We’re walking blindly towards capitation

7 minute read

Voluntary patient enrolment is a new term for a failed model that I believe risks harming our patients.

Over the past two decades both Labor and Liberal governments’ main agenda for primary care funding has been cost cutting, big data collection, and increased bureaucratic control.

These objectives are best met in a capitated system.
A capitated system may be good for government in the short term (by meeting those needs), but it is bad for patients and the GPs who care for them. This is also bad for government in the long term. Mark Butler recently stated: “The most terrifying statistic in health, which is an area replete with terrifying statistics, is that less than 15% of medical graduates are choosing general practice as their career.”

Making general practice an even less appealing choice for graduates is unlikely to improve this statistic.

I believe that preventing the move away from fee for service (FFS) is the best way of keeping government honest. It is much harder for the government to mislead the population when they can see that their Medicare rebate for a consult has hardly risen in two decades. It is much easier for government to mislead a population with a complicated funding formula and KPI hoops.

A similar country to ours has gone down the capitation route with disastrous results. The UK moved to a KPI based capitation-based system in 2004. Having gone through the capitation process, UK GPs are now formally asking to have fee for service reinstated. Many UK GPs are fleeing the current UK capitation model to work within the Australian FFS framework, which helps boost declining numbers of GPs here.

Australian capitation in the form of Health Care Homes has already failed. It failed because of poor funding and a lack of understanding of the needs of coalface GPs. It increased workloads in terms of paperwork and pushed GPs to start treating KPIs instead of patients.

The government and Department of Health understand that the term capitation is tainted, so they’re calling it voluntary patient enrolment (VPE). But it’s the same thing.

The proponents within general practice of VPE state that

1) It is voluntary

2) It is additional funding to FFS, which continues

3) General practice has no choice, so we may as well accept the lesser of two evils

The main problem with the argument for VPE is that it fundamentally misunderstands the relationship between general practice and government. This is not a partnership between equals.

This is a partnership between a government primarily motivated to contain costs, increase bureaucratic control and mine big data, and general practice, which has the motivation of providing excellent patient care. The government pulls all the strings, and general practice is a toothless force that is currently at the mercy of government.

When you have a complete difference in goals, and a massive power differential, any deal between these two forces will result in the government’s needs being met at the expense of general practice and our patients. This is what many leaders within general practice simply don’t understand – they have believed for decades that if you simply tell the government what makes good sense, the government will take your well-formed views and implement them for the benefit of patients. This has not happened; government instead cherrypicks ideas that suit their agenda and ditches the rest.

Any capitation system would shift the power balance further towards government, by leaving it open for government to cut funding at a future date in the name of “efficiencies”, by altering complex funding formulas or changing KPI goalposts.

We should see that the academic arguments as to whether capitation or fee for service is the better system in a perfect world is moot – both systems in a perfect world have their pros and cons. One is claimed to encourage underservicing, the other overservicing.

But in the real world this is irrelevant, as capitation will be used by a future government to further its’ own needs at the expense of our patients.

An important rhetorical question any GP should ask themselves is “Why would the AMA support capitating general practice, but no other medical speciality?”

A “voluntary” scheme only remains voluntary so long as the funding behind it does not become critical for practice survival. The most rational approach for a future government which wants to fulfil its needs (cost containment, control and big data) would be to allow VPE funding to increase at a rate higher than inflation, while simultaneously freezing and cutting fee for service items, or increasing their policing through PSR to encourage an even greater underbilling environment. Over time this creates a situation in which any GP who wishes to practice is forced to use the voluntary system.

Initially the amounts are trivial, but it is clear the government plans to massively increase this funding stream as a percentage of total funding. This has not been acknowledged by either the RACGP or AMA. Defunding GPWSI in real terms will only increase patient costs, further fragment care and worsen health outcomes.

VPE funding also completely disadvantages GPWSI and the patients they care for, such as skin cancer doctors and sexual health GPs (who most likely will have no access to the additional funding). One likely component of VPE would be to eventually limit telehealth to enrolled patients – once again really removing the “voluntary” out of patient enrolment, while at the same time severely disadvantaging GPs with special interests who would not be the patient’s “usual GP” and thus be ineligible for telehealth. This is another kick in the guts to GPWSI.

Many GPs believe in the false narrative that “the government simply can’t afford to properly fund Medicare”. The new Labor government has announced $5.4 billion additional annual funding into childcare, representing an astronomical 60% of total GP consultation medicare rebates. It’s a plan I personally support. It shows, however, that there is money to be spent – just not the political will to spend it on fixing general practice.

Payroll tax is another massive problem. In my opinion the practice distributing capitated money to doctors will make it extremely hard to state the doctors are not employees. No one inside the AMA or RACGP seems to be addressing this extremely concerning point. The irony is that even if VPE was a “good thing”, it may result in an initial funding cut after tax if this forces payroll tax to be paid (the funding increase is 2.7%, and the extra tax it would attract to practices could be around 3.25%). This is an oversimplification for the sake of brevity. Given many GP owned general practices operate at a 5% profit margin, this change could push the effective tax rates of owning a practice over 70%.

I completely disagree with the defeatist attitude that seems prevalent in many GP circles: “We may as well collude in a system we see as harmful, so at least we can minimise harm.” General practice is a sleeping giant that just needs to be awakened. We are acting solely in our patients’ best interests – imagine the force for good that we could be if we stopped fighting with both hands tied behind our backs. We are larger and stronger than the Pharmacy Guild. The government needs us far more than we need government. It is completely attainable for general practice to be the premier medical speciality firmly entrenched in a well-funded fee for service model – we just need leaders who believe in us.

I strongly believe a retention of the current predominant fee for service system is by far the best way to encourage young doctors to become GPs in the future, as well as provide optimal health outcomes for our patients.
You have a choice in this RACGP presidential election as to whether general practice goes down this slippery slope. Choose carefully.
Dr Chris Irwin is a GP, practice owner, founder of the Australian Society of General Practice and an RACGP presidential candidate.

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