Election promises: Will they fix bulk billing challenges?

Earlier this year, the Albanese government announced an $8.5 billion investment in Medicare. 

The funding is intended to deliver an additional 18 million bulk-billed general practitioner (GP) visits annually and support the training of 2,000 new GPs each year by 2028. 

Health Minister Mark Butler has stated these measures could boost the bulk billing rate to 90% by 2030.

While that’s obviously phenomenal in theory, the true feasibility and impact on the sector is unclear. The initiative aims to make GP visits more affordable for patients, yet we have no idea how financially viable it will be for medical practices.

Financial realities for medical practices

The standard Medicare rebate for a Level B consultation (approximately 15 minutes) currently sits at $45.15. Of this, the consulting doctor might receive about $31.50 and the remaining $13.15 is allocated to the practice to cover operational costs. 

These amounts typically fall way short of covering the actual expenses incurred by clinics. What medical practice in a capital city could afford to get by making $60 an hour from one GP (who would need to be fully booked), where this is expected to cover:

• location lease costs
• admin staff and nurse wages
• utilities
• medical supplies
• and more

Despite the pledge for $8.5 billion, we haven’t heard from the Albanese government as to what extent this money will be used to boost rebate amounts. All promises so far centre on increasing the number of bulk billed GP visits, without a clear understanding of how. 

Given that bulk billing is at the discretion of medical practices and GPs who must price their services fairly to ensure the survival of their practice, we’re unlikely to realise the outcomes of election promises unless the Medicare rebate all but doubles.

Although we’ve seen attempts to address bulk billing challenges in the past, more recent incentives have primarily focussed on tackling the healthcare crisis in rural and regional areas. A Level B consult in certain locations now attracts a rebate of up to $35 more per consult – almost double the standard amount. 

Such incentives have been moderately successful in encouraging GPs to work in rural and remote areas, and ensuring patients in these regions don’t pay out-of-pocket fees. 

However, it does not address the problems faced by (for example) a Western Sydney clinic with four practicing GPs. This practice would pay a fortune in lease costs, require competitive pay rates to attract reasonable admin staff, and undoubtedly have hefty utility bills. Assuming they aren’t fully booked every hour of the day, staying profitable under the current bulk billing scheme is virtually impossible.

Where to from here for bulk billing

The details of how the $8.5 billion Medicare investment will be allocated remain unclear, so we’ll be watching closely as more information emerges. 

Opposition Leader Peter Dutton has expressed concerns about the government's bulk billing incentives, suggesting they’re insufficient and don’t fully address the financial challenges faced by medical clinics. He has committed to matching the investment and adding an extra $500 million, but again, there’s very little detail as to how this will specifically address medical practice operating cost challenges. 

Despite the pressure from the government, medical practice owners should not feel guilty following a well-defined pricing strategy to ensure their business’s survival. After all, failing to do this could lead to closure as we’ve seen with many practices in recent years. 

If you need expert advice on your pricing strategy – including the feasibility of increasing bulk billing numbers or increasing out-of-pocket expenses – give us a call. The experienced business advisors and accountants in our Medical Services team can help you get completely clear on the numbers, so you can make informed decisions that are in the best interests of your practice, doctors, staff, and patients. 

For a free initial consultation or to learn more about RSM’s Medical Services team, contact Peter Nicol – Partner, Medical Services – on 02 6057 3000.