Only honest transparency and commitment to viable practice models will protect both practitioners and patients from these systemic threats.
A significant moral and financial risk now threatens the entire general practice sector.
The government’s direction increasingly resembles managed care by stealth, diminishing the value of GPs and paving the way for large corporate entities to take control.
It is crucial to keep financial decision-makers, bean counters – and I speak as one myself – away from influencing the sacred doctor-patient relationship.
In my first national interview back in 1997, I discussed the future of general practice and forecast developments like the rise of super clinics, clinics without walls, and the corporate incursion into general practice, all of which have now materialised.
Fast forward to today, and new tax rules that are being reinforced, such as payroll tax, are driving yet another fundamental transformation: the emergence of the Tenant Doctor model, ushering in a genuine back-to-the-future shift in how general practices must operate.
Who can you trust? The government’s dangerously misleading claims
Without the national leadership of clinical professional bodies driving patient-centred, widely accepted, and peer-reviewed global clinical and ethical standards – similar to the principles-based foundation in accounting – the government is left with no alternative but to implement cost-containment measures, as they do not have a bottomless pit of money.
For more information on how to legally and ethically secure more funding, visit the not-for-profit project International Healthcare Standards and Ethics Board that I am involved in.
The recent TMR article claims that 13% of 4720 metropolitan GP clinics are shifting to bulk billing.
But if every full-time equivalent GP is counted as a practice, that would mean 30,000 practices nationwide, so only about 2.05% are making the move, far below the official narrative.
Even when using the government’s 6500 practice definition quoted by the federal health minister in the Guardian article on 5 November 2025, the true expansion rate is just 15.38%, reflecting only the new practices joining bulk billing.
The numbers shift dramatically depending on how “practice” is defined.
This lack of a clear, consistent definition makes published statistics unreliable and, in some contexts, dangerously misleading.
High Court says ‘no’ to government price-fixing in Australian healthcare
The context of medical fees in Australia is governed by the principle of “proper market value”, which means fees for consulting rooms, services, or leases are a matter between a willing buyer and seller and are not subject to federal government price-fixing.
This has been upheld in both statutory amendment and High Court interpretation, especially following the 1973 national referendum rejecting a government power to fix prices for goods and services.
In General Practitioners Society v Commonwealth (1980) 145 CLR 532, Justice Gibbs led the High Court in confirming that the Commonwealth cannot compel private practitioners to provide services or set private fees under “civil conscription”.
Any regulation of medical practice must relate only to administrative and financial incidents connected to government benefit schemes, not compulsory service provision or pricing.
To remove all doubt: “private fee” means no bulk billing, such as requiring the patient to pay the Medicare Benefits Schedule (MBS) only and/or charging a gap greater than $1 above the MBS (according to 2025 Medicare data, the current national average gap is $44.89), depending on the item. The current national average is $374.60 per hour ($6.24 per minute). A practitioner would reduce their exposure to Medicare retrospective audits, financial clawbacks and insolvency risk.
As a side note, six-minute medicine the federal government rewards the most at $13.35 per minute or $1.2 million per annum, based on 10 sessions.
The RACGP Billing Calculator is an interesting tool.
Based on 10 sessions with eight weeks off a year, the maximum a GP can bill is $370,769 if they bulk bill at 100%. This is far lower than the federal health minister’s claim of $415,000 per annum.
If you privately bill (not bulk billing), the patient pays you directly (including or excluding a gap), and then claims their Medicare rebate, so the financial liability is more diffuse.
In this scenario, Medicare is less able to demand direct repayment of all the fees from the practitioner, since it did not pay those fees directly; it can only recover the rebates it paid to the patient.
However, suppose you incorrectly bill a Medicare item, even if you privately charge the patient and they claim a rebate.
In that case, Medicare can still require repayment of the rebate component claimed for non-compliant services. While private billing reduces the risk of large clawbacks covering the full consult fee, it does not eliminate the risk of compliance action or the duty to repay Medicare benefits wrongly claimed. Private billing may make recovery more complex for the government and reduce the total sums at risk, but it does not grant absolute legal protection.
Related
Legal and tax risks
Practices submitting an Expression of Interest for bulk billing isn’t legally binding.
Treating EOIs as policy commitments creates significant payroll and contractor tax risks. Mandating how GPs set fees, especially for bulk-billed items, may (most likely) expose practices to 12% superannuation on contractor payments, payroll tax, Fair Work leave entitlements, and ACCC price-fixing risks for non-bulk-billed items.
Systemic financial risk: following the Pied Piper
For those unaware of the challenges, including larger GP corporates that have been significantly impacted by recent GP taxation issues, shifting from mixed billing to bulk billing can reduce practice profit margins – often supplemented by pathology rental income – by approximately 6%.
Many GP shareholder-funded corporates have encountered difficulties selling their businesses; even the largest have suffered notable losses and have only recently reported profits similar to, or lower than, those of smaller, independent practices.
The trend of GP corporate consolidation and subsequent sales to private equity firms is slowing, signalling a shift in the market’s direction, with increased sales now occurring to private health insurance companies. This transition has raised concerns that a form of managed care may be emerging quietly and behind the scenes.
