishment or health agency; increase the
number of beds in or acquire prescribed health technology at a health
establishment or health agency; provide prescribed health services; or
continue to operate a health establishment or health agency after the
expiation of one year from the date the act took effect, without a certificate of
need. Applications for certificates must be made to the director-general of
health. The purpose of the certificate of need is ostensibly to control the
distribution of healthcare services and the kind of services that may be
offered in any particular area so as to match health services offered with the
needs of the population on a geographical basis.
The provisions of the Bill and particularly the certificate of need made
headline news, culminating in a march on parliament by concerned health
care professionals. Writing in a leading newspaper the Minister of Health
defended the certificate of need, arguing that it is a planning tool used
worldwide to ensure the equitable distribution of health resources and, in
South Africa’s case, would help to transform the health sector for the benefit
of all. Except, of course, the people detrimentally affected by government
regulation.
Government policy appears to be antagonistic towards for-profit health-care.
This is unfortunate, as the first step towards lasting reform and sustainable
health-care delivery is to recognise that there is no free lunch and no such
thing as free health-care. The so-called free health services provided by
public hospitals are paid for by the taxpayers and all taxes are part of the
wealth produced by businesses and ordinary citizens. Furthermore, someone
actually has to produce the medicines and medical technologies that
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government provides. If it were not for profits, not much of what we take for
granted, including medicines and health services, would exist.
In a free society, medical professionals are free to practise their trade where
they wish and to provide care and medicines to whomever they wish,
provided that transactions are voluntary. Contrast this with a system that
dictates where doctors must work, what services and equipment they may
provide, the type of medicines they may prescribe, what their fees should be,
what prices pharmaceutical companies must charge for drugs, and even how
many hospital beds there should be. The foremost planning tool of a free
society is the profit and loss system. The certificate of need is a planning tool
of an unfree society.
In a free society consumers reign supreme and profits accrue to those who
serve the customers best. Those who do not meet customers’ needs go out
of business. However, when government provides health care there is no
profit or loss control, hence nobody knows whether patients’ needs are met
or not. Government officials nevertheless appear to believe that making a
profit in health care is immoral, ignoring the fact that there can be no medical
progress, no new medicines, no new technologies and no new treatments
without profits. Profits are re-invested in new ventures in order to ensure
future profits. But investing is risky. Pharmaceutical companies invest billions
in research and development, with no guarantee of success. These
companies depend entirely on the efficacy of the cures they offer to patients.
The potential for making profits determines what services will be rendered,
where they will be rendered, the type of research and development that will
be carried out and the amount of capital that will be invested in firms
providing them.
According to some health-care planners, the allocation of health resources by
means of the profit and loss system results in over-concentration of services
in cities and under provision in rural and poor areas.
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The certificate of need, we are led to believe, is the planning tool that will
overcome this “imbalance”. However, after decades of government control
and delivery of health care in Canada and the United Kingdom, equity still
remains an elusive goal.
The certificate of need is also a precursor to chaos. Once the Bill is signed
into law the director-general of health will receive thousands of applications.
To make proper decisions the director-general would need to know, with
great accuracy, what the health-care needs of the country’s 44 million
citizens are and would then have to match the existing distribution of facilities
and services with these needs – clearly an impossible task.
Nobel laureate, Friedrich Hayek, has shown that entrepreneurs can discover
the true needs of the people only through the trial and error of the market and
the competitive process and its guiding mechanism, the price system. The
system of profits and losses forces entrepreneurs to constantly adjust the
production of goods and services to meet the needs of consumers. When
you realise that government’s health-care planners are incapable of even
delivering the right medicines in the right quantities to public hospitals it
becomes clear that delivering reluctant health professionals to the right areas
through certificates of need will lead to chaos.
Certificates of need are to be granted for a maximum of 20 years and doctors
and hospitals will have no guarantee that the certificates will be renewed.
This will increase the risk to investors in health-care, reduce investment in
new and existing medical facilities and increase fees payable by patients to
off set the risk.
Government’s health planners have limited knowledge of the intricacies
associated with the establishment and expansion of health facilities or the
actual health care needs in any area. On what basis will they decide whether
a medical facility may install or not install an MRI or CAT scanner, and how
will they judge whether a gynaecologist needs sonar equipment or not? Long
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complicated bureaucratic procedures will be introduced that will delay the
introduction of new medical technologies and drive up the cost of care
because of the time and expense involved in obtaining certificates of need for
medical personnel, medical facilities and staff, which will have to be
recovered from patients.
