What data does DoHAC have on GP practices that the practices don’t have themselves, in determining whether they will take up the new BB offer or not?
There isn’t a GP expert, non-expert or analyst in town that comes to the conclusion that the Department of Health and Aged Care modelling on this week’s proposed $8.5 billion bulk-billing changes will lead to nine in 10 patients being bulk billed by 2030.
The government and DoHAC are maintaining a line of “trust us, we’ve modelled it, it’s gonna happen”.
But even an ex-Australian rugby captain wasn’t buying it.
Senator David Pocock pulled out his calculator, called 25 local GP practices in the ACT to check his numbers and asked the right basic questions of the government in Senate estimates this week, which pointed to none of the assumptions in the new policy targets adding up on any scenario anyone other than DoHAC could imagine.
“The average fee is currently $90 [in the ACT], but the bulk-billing incentive, plus the PIP, plus the rebate, only brings the rebate to $60,” Pocock explained to DoHAC representatives.
“How are [practices] better off if it is currently $90 and it’s going to go down to $60 and you’re saying [they are] going to have to have to bulk bill every single patient to get the PIP?”
Okay, we have thousands of practices with a broad spectrum of profiles on how much they bulk bill or don’t, and an ACT practice is a very specific profile of practice, but these basic numbers applied to that whole spectrum seem entirely unlikely to get Australia to nine out of 10 patients being bulk billed. We go into the maths a bit more below.
The pollies batted Pocock’s plain-speaking questions back with the “yeah but we’ve modelled it mate” line (which he didn’t buy).
And they kept throwing the same line out during the week.
On Thursday, responding to widespread scepticism of the unseen DoHAC modelling by GP groups, federal health minister Mark Butler doubled down saying the modelling clearly indicates that the number of universal bulk-billing practices in Australia would triple to 4800 under the new measures.
If DoHAC has modelled it and they have conclusive data indicating the policy will work in the manner being pitched to the electorate, then release the modelling in full so everyone can try to work out why we are all wrong and DoHAC is right.
DoHAC and the government have said they can’t do that. Why though? Shouldn’t the colleges, GP owners and their advisors somehow be provided with complete transparency in something so obviously important to their future financial viability?
DoHAC did release a few very generic examples to give us some taste of what they might have been doing – HERE – which we assume must come from their modelling in some way.
Related
If you look at the small practice example and try to do the maths, you aren’t going to be any wiser (if you are somehow please write in to us and explain).
It’s either an extremely weird outlier of a practice they’ve conveniently used for their example, or DoHAC has its maths wrong big-time. In no way can you get to a “small practice” being $97,000 better off if they switch to full bulk billing given the information provided.
This example sheet seems to give away the game and the whole problem with what is rapidly evolving into a reasonably whiffy “happy times everyone” policy that both the government and the opposition are now pitching to us all.
It’s all about the political optics: Medicare is free everyone, errrh… well, GPs are at least.
The Coalition, by the way, has demonstrated how disinterested and ill-informed it really is on health by jumping on board before the Prime Minister even finished his press conference in Launceston over the weekend.
If they’d done any homework prior and waited to even look at the policy they could have come out with the same money spent in a much better way within a few days and gazumped Labor’s potentially clever new version of Mediscare.
Okay everyone, there’s an election coming, we should all chill out, right?
What do we expect? And besides, whether bulk billing hits the magic nine out of 10 figure or not, nearly every practice is going to make more money going forward here, whether they change anything or not.
There is going to be more money, a fair bit more regardless of the politics here for GPs, and surely, that is something good.
Let’s say you’re a fully mixed billing practice like mine in the quaint mostly high income seaside suburb of Sydney. No matter what their marketing and signage says, they still do a level of bulk billing, probably a lot more than the owner wants because the GPs get to decide who they actually bulk bill or not. In this particular practice, a good number still get selected and bulk billed. So, more money for this practice regardless of what they do.
This practice of course, and likely all 27 in the ACT the government has modelled as likely to switch, never will go back to bulk billing based on their profile.
That maths is really simple. The same maths that David Pocock did. If you are mixed billing to any significant degree in an urban area, if you wanted to go back to bulk billing you’d lose quite a bit of money, which you can’t afford to lose.
The clunky nature of the policy is illustrated by the huge and potentially perverse upside that it will have for most of the big corporates, most of whom have very high bulk-billing rates already.