Some have referred to this historic trend as a “hallmark of a Ponzi scheme”, suggesting concerns about the sustainability of repeated buyouts and consolidations in the healthcare sector. There is less money available for patient care.
The government’s widely publicised modelling is deeply flawed, as it fails to reflect the actual costs of running a practice.
With operating expenses rising faster than both inflation and MBS rebates, this shift has proven financially devastating for most clinics.
The recent increase in deemed employee-like contractor payroll tax and superannuation contributions to 12% further heightens the risk, potentially tipping many practices into immediate financial distress.
This combination of unreliable data, escalating costs, and mounting regulatory uncertainty is fostering needless fear and confusion. It is being used to justify political choices rather than accurately represent the reality for Australia’s GPs. For most, the situation is now untenable, making bulk billing unsustainable (see our national GP benchmarks).
It is unethical to deliver care beyond a patient’s means
Notably, in the accounting profession, our international code of ethics (which does not exist in healthcare, in the context of an international standard) requires that it is unacceptable to service a client who cannot afford your fees if doing so would compromise the quality of your work.
This ethical standard should apply equally in medicine: care must always uphold professional standards, and the financial model should enable, not undermine, the quality and integrity of a doctor’s service.
Allowing flexibility to adjust fees based on patient circumstances is far superior to enforcing a rigid “one size fits all” policy and is critical to ensuring both financial viability and ethical healthcare.
Why an ethical Tenant Doctor model works
This is an opportune time for tax-compliant practices to recruit and retain practitioners, and it is tax-effective for individual practitioners.
Earlier this week, we received a call from a GP practice grappling with a $90,000 annual payroll tax bill.
Their frustration was palpable; the practice had sought guidance from not one, but two highly regarded law firms. Yet, despite this expert advice, they found themselves facing a hefty tax burden they should never have incurred.
It’s a cautionary tale of how even the best intentions and prominent advisers can lead to costly mistakes without the proper guidance. Furthermore, it is a cautionary tale: you must not rely on hearsay advice or it may send you broke.
Since 1978, the Tenant Doctor model (which we presented at the recent Royal Australian College of General Practitioners’ May 2025 Practice Owners Conference) has remained, in my opinion, best practice.
According to the AMA in 2005, over 70% of GPs use this service entity (such as a serviced office landlord and tenant doctor arrangement) structure, ATO Service Entity Arrangements Taxation Ruling TR 2006/2, which means no payroll tax or employee-like contractor liabilities should arise, unless you are receiving poor legal and accounting advice.
Unfortunately, the corporatisation of general practice and healthcare has blurred this critical distinction, leading to serious taxation issues, including payroll tax and the 12% superannuation guarantee for contractors. Larger practices and corporate operators are not immune; many are choosing to exit the market due to these challenges.
It is the only legal and sustainable approach for general practice that is both medicolegally and ethically sound, scalable, and very similar to the way specialist practices operate.
Individual (Tenant Doctor) practitioners can use a collective clinical governance and operational structure (like a strata meeting for tenants), including patient fee collection, to direct how the service trust/entity (the landlord) operates, supporting each practice with non-clinical staff, systems, marketing support for their personal professional website, and premises.
To build a healthy and engaged workforce, practitioners must have genuine skin in the game; they need to own their practices and not third-party corporates.
The government’s ongoing contractor crackdown is driving this change, whether anyone admits it or not. Yet, programs like the Practice Incentive Payments have blurred the lines between truly independent practice models and other structures, creating significant tax and regulatory challenges for many traditional clinics.
Within the Tenant Doctor model, decisions about bulk billing are made by the doctor, who is uniquely positioned to balance both the needs of the practice and the patient at each consultation.
This approach is fair, adaptable, and centres patients, giving doctors the autonomy to place decision-making where it belongs, while also prompting patients to take more responsibility for their own healthcare choices.
People tend to value services when they have a stake in them, just as speeding fines reinforce the importance of safe driving, out-of-pocket expenses encourage healthier patient decisions. Australians recognise this.
A fair go for all Australians
Australians are inherently reasonable and empathetic, especially when provided with clear information.
Years ago, I attended and addressed a heated town hall meeting with the locals in Geraldton to address concerns surrounding GP mergers and local monopolies. The atmosphere was tense at first, but as people began to understand how these changes could benefit their community, the sentiment shifted.
Geraldton locals quickly recognised that making wise use of GP services is a collective responsibility, shared by both patients and the broader community. Their thoughtful reaction demonstrated that, with proper education, Australians can participate fairly and constructively in discussions about health policy.
Conclusion
When uptake rates are obscured and sustainable models like the Tenant Doctor model are overlooked, misleading bulk-billing policies put clinics at immediate financial risk.
This not only limits patient choice through the subtle rise of managed care, whether by the government or healthcare insurers, but also undermines access to and the quality of healthcare delivery.
Only honest transparency and commitment to viable practice models will protect both practitioners and patients from these systemic threats.
A longer version of this article is available here.
