General practice – service or business?

10 minute read

Many who complain about the lack of bulk billing have no idea that every practice must succeed financially to sustain itself.

On a recent flight I sat next to a businessman who was bemoaning the difficulty for workers facing a two-week wait for an appointment with a GP in the small mining community where he does business.

He said that the lack of access to GPs was stifling economic development in rural and remote areas because workers and their families do not want to live where basic services are poor. He asked why governments couldn’t just send more doctors to such communities?

Interestingly, it became apparent on further conversation that he had little knowledge of the deep structural issues for health care in Australia that had been written into the creation story of Medicare. In particular, he did not understand the central role of GPs in the function of our health system, nor the huge gap in remuneration between specialists and GPs that politicians of all shades have left unaddressed in the too hard basket for decades – one of the most important factors that is threatening the viability of our health services.

Our health system was designed around GPs as the providers of primary care and the coordinators of care across the full range of their patient’s needs. GPs refer their patients to specialists when they think that the management of a patient’s problem requires skills that they do not possess. Patients must have a referral from a GP before they can see a specialist, although specialists can cross-refer (short term referrals only) when necessary for the management of a particular problem. Patients who have more than one problem, and need to see more than one specialist, still need a GP to coordinate their care, particularly given the growing complexity of modern medicine and the increasing numbers of elderly patients with multiple morbidities.

Ideally, GPs who are embedded in their community come to know their patients very well, and often across several generations of one family. While much of this work can appear intangible, these relationships enhance the routine of illness prevention, early diagnosis and intervention, and wise decision making that meets the best interests of the patient and their family across the lifespan.

Many specialists managing the illnesses appropriate to their specialty interest do not have the skills or an expectation of themselves that they will meet their patient’s other needs. Nor that they will need to balance the impacts of their treatments with those of other specialists across a number of organ systems, or address all dimensions of their patient’s whole-person care and their preferences.

My flying companion had never thought much about general practices needing to succeed as businesses rather than simply services for patient need. He had not considered that the customers (patients) of the business of general practice had been encouraged by governments to believe that they should not have to pay – that governments expected general practices to make do with what the government chooses to pay (time-based payments for bulk-billing) on behalf of patients. He did not realise that for many years, and when not frozen, the quantity of money government pays GPs for bulk-billing for the services they provide has been increased by a flat percentage rate, that has been usually lower than inflation, and with no mention of any calculation of the cost of providing care and treatment (here and here). He did not know that the government does not consider the quality of care that is necessary to fulfil the needs and expectations of customers, the quality standards that apply to health care delivery, the professional standards of doctors themselves, the evolving difficulty and complexity of the tasks being undertaken, the value to the community, or the infrastructure costs of running the business of general practice.

As a businessman, he understood that no business can operate at a loss, except as temporary phenomenon with a clear path for a return to profitability. If the income of a business is not sufficient to meet its running costs, then drastic action is necessary – increase prices, increase throughput, reduce the wages bill, reduce other operating costs, or simply close down. With bulk-billing rebates fixed by government, stopping bulk-billing and charging a fee is likely to create financial barriers to accessing care for a significant proportion of patients, particularly in poorer communities. None of the other options are possible without diminishing the quality of care.

When bulk-billing was first rolled out on 1 February 1984 it seemed like an efficient way of paying GPs. Bulk-billing practices that profited from high throughput sprang up across the country, and many were initially very successful as businesses, although not so good at complex care. Others realised that it was the beginning of the commodification of primary care and the white-anting of the relationship of trust and commitment that delivers the service and outcomes at the heart of general practice.

Over several decades, the bulk-billing payments for general practice have progressively fallen further behind the cost of delivering care of a quality we might reasonably expect in Australia. The provision of whole-person care has progressively declined and many primary care facilities have come to look more like budget retail franchises.

Some GPs were fortunate to sell their business (often becoming employees) to larger enterprises who perhaps believed that the consolidation of multiple small businesses would provide economies of scale that would deliver profits. While I have no reason to think that they did not aspire to providing good care, their obligation is to the interests of their shareholders and they are not bound by the doctors’ code of conduct, Good medical practice, nor to the sense of duty and service to patients that is part of the ethos of medical practice. And now, even large corporate providers of primary care are closing some clinics because they have become non-viable with the current schedule of fees (here and here).

