The structure that allows good care to be delivered is no longer viable. Unless that structure is addressed, Kalbarri will not be the last to close.
The announcement of the closure of Kalbarri Medical Centre is a direct result of funding cuts to Medicare and the ever‑increasing overheads that small business medical practices can no longer absorb.
This has not happened suddenly, and it has not happened without effort.
Tara and her husband have been carrying this practice for the past three years under steadily increasing pressure. Over that time, they have done what so many practice owners are quietly doing across the country – absorbing costs, adapting systems, and continuing to turn up each day to provide care, even as the underlying economics have continued to deteriorate.
With targeted support, particularly around administration and compliance, they were able to hold the service together longer than most.
But support does not change the structure. It only prolongs the point at which the numbers no longer work.
What has changed most significantly over that period is not demand for care, but how that care is funded.
Chronic disease management, which once sat at the centre of general practice, has been progressively stripped of its value. Care plans and reviews – the core of coordinated, team-based care – have been reduced to the point where they no longer meaningfully support the systems required to deliver them properly.
At the same time, mental health consultations and plan reviews have been removed or restricted.
These were not peripheral items. They were fundamental to both patient care and practice viability. The work has not disappeared. The need has not reduced. It is simply no longer funded in a way that sustains the infrastructure required to provide it.
Running in parallel to that is the reality that the cost of employing people has changed completely. A full-time administrative staff member now costs in excess of $26,000 more per year than they did a decade ago, before even accounting for the broader operational layers that now sit around employment.
Wages have risen, as they should, but so too has superannuation, which now sits at 12%. Leave liabilities accrue at higher values. Recruitment costs are substantial, onboarding takes longer, and compliance expectations are significantly more complex. Every staff member carries not just a salary, but a system of cost and risk that has expanded year on year.
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These are not optional expenses. They are what it takes to run a safe, functioning medical practice.
In a rural setting, these pressures are amplified. Recruiting staff is not just expensive, it is often extremely difficult. Attracting experienced administrative staff, nurses, and doctors into small communities requires time, incentives, and stability – all of which are harder to offer when the underlying business is under pressure.
Housing costs for doctors have increased, adding another layer of expense that practices must often carry to secure workforce.
When international medical graduates are recruited, even when highly capable, supervision requirements add an additional layer of workload and complexity. That supervision is necessary and important, but it is not without cost – in time, structure and risk. All of this sits within a financial model that does not flex to accommodate it.
Most general practices operate on a service fee basis, where the practice retains around 25% of billings.
That means that costs – wages, infrastructure, compliance – sit directly with the business, but revenue does not scale in the same way.
To generate an additional $1 to cover rising overheads, fees need to increase by around $4. Only one quarter of that returns to the practice. The rest flows through to clinicians. This is not a criticism of the model itself, but it is a structural constraint that becomes critical when costs are rising rapidly and funding is falling.
Tara and her husband attempted to work within that system. They explored bulk billing, including access to additional incentives. But the numbers do not stack up.
Bulk billing, even with incentives, does not meet the real cost of delivering care in the current environment. It narrows the gap, but it does not close it. When core funding has been cut, and overheads are increasing across every part of the business, there is no version of bulk billing that restores viability.
We are seeing this tension play out more broadly.
When the federal government is required to provide substantial direct funding to support bulk billing even in metropolitan clinics, it reinforces what those on the ground already know – the model no longer sustains itself.
In regional communities, without scale, without workforce depth, and without infrastructure flexibility, that reality arrives sooner and more abruptly.
This is where Kalbarri now sits. Not because of a lack of effort, but because of sustained exposure to a system that no longer aligns cost with funding.
The practice has reached the point where continuing would mean ongoing financial loss, increasing operational risk, and an inability to maintain the standard of care that patients deserve.
The consequence of that is not contained within the business. It extends directly to the community. Patients will now travel close to two hours to access care. Continuity is disrupted. Local employment is lost.
The everyday infrastructure that supports health in a regional town is quietly dismantled. This is the part that is often missed. Practices do not close because people stop caring. They close because the structure that allows that care to be delivered is no longer viable.
And unless that structure is addressed – through meaningful recognition of both the cost of employing people and the funding required to support modern general practice – Kalbarri will not be the last.
Dr April Armstrong is the owner of Grow Medical Group, is principal CEO and managing director of Business For Doctors, and company director of April Armstrong Enterprises.
This article was first published on Dr Armstrong’s LinkedIn feed. Read the original article here.