The director-general of health will be the referee in a game in which the
national health department is the main player and rule-maker, which does not
bode well for the private health system. The certificate of need will turn
medical practitioners into slaves of the state, increase the cost of health care,
make a career in health care unattractive and cause even more doctors and
nurses to leave the country.
As we go into the 2005 legislative session, I sincerely hope we can look
objectively at some of the issues and obstacles facing into bigotry or
unthinking intolerance. If we truly value individual freedom and responsibility,
limited government, open markets, the free exchange of ideas, and safe,
robust communities, then we need everyone at the table treating each other
with respect. No exceptions.
Author: Johan Biermann is an independent policy researcher. He is the
author of Undermining Mineral Rights: An International Comparison,
published by the Free Market Foundation in 2002. He is also the author of
the forthcoming book on South Africa’s real health care challenge, to be
published by the FMF in the next few months. This article may be
republished without prior consent but with acknowledgement to the author.
The views expressed in the article are the author’s and are not necessarily
shared by the members of the Free Market Foundation.
FMF Feature Article\2 March 2004
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ANNEXURE D
Health care transformation: Certificate of Need is a tool for better health care provision
THE DELIVERY of the State of the Nation address by our President on 6
February 2004 was a momentous occasion for South Africans. As the day
drew to a close some of those entrusted with the care of society's health
needs paraded in the streets of Cape Town against health legislation that
seeks to consolidate the transformation process in health. The date was in
many respects not an ordinary date for the South African medical profession.
The week had started on a high note for the South African Medical
Association's (SAMA) leadership aided by some sections of the media,
whipping the nations' emotions on the state of health care. An impression
was created that there was a serious crisis akin to an immediate collapse of
public health services.
Through its chairperson Dr Kgosi Letlape, SAMA communicated to the public
their displeasure at not getting their privileges protected in the National
Health Bill. The profession says it is incensed by a provision in the Bill to
have health establishments, which include doctors' surgeries. This licence is
known as the Certificate of Need. The media frenzy on this issue served to
create doubts in some people's minds about the real intent of the envisaged
legislation. It is crucial that we take a step back and briefly discuss the
intentions of the Certificate of Need.
The Certificate of Need is a form of administrative planning tool to ensure
equitable distribution of resources (health establishments, human resources,
health technology) and ensure provision of better quality of services. Its
90
introduction is fully supported by the Health Professions Council of South
Africa and a number of other health bodies. The legislative process around
the National Health Bill made provision for all stakeholders to comment and
in addition make oral submissions before the Parliamentary Portfolio
Committee on Health.
The notion that doctors are being targeted and that there is a plot to wipe out
private medical practice is malicious. What comes out clearly is that some
doctors want to preserve privilege and they want it entrenched in national
legislation. All South Africans acknowledge that there are serious challenges
in our health care system - public and private. All acknowledge that the
health care system we inherited was flawed. Doctors nevertheless had a
major influence on the state and shape of that flawed system. The highest
leadership position in a public hospital (superintendent) was the preserve of
medical doctors. The medical model of public health management could not
be challenged and doctors were in most instances the pivotal point around
which the administration of health facilities revolved. It would be naïve not to
acknowledge that the medical profession still plays a major role in rationing
health care, particularly in the private sector.
The indisputable importance of medical practitioners to the health care
system must not be misinterpreted to mean that doctors are the only health
professionals necessary to develop a national health care system or that they
are more important than other professions such as pharmacists, dentists,
nurses and other categories of health professionals.
One interesting aspect of the many media pronouncements was that the
march to Parliament on 6 February was unprecedented 'because for the first
time doctors were marching against government'. One cannot but wonder
where those people making such statements were, when the National
91
Medical and Dental Association (NAMDA) and the SA Health Workers
Congress (SAHWCO) marched against the apartheid government fighting for
the creation of a single national health system. One cannot help but wonder
where the marching doctors were when people were being brutalised and
murdered in our prisons and other state institutions in gross violations of
human rights. Or is this march unprecedented mainly because of the nature
of the government that is now in place and the fact that those who were
comfortable with the previous regime have now taken to the streets in
protest.
Dr Letlape states unequivocally that in their view the state of health services
were much better during apartheid days than is the case under a people's
government (Pretoria News, Business Report, 12 February 2004). It is of
serious concern that the rest of the profession has not publicly contradicted
his statements. An even bigger tragedy is for the profession to be led into the
political terrain by those who were spectators during the fight to liberate this
country.
