Some small regional councils are paying up to $1000 per resident to keep the local general practice operational, a senate inquiry into rural Medicare access has heard.
Medicare is failing rural Australia and forcing local councils to take on the burden of keeping general practices running, one health workforce agency has told senators.
Speaking at the Kununurra hearing of the senate Rural and Regional Affairs and Transport References Committee inquiry into rural, regional and remote Medicare access and funding on Tuesday, Rural Health West communications general manager Kerida Hodge said smaller towns were disproportionately affected by Medicare’s failings.
“Medicare is designed around patient volume and economies of scale, and those conditions just often don’t appear or exist in rural communities,” she said.
“In smaller towns, patient numbers are lower, consultations are often longer and more complex, and a lot of communities, particularly in the inland regions, are served by a solo GP who’s responsible for covering the full cost of running a practice.
“While care is being delivered, the business model that supports that care is often not financially sustainable for the providers.”
According to data collected by Rural Health West, around 48 local governments in WA were contributing a combined total of $7.8 million to the running of their local general practice as of 2021 – this figure had grown to about 52 local governments providing a combined $9.5 million in 2024.
Ninety per cent of that funding, Ms Hodge said, was coming from local governments representing populations of 5000 people or less.
“That support is delivered in a wide range of ways,” she said.
“Sometimes it’s housing and premises, but a significant chunk of that is also in direct financial incentives and income guarantees.
“The local governments are doing this because they understand how critical a GP is to the liveability of their community, and while this is really noble, the local government intervention distorts the market signals and masks the underlying unsuitability of Medicare in these communities.
“GP services continue to operate, but only because they’re being subsidised outside of the Medicare system.”
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To this end, she said, around one third of practices across regional WA were now bulk billing all patients. An estimated half of these are recent converts, having signed on to the Bulk Billing PIP from November last year.
By Ms Hodge’s observation, there has been one particular clinic type which has been more likely to respond to the introduction of the bulk billing PIP.
“What I’d like to the committee to note, though, is that the strongest moves to bulk billing since November last year have been amongst practices that receive local government support,” she said.
“And that’s despite the fact that a lot of those shire-supported practices were already bulk billing. And I think there’s probably two drivers behind this trend.
“Firstly, there’s often an expectation that shire-supported practices will bulk bill the majority of all patients because of that local government support and the November changes are quite attractive to practices who bulk bill the majority of patients already.
“I think the second driver around that is that local government is underwriting the financial risk to some extent for those practices.
“Practices who know their income is stable moving to universal bulk billing becomes a safer decision even if Medicare revenue alone wouldn’t sustain the practice under normal circumstances.
“The increase that we’re seeing in bulk billing is really promising but it’s not simply a policy outcome. It’s a product of multiple funding streams being layered together.
“And in some communities universal bulk billing is still only viable because it’s being supplemented by local government funding.”
The reasons why a local council will choose to get involved in funding general practice vary, but a common one is that losing a general practice causes a domino effect.
If the GP goes, the pharmacy often follows, Ms Hodge told the senate inquiry, and that might cause a knock-on effect whereby farmers from local properties start heading to a different town to do their weekly grocery shop and fill any prescriptions.
But this support comes at a cost. According to Ms Hodge, some local councils are forgoing road upgrades, libraries and community pool services to retain the local GP.
“We did some rough numbers and for some of these small local governments it was about $1,000 per head of population that was going towards retaining a GP service for their community,” Ms Hodge said.
“Some of these are communities that may not have diverse streams of income available to them.”
ACRRM president Dr Rod Martin told The Medical Republic that he had also noted a broad shift toward regional council support for general practice over the last several years.
“[These funding models have] been around for a long time, but quantum that’s had to shift to local government seems to be pretty substantial,” he said.
“And it’s a question about how sustainable that is as well, because it’ll be hard to expect a shire to continue to top up salaries or build new property when there’s so many competing interests.”
There are currently no more public hearings slated for the senate committee. It will report back by November of this year.
