Reflections on the 2017 Federal Budget and what it means for GPs

One week on from the 2017 Federal Budget, some of the dust has settled on the announcements and we are in a position to assess whether there really was much new in the way of increased support for the sector.

What we know

In the lead up to Budget night, the Federal Government worked closely with both the RACGP and AMA to trade off an end to the Medicare freeze in exchange for ongoing support of the MyHealth Record system, reviews of the MBS and tightening access to after-hours claims. Both organisations have defended their negotiations with the Government, claiming that they are a first step towards increased recognition of the value of general practice care.

The good news is that the Turnbull Government has pledged $10 billion to healthcare including the withdrawal of the Medicare indexation freeze and the establishment of a Medicare Guarantee Fund to ensure longevity of health care and access to medicines. Some of this funding is for new programs and some is confirming allocations previously announced. All of the initiatives are yet to be passed, so depending on where we end up some initiatives may not get the green light.

The funding for these announcements will come from a proposed increase in the Medicare Levy by 0.5 per cent from July 2019 in a move that will cost workers on average earnings $400 a year.

A slow melting of the Medicare Freeze

The government announced that it would resume indexation for:

  • GP bulk billing incentives from July 1, 2017,
  • Standard GP and specialist consultations from July 1, 2018
  • Specialist procedural and allied health from July 1 2019.

The budgeted cost of these changes in year one is just $9m, which is indicative of the slowness of the unfreezing measures. Indeed, even after July 2018, the rebate for a B level consult will increase by only around 55 cents. There is no evidence that the thawing will apply to services such as GP care plans.

With increasing bulk billing rates, there seems little pressure on the Government to allocate more funding towards the GP sector.  The Government’s statement that they are “recognising and rewarding General Practitioners” seems somewhat hard to swallow.

For dental support, families will receive an extra $300 to spend on their children’s dental care every two years. The amount families can spend on dental check-ups, fillings and other basic dental work every two years will rise from $700 to $1,000 as a result.

Medicines

Doctors prescribing medicines will also be encouraged to prescribe more generic brands to save taxpayers $1.8 billion. The new listings on the Pharmaceutical Benefits Scheme will include a $510 million new drug for patients with chronic heart failure. Large pharmaceutical companies will wear the pain for these cuts in return for certainty of funding a new five year agreement with the government.

Improved access to telehealth

People in remote areas with mental health problems have been promised access to city-based psychiatrists via a new $9m telehealth program. People suffering a mental illness who don’t qualify for care under the NDIS will continue to have access to psychosocial support programs under an $80m plan that will provide community support, matched by State funding if approved.

Healthcare homes start delayed

The Government’s flagship Health Care Homes (HCH) program, meant to revolutionise GP care by tying patients to a single GP practice, has been delayed. Of the shortlisted practices, 20 will launch the program in October with the bulk of practices participating in the trial – a further 180 – to start in December.

We continue to harbour concerns about how the implementation of the HCH model will impact the taxation arrangements of both practices and contracting GPs, with little apparent consideration being given to what we see will be a fundamental change in the tax status of practitioners at participating practices.

Pathology rents

One positive arising out of pre-budget negotiations and lobbying is that the Government appears to have dropped their plan to limit the rent payable by pathology centres to GP practices.  The budget does commit a further $18m towards audit and compliance programs designed to support existing rental regulations.

An industry under pressure

It is hard to see that any of the announcements will help address the fundamental issues facing General Practice. Recent studies have confirmed declines in job satisfaction, decreasing work life balance, ongoing pressure on GP net incomes and a shift in graduate numbers away from general practice into specialisations.

GP practices and individual contracting GPs have a long road ahead as they wait for any meaningful outcomes from the loosening of the Medicare freeze. In the interim, we continue to work with practitioners and practices to streamline processes, improve reporting and financial management and maximise the opportunities available to improve after-tax outcomes. Drawing on more than 25 years of industry practice we combine the skills, knowledge and know-how of chartered accountants, tax specialists, financial planners, business managers and cloud system experts to help practice owners and contractors to manage for prosperity.

About Stephen Guthrie

Stephen has more than 20 years experience providing strategic business advice and taxation services to his clients.

He is a Director in the Business Services and Taxation division managing a team of professionals delivering business advisory, taxation, corporate assurance and financial services advice. Prior to joining Prosperity Stephen was a partner in a global accounting firm, where he advised business, corporate and personal clients and non-profit organisations. Stephen also works closely with our Prosperity Health clients that have Medical and Dental practices and has assisted numerous medical professionals over his career.

Stephens’s expertise includes advising business owners and private clients on their strategic planning and business development, restructuring, valuations, taxation and finance needs. He specialises in working with high net wealth family groups providing effective business and financial solutions.

He also has many years experience working with clients in the health, retail, manufacturing, financial and professional services industries. Stephen has also provided business valuations for a variety of business types, including his recent involvement in the environmental sector.

Stephen enjoys working with clients on complex and challenging business issues, using his proven technical and analytical skills to deliver good financial outcomes for his clients.

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