If you’re averaging up near the 80% bulk-billing rate and you’re an already profitable corporate – they mostly all are because they are good with scale and systems – this policy will add something in the range of 15-30% to their revenue overnight, and most of it will fall to the bottom line.
Then, given their size and volume, quite probably the modelling to go back to full bulk billing will work for them based on the 12.5%. Even more profit.
Overnight, a certain corporate owned by one of our biggest private equity providers probably just added a few hundred million to their value (like 20%) and sale price. Happy days over there.
Did DoHAC model that this was an efficient way to splay out the new bulk-billing money?
Because these groups are already highly geared on bulk billing, and while everyone can do with a bit more, they’re getting a boatload more – the government has given them all a huge free kick on revenue, profit and business value.
Shouldn’t DoHAC be designing something a little more sophisticated in terms of targeting this new money at converting all those small to medium practices that have converted their billings to mostly mixed, if they want to change the profile of bulk billing more effectively across the country?
The pivot point in any modelling that a practice does will be as follows:
If your bulk-billing level is high enough, then you could take the extra money you are now going to get on the new incentive on those consults, and invest it in dropping all of your mixed billing, adding into your equation the 12.5% PIP payment on all billings, and see if you are now in front financially, as the government believes the majority of practices in the country will be.
We haven’t done it but it should be pretty easy to get to a ratio of bulk to mixed billing where it does and it doesn’t make sense.
But even if you do this calculation and you are in front financially, you are going to have a few other important considerations before doing what the government wants.
Medicare has never been designed or indeed executed in a manner that is going to keep you up with inflation, so you had better be way ahead when you do your modelling, lest you change all your billings, your customer-facing marketing, your software billing systems, and your patient expectations, only to start slipping back behind in a year or two.
Does anyone trust Medicare to keep you in front if you’re modelling suggests you are in front now given our poor history on freezing rebates, or even indexing it reasonably from year to year?
There are a lot of other complications here we aren’t going to go into here in detail which we aren’t sure DoHAC has built into its model, some of which aren’t just financial.
One would be – who gets the 12.5% PIP, because if a practice doesn’t distribute as tenant doctor or contractor income, your doctors aren’t going to buy in anyway because their income might go down while the practice’s goes up. That’s going to set up doctors against their landlord which is not a good dynamic.
Another might be – in all those states that aren’t Queensland (which doesn’t levy payroll tax on GPs any more, yay) how do you actually get every GP in your practice to buy into bulk billing universally with no exceptions any more, and convince your local state revenue office that these GPs are genuinely independent, so you aren’t in a lot of payroll tax and ATO deemed employee hot water moving forward?
But the biggest issue for GPs which almost certainly hasn’t been factored into any DoHAC modelling is – does the GP community really want to be recaptured into the olden days Medicare narrative that they are free – again?
Since Adjunct Professor Karen Price first put out the call to all GPs to start mixed billing in September of 2021 (interpreted by many as “abandon bulk billing” which it never really was), practices all over the country have gone through a lot of pain to regear their systems, their marketing and their patient expectations that they are worth paying something for, and for very good reason.
GPs have value that it’s important for the community to understand and are starting to. That doesn’t mean abandon bulk billing. But it does probably mean that GPs aren’t going to be easily lured back to the days when they are captured by the idea that patients think they are fully free service provided by the government.
How do you model that?
Dr Price had a pretty interesting take on the whole issue this week.
“We’ve been down this road before, where carrots have been dangled but no indexation occurred, and it was a huge issue for general practice,” she told TMR.
“Now, no healthcare is ‘free’.
“It’s a real problem in the way it’s been communicated, and now receptionists all across Australia are going to have to field these questions from patients, who may be feeling very cheated that the government of the day is announcing free healthcare, and yet there’s still a gap for you to pay.”
What Dr Price is saying is the real nub of the problem for patients and GPs in this new policy: the government and the opposition are now saying to everyone we’re going back to free, but most practices can’t because the numbers don’t work or won’t because the dynamic is wrong for the system.
Healthcare isn’t free. It’s not that simple and it never really has been.
While most practices are going to be better off financially as a result of the policy regardless of whether they change their profile, it’s setting a really bad dynamic for the healthcare system into the future: GPs versus their patients rather than GPs with their patients.
Maybe it’s a political winner, but in the long run setting up patients to be antagonistic to their GPs is ugly policy.
