Election promises betray multiple misunderstandings of how this sector of medicine operates – payroll tax is just the start.
The federal election is fast approaching, and the big political parties are dusting off a familiar promise: “free GP visits” under Medicare.
The push for this will continue after the election, regardless of the political ideology of whatever party forms government, and it’s all supposed to go live in November.
On the surface, it sounds like a win for voters. But for general practice particularly, and eventually for non-GP specialist private practice if the MBS review taskforce gets its way, it’s a dangerous illusion. Behind the political gloss lies a policy that threatens to destabilise small business general practice and expose both GPs and practice service entities (PSEs) to viability-threatening legal and financial risks.
Patients see “free care”. We see business losses and risks
Many voters don’t know that rebates aren’t a GP’s take-home “pay”, they are a GP’s whole business revenue, from which they must cover staff wages, rent, indemnity, software, tax, superannuation and many more business costs.
This lack of knowledge is unsurprising, when – despite TMR and similar publications reporting extensively on the true nature of Medicare rebates and the risks of employer-like behaviour – political parties, health economists, and peak medical bodies continue to speak in a way that suggests poor understanding of the legal structures necessary for independent autonomous clinical practice.
Purveyors of PSE business administration courses are now suggesting that a PSE choosing to fully bulk bill has to radically change its structure to survive. This includes implementing measures such as 10-minute appointments, with doctors seeing five patients per hour; having a strict one-problem-per-consultation rule; requiring all result reviews to need an appointment; closing their treatment rooms and referring all procedures to urgent care clinics or emergency departments; and referring all vaccinations to pharmacies, including children’s immunisations.
One would hope they are also advising people who wish to follow that advice to either employ all GPs in their clinics or make them directors or partners.
Short is not sweet
Since the unfortunate defunding of the BEACH study in 2016, much has been published lauding the quality of data BEACH collected, and warning of the pitfalls of short consultations, including:
- Missed or delayed diagnoses;
- Unnecessary or inappropriate treatments;
- Polypharmacy;
- Overuse of antibiotics;
- Poor communication;
- Increased GP workload and stress;
- Increased risk of patient adverse events;
- Reduced patient satisfaction.
The Medical Board Code of Conduct lists no fewer than 27 requirements underpinning provision of good care, all of which individually require more time than would be available in a 10-minute consultation.
Uniform fees raise red flags with the ACCC
Regular TMR readers know the state payroll tax liability that comes with a practice behaving like an employer, such as by controlling pricing – including mandating bulk billing – and that the federal taxation office has its own processes for identifying employees, regardless of any state-based exemptions.
Consumer law has had a lot less coverage, but it should not be ignored.
If PSEs enforce a uniform fee structure on their tenant GPs, or if multiple PSEs align their fees, this could attract the attention of the Australian Competition and Consumer Commission.
Even in healthcare, which operates in a very regulated market, competition law applies. Removing price variability can reasonably be seen by the ACCC as illegal price fixing or anti-competitive conduct.
If a PSE and its tenant GPs are legitimately operating as separate business entities, and the PSE is colluding with GPs to charge a set fee for services, they will be in breach of the Competition and Consumer Act 2010, as explained on the ACCC website.
The Act specifically prohibits medical practitioners from engaging in fee-setting jointly with competitors. The ACCC considers medical practitioners practising through separate legal entities to be competitors, and deems joint fee setting in this situation to be illegal price fixing. This applies where PSEs have tenancy or service contracts with separate GP business entities and either mandate or reach a joint agreement with tenant GPs to set fees for services, or where a number of tenant GPs either of the same PSE or different PSEs agree to charge set fees for services.
Related
The ACCC considers medical practitioners who practise within a single legal entity as employees, directors or partners, for the purposes of the Act, not to be competitors.
So, for a practice to have all co-located GPs charging the same fee, those GPs all have to be employees, directors or partners to avoid breaching the Competition and Consumer Act.
Obviously, this applies to circumstances where separate entities form an agreement not to bulk bill, but the ACCC does state that where separate entities agree to only bulk bill all services, it is still technically price fixing. The ACCC has discretion over whether or not it takes action, and bases those decisions upon the level of harm to consumers from the conduct, and the overall public interest. The ACCC usually defines consumer harm from a financial perspective, but it does have scope to consider a broader definition of harm.
Under the Act, the ACCC can grant authorisation for conduct that might otherwise contravene competition laws if it is satisfied that the conduct results in a net public benefit. This includes considerations beyond just financial impacts, potentially encompassing broader public health outcomes. This happened when the ACCC authorised collective bargaining arrangements to set uniform fees among doctors in rural South Australia, recognising the public benefit in improved healthcare delivery in underserved areas.
