To (bulk) bill or not to (bulk) bill, that is the question

Feet and two arrows painted on an alphalt road

The business of running a medical practice is what GPs seem to fall into from necessity rather than choice, more often than not from a desire to deliver patient care in the way they choose. Yet the business environment of the modern general practice is full of challenges and hurdles, to name just a few:

  • continued freeze on indexation of Medicare rebates proposed by the Liberals vs Labor’s promised “partial” unfreeze from July 2017
  • contention around pathology rent control proposals, which would see an additional hit to the revenue stream of many practices
  • ongoing competition and pressure from corporate-run practices.

Clients tell me they feel locked in to bulk billing and patient care models which no longer offer job satisfaction. Long hours and decreasing returns make for many unhappy practitioners!

What’s the alternative?

Against this backdrop, the Australian Medial Association (AMA) is launching their Future Practice project, which is designed to help GP’s take back control of the profession’s business model and transition from bulk billing to a mixed fee model. Having attended the launch of the project, I feel the AMA should be congratulated on seeking to better resource GP’s and practice managers with tools, templates and a forum to exchange ideas and stories.  The website, which is still at an early stage, will act as a forum with contributions sought from practices to share their journey from bulk billing to a mixed bulk billing / private fee model.

Listening to GPs and practice managers who have already started the journey reinforces a number of “change management” principles which should be kept in mind by transitioning practices:

  1. Change is always possible, given the right approach and the right people. Many of the practices highlighted in the discussion were from low income areas with significant socio-economic challenges, yet with the right approach there was progress and improved practitioner satisfaction.
  2. The practice needs a persuasive vision driving the change process. This vision needs to be shared by all the doctors and all the team and be explainable to patients in simple terms which demonstrate the benefits to them in terms of improved care, more efficient processes and better health outcomes.
  3. The staffing team is critical to success. The team needs to see the benefit and buy-in, with training, support, communication and clear responsibilities. Consistency of message and approach to patients will be crucial. Expect lots of meetings to bring the team along on the journey.
  4. The responsibility for selling the change to patients starts with the GP’s. The message that Medicare is the patient’s insurance and rebate and not the revenue receivable by the GP needs clear articulation. Thought needs to be given to emphasising the benefits to the patient, down to the language used by the front line team in their patient interactions.
  5. Start with small incremental changes. Creating an expectation of payment for service, even if this is initially only a few extra dollars. Be imaginative in how to price your services and consider multi-tiered fee structures. Practices with mixed fee models might still bulk bill 50-60% of daily appointments but this is a large improvement on the national average of 84%.
  6. Look for early wins to demonstrate improved patient outcomes. Track patient outcomes over time against regional averages to show improvements in areas such as diabetes, BMI, etc.
  7. Understand the demographics of your practice area. Look for opportunities to deliver higher value services which are outside the Medicare system. Build relationships with local companies and develop “back to work sooner” programs or similar initiatives.
  8. Make better use of technology to improve patient outcomes before they see the GP. Patients really value SMS communication of reminders, appointment times and waiting times.

At Prosperity Health we work with GPs looking for change and struggling under the burden of practice management. This new initiative from the AMA offers GPs access to shared resources and tools to support the change they want to see in their business. We strongly support initiatives to help the GP community develop and grow.

Save up to $1,200 by prepaying your private health insurance

As part of the 2012 Federal Budget, the Federal Government proposes to means test the government rebate on private health insurance payments paid on or after 1 July 2012.  For those adversely affected, prepaying your private health insurance before 1 July 2012 could save you real money!  The Federal Government also propose to means test the Medicare Levy Surcharge levied on individuals without private insurance hospital cover.  These measures and what you should do is discussed below.

Private Health Insurance Rebate

For payments of private health insurance from 1 July 2012, the rebate will depend on the age and “adjusted taxable incomes” (see below) of singles and families.

The changes will adversely impact:

  • Singles aged under 70 years of age with an adjusted taxable income of more than $84,000
  • Singles aged 70 and over with an adjusted taxable income of more than $97,000
  • Family members aged under 70 years of age with a family adjusted taxable income of more than $168,000
  • Family members aged 70 and over with a family adjusted taxable income of more than $194,000

For these purposes adjusted taxable income is calculated as your taxable income, adjusted to include fringe benefits, tax free pensions, tax exempt foreign income, reportable super contributions and total net investment losses, less any deductible child support expenditure.

The tables below show the revised rebate rates.

Singles (single on the last day of the year and have no dependants)

 

Adjusted Taxable Income

 Age

Up to $84,000

$84,001 – $97,000

$97,001 – $130,000

$130,001 or more

Under 65:

30%

20%

10%

0%

65-69 years:

35%

25%

15%

0%

70 and over:

40%

30%

20%

0%

 

Families  (if you have a spouse on the last day of the income year, or are a single parent with one or more dependants)

 

Adjusted Taxable Income

 Age

Up to $168,000

$168,001 – $194,000

$194,001 – $260,000

$260,001 or more

Under 65:

30%

20%

10%

0%

65-69 years:

35%

25%

15%

0%

70 and over:

40%

30%

20%

0%

Note: The family income thresholds are increased by $1,500 for every dependant child after the first child.

Medicare Levy Surcharge

The same adjusted taxable income criteria will also be used to determine an individual or family’s exposure to the Medicare Levy Surcharge from 1 July 2012.  The rate of the Medicare Levy Surcharge will be means tested and taxed up to a maximum of 1.5% as per the tables below.

The changes will adversely impact:

  • Singles with an adjusted taxable income of more than $97,000
  • Family members with a family adjusted taxable income of more than $194,000

Singles (single on the last day of the year and have no dependants)

 

Adjusted Taxable Income

 

Up to $84,000

$84,001 – $97,000

$97,001 – $130,000

$130,001 or more

All ages:

0%

1.0%

1.25%

1.5%

Families (if you have a spouse on the last day of the income year, or are a single parent with one or more dependants)

 

Adjusted Taxable Income

 

Up to $168,000

$168,001 – $194,000

$194,001 – $260,000

$260,001 or more

All ages:

0%

1.0%

1.25%

1.5%

Note: The family income thresholds are increased by $1,500 for every dependant child after the first child.

What can you do?  What should you do?

If you would be adversely affected by these measures, you should consider:

  • Prepaying your annual private health insurance before 1 July 2012 to maximise the private health insurance rebate available to you (on a $4,000 policy, the saving could be up to $1,200); and
  • Taking up private health insurance hospital cover to avoid the Medicare Levy Surcharge (if applicable).

If you are unsure whether you might be adversely impacted by these measures or would like to talk about the implications/opportunities, contact me or your Prosperity Adviser for advice.

Michael Griffiths is a Director of Business Services and Taxation at Prosperity Advisers.


Image source; Flickr; Ryan Smith Photography