92
ANNEXURE E
PROTOCOL FOR DATA ANALYSIS
Tesch in Cresswell (1994:155) identified steps that can be used when
analysing data into identified themes. These steps are described as follows:
• Read through the transcript carefully to get a sense of the whole;
• Read one transcript at a time and write in the margins any ideas that
come to mind;
• Make a list of presenting themes and group similar topics together.
Separate major topics form unique topics;
• Code identified themes and write them down as categories;
• Categorise topics by using the most descriptive wording possible.
Group interrelated categories together;
• Arrange these categories alphabetically once a final decision was
made;
• Gather all data belonging to one category and perform another
analysis;
• Record the existing data if necessary; and
• Mark possible quotes in the original context.
93
ANNEXURE F
SAMPLE OF INTERVIEW TRANSCRIPTION
Interviewer:
Hi, ….
Participant
Hallo
Interviewer
You have agreed to do this interview …
Participant
Yes, Yes…..
Interviewer
Ok, please tell me what were the main problems you experienced when you
started your business?
Participant
Yes, I think the main problems with my business were the financial side,
hmm, with a physio practice you know, like we need a lot of equipment, and
those equipment were very expensive ……
Interviewer
Hmm……
Participant
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………and most of the people start from scratch where you have to buy all
the equipment and then you start, or you buy into a practice….
Interviewer
Hmm…
Participant
I was a bit lucky you know, because I bought into a practice, it was an
excising practice with two people who said they might need a third person,
but the only problem then is that you have to pay a goodwill, they call it an
establishment fee, which is basically very high….,
Interviewer
Yes…..
Participant
……… because they put it up according to their figures and that is what they
what they want….
Interviewer
Mmm…….
Participant
But you see, I use to work for them, I locum for them, hmm …...for two or
three years, so they know my work, so with them it was fine. So the initial
main problem was the finance, going from bank to bank, because you don’t
have any assets. You are just starting without a house; you don’t have any
guarantee for the bank. Some of the banks are not interested, but some
banks will give you a loan. But know you have to pay high interest because to
them it is a high risk factor according to them. So that was the major, or one
of the major problems.
95
Interviewer
So getting money without any guarantee was very difficult for you?
Participant
Yes
Interviewer
After getting the necessary finance, did you have any financial support, like
anybody to help you…..?
Participant
Yes, after getting the finance, my partners carry the expenses for the first two
months until my money start coming in, you see you have to get patients and
then it takes two months for the medical aids to pay, but in the meantime you
have to pay your receptionist and other bills, there they were taking the cost,
and after that, everything started running well.
Interviewer
Do you have any other support systems in place?
Participant
Yes …yes, I used XXX tax, but again, that was a big mess up, because the
person that I was using did not give me the right information and using the
right procedures for saving tax, but as you go on in business you meet other
people and they tell you what is best to do, so that is also a problem to a new
person, and their way of doing it.
Interviewer
Other financial issues…..
Participant
96
No not really, because it was a practice that was running for fifteen years,
they had the core structure, but I mean if you have to start from scratch, it will
be a big difficulty to know about all the expenses, but in my case it was not
difficult, because I knew more or less what has to be done. ……but the only
thing for me, I had to make sure that I had enough work, so that was the
second phase.
Interviewer
Hmm…..so if I understand you correctly, the administrative side was not a big
problem….
Participant
Yes, expanding the business was more of a problem.
Interviewer
Please tell me about it…..
Participant
You see, we were two people, so the number of patients stayed the same, so
what I did was, I started going from the one general practitioner to the next…
Interviewer
Hmmm
Participant
You go to them and tell them what you do, so I went to about seventy, eighty
general practitioners, explain to them what you can do and what
physiotherapy is, you know, things like that, and the second thing is you also
go to the factories, or places where they have back problems, you speak to
the supervisor and said, look, instead of this person taking off, I can treat him
and if he use the equipment correctly, ……so yes, that was the main areas,
97
and I also started to come to XXX hospital recently, and instead of using a lot
of medication…..
Interviewer
Hmm…..
Participant
I spoke to some of the specialists, so that is how it started expanding………
Interviewer
How long will you say did it take before you break- even?
Participant
O, I will say, it took about twelve months, because when you start this new
business you are not so confident, you have to prove…they want to see the
results from the patients
Interviewer
Hmm…
Participant
You see, patients go and tell other that it helped them….yes, I will say it took
a year.
Interviewer
Could you see a difference in patient numbers after you went to all the
general practitioners . …getting more referrals?