There is scope to argue, therefore, that medical harms resulting from inadequate consultation times constitutes a significant public detriment. Short consultations may compromise the quality of care, leading to misdiagnosis or inadequate treatment plans, which can have severe health implications for patients. Recognising this, the ACCC’s authorisation process allows for the consideration of such non-economic factors when assessing the overall public benefit or detriment of a particular arrangement.
Won’t somebody please think of the Constitution?
Section 51(xxiiiA) of the Australian Constitution empowers the Commonwealth to legislate on various social services, including medical and dental services, but explicitly prohibits “any form of civil conscription”. This clause was introduced following the 1946 referendum to alleviate concerns that federal powers might compel medical professionals into government service, effectively nationalising healthcare.
The High Court has interpreted “civil conscription” as any legal compulsion forcing medical practitioners to provide services for the government or its agencies. In British Medical Association v Commonwealth (1949), the Court emphasised that compelling doctors to render services under government direction constituted civil conscription.
Subsequent rulings have nuanced this interpretation. In General Practitioners Society v Commonwealth, the court distinguished between compulsion to practice and regulation of practice, suggesting that while the government cannot force doctors to work, it can regulate the conditions under which services are provided.
During the covid pandemic, the Morrison government mandated that all telehealth consultations be bulk billed. This policy faced criticism from medical practitioners who argued it effectively compelled them to provide services under specific financial terms, infringing upon the civil conscription clause. While there is no publicly available record of a court ruling declaring this policy unconstitutional, the government eventually reversed the mandatory bulk billing requirement, possibly in response to these concerns.
In his recent pre-election speeches, health minister Mark Butler has referenced the civil conscription clause, highlighting its role in shaping Medicare policies. He has pointed out that the clause was introduced to prevent compulsory government service by medical professionals, ensuring their autonomy. Butler has also said that current Medicare reforms aim to strengthen the system without infringing upon this constitutional protection.
But does it really? The High Court has previously recognised that Medicare rebates are payments to patients, and there are several factors which the government can take into account in setting the Medicare schedule fee in addition to what it believes is a reasonable fee for a service, including the capacity of government to pay and the future of health services in Australia.
The government’s goal to achieve a 90% bulk billing rate raises questions about the voluntary nature of medical practitioners’ participation. While their policy may not legally compel doctors to bulk bill, economic pressures – such as financial incentives for bulk billing and lower patient Medicare rebates for private billing – could effectively limit their choices.
This scenario introduces the concept of “practical compulsion”, where, despite the absence of legal mandates, practitioners feel compelled to conform due to economic realities. In Wong v Commonwealth (2009), the High Court acknowledged that practical compulsion could, in certain contexts, equate to civil conscription. In this same case, the High Court also clearly stated: “A law pretending to be about finances but which really intruded into the individual relationship between patient and doctor, or that created blanket rules that intruded on that relationship, or requirements that are so detailed and intrusive as to be coercive and disproportionate to the legitimate interest of the Commonwealth, might be unconstitutional.”
While the civil conscription clause prohibits the government from legally mandating medical practitioners to provide services, policies that create significant economic incentives or disincentives could lead to practical compulsion. Such scenarios may challenge the constitutional protections intended by Section 51(xxiiiA). Therefore, while current Medicare reforms aim to enhance the healthcare system, they may inadvertently infringe upon constitutional safeguards by creating conditions where participation becomes effectively compulsory.
It’s time for policy that reflects the real world
“Free GP visits” might sound like a generous promise, but it rests on the false assumption that GPs and practices can absorb the shortfall between gross revenue from rebates and the actual cost of care.
General practice isn’t funded by the taxpayer alone: it’s increasingly subsidised by GPs, especially those who offer discounts or bulk billing and as a result can not generate enough revenue to cover business costs. And when the numbers stop adding up, practices have to either stop bulk billing or close their doors altogether to avoid the potentially significant compliance risks of the government’s proposed Medicare “reform” policy.
If we want real reform that gives us affordable and accessible health care that lasts, we need:
- A rebate for health services in which there is no question about civil conscription by practical compulsion
- Patient Medicare rebates that are not just based on what the government feels they can or should pay, but which reasonably approximate the real business cost of providing quality care, and are commensurate with length and complexity of service
- Medicare rebate models and business models that allow tenant GPs and PSEs to remain viable without reliance on additional incentivised handouts
- Legal structures that preserve the independence of PSEs and tenant GPs
- A political conversation grounded in economic and regulatory fact, not slogans and undeliverable election promises
The Medicare rebate is not doctor’s pay, it’s a sole trader GP’s business revenue. If that revenue doesn’t sustain the business, no amount of political spin will save it.
Dr Matt Harvey is a sole trader GP experienced in small business general practice, clinical and directorial governance.