In the absence of any suggestion of impending reforms sufficient to rescue the funding model for general practice in the Australian health care system, it would seem foolish to persist with any practice that is no longer paying its way as a viable business and has no obvious way forward.

On the other hand, the business of specialty practice seems financially secure with a generous schedule of fees. Even specialist cognitive private practice is remunerated on the basic rate of the Medicare schedule at much higher levels than general practice for the common task of talking with patients about their illnesses and formulating plans.

The Medicare Benefits Schedule values procedural work far more highly than cognitive work, a contentious issue for non-procedural specialists as well as GPs. Many private specialists charge well above the Medicare benefits schedule for their work, with some proceduralists perhaps verging on exploitation of the vulnerability of their patients (here and here) (see Section 4.2.6 of Good medical practice):

4.2.6 Recognising that there is a power imbalance in the doctor–patient relationship, and not exploiting patients in any way, including physically, emotionally, sexually or financially.

And while GPs cannot charge a facility fee and must cover their operating costs from the fee for any procedure, patients of procedural specialists pay hospital or day surgery unit charges separately. Non-GP specialist medical positions in the public sector offer well paid security, and for some procedures, specialists are able to engage in private practice in public hospitals, which provides a significant salary enhancement.

It is then of little wonder that with the future of primary care evaporating in the current funding model, and irrespective of their personality, natural talents or clinical preferences, junior doctors looking to their future are far more likely to prefer specialist training.

Non-GP specialisation offers junior doctors a diversity of financially secure career pathways with intellectual stimulation at the cutting edge of the scientific/technological paradigm that dominates medical training. While non-GP specialist practice commonly offers less variety in what can be a narrow (in super-specialised practice, very narrow) field, that disadvantage may be offset by the challenge of solving complex medical problems. Some non-GP specialists can choose to avoid altogether engaging with the fascinating multidimensional whole-person complexity that is integral to high quality and effective primary care.

So, should health care be understood as a business or a service?

Small general practices might be described as businesses with a failing business model. With most having little control over their inputs and outgoings, I suspect that no sensible businessmen from the world of market forces would consider starting a general practice business operating under current conditions, other than in those communities where patients expect and can afford to pay.

However, the doctors’ broad mandate (not to mention their remuneration as salary or fees) from the community is founded on their service, the competence and commitment to the provision of health care that they provide to meet the needs of individual patients and the interests of the community as a whole.

Neither primary care nor non-GP specialist medical businesses should be exploiting the opportunities presented by patients and the resources of the state to extract excessive profits. Governments also have a matching duty to ensure that finite resources are distributed across the health system in a manner that maximises the functionality, business efficiency and long term viability of the system as a whole in the interests of patients and the community at large who benefit from effective service delivery.

The consequences of the current imbalance between primary and specialist care, and the decades-long failure of governments to try to create a balance, should be clear to all.

Without sufficient numbers of GPs to provide essential primary care and the initial assessments that generate the obligatory referrals to specialists, our current complex system will continue to unravel.

While patients who cannot afford private specialist gap payments can wait their turn at public hospitals, the back-up for unaffordable or insufficient quantities of primary care is for patients to flood into already-overcrowded hospital emergency departments (EDs).

EDs will continue to be clogged by patients with minor ailments that could have been managed entirely by GPs, patients will delay visiting a doctor and their illnesses will progress, and our ageing population will continue to suffer from inadequate care and unwise decision making. It is entirely possible that the declining quality and quantity of care in a “fragmented and profit driven health system” will eventually lead to decreasing life expectancy, as is happening in the US (exacerbated of course by COVID-19).

As I have explored elsewhere, complex systems can destabilise suddenly. Tipping points have become part of the conversation.

It seems to me that we are facing a tipping point in our health system where the interconnected dysfunctionality and the consequent career choices of health workers (particularly GPs), and the failure of the organisations they work for, will mean that there is little hope of repairing our health system other than by a complete rebuild.

I recently went into a shop where more than half the shelf space was empty, and my gut reaction was that it was on the brink of failure. I sensed a quiet despair in the staff who knew that the writing was on the wall. The shop did not have what I needed so I left. Health care workers and consumers (patients) know that many parts of our health system, but particularly primary care, are struggling, and that only the goodwill and commitment of health workers keep them going.

Once the stampede for the exits starts, assuming it hasn’t started slowly already, it will be very hard to reverse.

Dr Will Cairns has retired from clinical practice as a palliative medicine specialist.

This piece was originally published at MJA Insight+.

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