Participant
Yes, there was an increase in patient numbers, very few from outpatients, but
a lot from inpatients
Interviewer
98
Hmm…
Participant
You see, especially after surgery, if you do exercise, they patients can walk
much quicker and you reduce the number of days in hospital, so we explain
to them, not all the doctors will use your advice, but some will.
Interviewer
So you did benefit from going to them
Participant
Yes, definitely
Interviewer
What else did you do to overcome your initial problems?
Participant
You see the major thing we did the first year, I told my wife cut expenses, you
see, lifestyle expenses, we had an old, old car,…laugh, I mean I had a car
that was leaking…
Interviewer
Yes,…..
Participant
So try and spent little, very, very little, you cut all luxury items, because……
because you’re main aim is to pay back your bond…
Interviewer
Hmmm…….
Participant
99
You see from experience, I saw many people, after starting their practice,
two, three months later they buy luxury cars, but your income is not very
stable, it goes up and down. What I decided the first year, no luxury things,
no holidays, so in that way I could pay back the loan, my loan was paid back
before two years….
Interviewer
So you reached your goal…
Participant
Yes, that was my main aim, if you finished that, then at least you know you
don’t owe anyone,………..hmmm…yes, …… plus the first year I use to
locum for other practices, in the first year, in XXX Hospital.
Interviewer
Hmm…..
Participant
Yes, I use to work Saturday’s and Sunday’s. So you get another
income…….
Interviewer
You seem to manage your finance quite well…….
Participant
Yes, some people do a course, but I learned by trail and error…
Interviewer
Okay, Participant X, can you tell me what kind off problems do you
experience at the moment?
100
Participant
At the moment, one of the major problems…..you see, we pay a huge
amount of tax, and the rate is quite high…..
Interviewer
Hmmm…
Participant
…….yes, which basically puts you, especially the provisional tax that you
have to pay every six months, ………tax is one of the major problems, you
see money coming in, but it just disappears again…
Interviewer
Hmm………………
Participant
Another problem is you have to maintain the standard of your practice, which
is another major problem, because, basically you have to render the same
service to the patients…so physical equipment should be there.
Interviewer
Yes….
Participant
But my main problems I would say, number one is tax, number two is reports
to the doctors, I am a little bit behind with my reports to the doctors, because
your patient’s starts increasing, then you have less time to write reports. You
see when you start, you have a lot of time and not a lot of patients and the
doctors expect from you to give them feedback…you see …
101
Interviewer
Mmm……
Participant
Another problem is, the machines starts to break, and you have to maintain
them or buy other…
Interviewer
Hmm…..
Participant
And the accounts are getting more……
Interviewer
So the admin also increases…
Participant
Yes, and you will get that the receptionist will say to clients that you are fully
booked, and then it is not. Especially on Friday afternoons…
Interviewer
What did you do about it?
Participant
So you need to supervise them….yes, they will tell them to wait till Monday,
so that sort of things causes problems……
Interviewer
So what you are saying, if I understand correctly is that you need good
supervision skills.
102
Participant
Yes, definitely
Interviewer
Any other problems?
Participant
The medical aids…..Sometimes the medical aid does not pay because of
your fault, not the medical aids fault, they maybe asked for a motivation, and
you did not send it, so you have to supervise all those things, because at the
end of the day, if you treated the patient well, but they had a bad experience
with the accounts, they won’t come back again. They will say they keep our
money, so we will go to someone else.
Interviewer
Mmmmm…..
Participant
Like for example, ……………….then three months down the line, then they
will send you something in the post that you haven’t seen, meantime ….you
have to fax the authorization …and then at the end of the day, the medical
aid won’t pay, the patient said I asked you, you said yes, so I have to…I don’t
have major problems, but especially ……so I don’t have major problems
Interviewer
How long does it usually take before the medical aids pay?
Participant
Not long, we submit our accounts once a week; usually it takes three weeks
for them to pay
103
Interviewer
Any other problems that you can foresee for the future?
Participant
I speak to many other people; the major problems are the medical aid,
because the limit is much smaller, like for instance usually I could treat
people for twenty five sessions, the medical aids decrease it to seven or even
six sessions.
Interviewer
So they are cutting the cake in smaller pieces….
Participant
Yes, the limit is getting lesser….. patients don’t have money to pay. For
specialists it is not a major problem because there are not many specialists,
they will always have patients, but for us it is becoming a problem.
Interviewer
Anything else that you can thing off?
Participant
Only the medical aids, otherwise, nothing major.
Interviewer
….. thank you very much for your time and all the information, I really
appreciate it.
Participant
Not a problem, thank you.
Interviewer
Goodbye