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moreThe future of general practice is truly at a crossroads, with many challenges but also a range of opportunities.
General practice income is vulnerable because it largely relies on fluctuating government policy. How can a general practice navigate uncertain times while continuing to deliver high-quality patient care?
It's knowing what to do next that matters.
Let’s look at the key issues for general practice of cash flow, growth and innovation, and future planning.
The future of general practice:
Planning for cash flow
RSM works with many GPs on cash flow issues since any practice that is to survive must have enough income to cover costs.
Even bulk billing practices still rely heavily on government rebates for revenue. The frozen rebate that came out of the MBS Review, which is being lifted in stages up until 2020, both the Practice Incentives Program (PIP) and the Practice Nurse Incentives Program (PNIP) all demonstrate how changes of policy emphasis in Canberra can impact the sector.
Thankfully, the Medicare rebate freeze was lifted from bulk billing incentives for GP consultations on 1 July 2017, from standard GP consultations and other specialist consultations on 1 July 2018, it will be lifted from procedures from 1 July 2019, and targeted diagnostic imaging services from 1 July 2020.
General practice may be unusual in its reliance on government income, but it does share something with other businesses – rising costs. There are wage hikes, climbing utility and insurance bills, capital repayments, and flexible working patterns that enable work-life balance but leave expensive resources underutilised.
These bills cannot be paid without sustainable revenue, which often requires charging a fee for service. GPs are uncomfortably aware that many of their patients are struggling with rising living costs. Yet others will happily spend their money on entertainment but baulk at paying the GP. That’s why some practices insist on a co-contribution from most patients but bulk-bill under-16s or concession card holders.
If you feel caught between compassion and cash flow considerations, remember that caring for your practice is part of caring for your patients – they suffer when practices close.
The future of general practice:
Growth and innovation and its role in the future of general practice
Our GP clients comment on how helpful it is to take a step back and examine how their practice is working.
- How can the practice get the most out of incentive schemes like the PIP and PNIP?
- Which software is most useful?
- How can cloud accounting help?
Be creative – some regional practices have successfully reduced costs by getting the local council to agree to subsidise their rent so that they can continue to serve the community.
The future of general practice:
Consider the path of succession of your general practice
At some point, whether it’s by personal choice, retirement or a sudden change in circumstances, you will exit this business.
You can’t wait until you want to sell to develop a succession plan. It’s a vital, lengthy process but research undertaken by RSM in 2017 revealed that 64% of Australian business owners including GP practice owners surveyed did not have a formal succession plan in place.
What does that mean for your practice?
- Firstly, you need a proper valuation.
- Secondly, you need robust legal agreements between partners.
Often a practice has multiple doctors each with different representation over the years, resulting in shareholder or unit holder agreements that don’t dovetail properly.
Make sure the process will work smoothly for the whole group and consider the needs of the practice itself as well as the doctors involved. This is when people find themselves underinsured for their level of debt or discover that their individualised agreements fail to function well when one partner dies.
RSM’s team of accountants can work with you to protect the asset you’ve built up and ensure your future plans unfold smoothly.
Knowing that your practice is running well gives you a firm foundation for strategic growth and service innovation. What does your local community need? How could you provide it? Hopefully you can now face the future with confidence.
If you would like to discuss any of these matters in relation to your practice, contact your local RSM Health Specialist.