Our two largest corporates are changing rapidly and promising a much better deal for GPs. But can our favourite leopards change their spots?
Our two largest corporates are changing rapidly, each in different ways, to accommodate a very different future for which they are promising much better deals for their GPs. But can our two favourite old leopards change their spots?
It is a little known fact that the RACGP’s commercial publications to members, which includes the newly named Australian Journal of General Practice (previously Australian Family Physician), refuse to accept any advertising from our two largest corporate GP providers, IPN and Primary Health Care.
It’s a bit of a strange situation because between them, IPN and Primary employ more than 3000 GPs, so you’d think this very large chunk of GPs might feel offended in some way. For the companies, access to these sorts of communication vehicles is key in being able to communicate to their constituency and conduct important business, such as recruitment.
If you think about it, the RACGP is effectively classifying these two very important providers of GP employment and services well below where it sees pharmaceutical companies. I’m not aware of any pharma company advertising that they refuse to take.
There isn’t a lot to go on in working out why the RACGP takes this position, but it might be related to this clause in its advertising policy:
The RACGP must not accept any advertisement or sponsorship or engage with any organisations promoting messages… likely to be perceived by a significant proportion of RACGP members as anti-social, anti-environmental, divisive or controversial by RACGP members.
That might well say a lot about how our two biggest corporates, and corporate general practice overall, is still seen by the profession. Or, it could just be the RACGP executive making inferences on behalf of all its members it maybe should not be making.
Regardless, if you go inside IPN and Primary today and talk to their senior managers, and to their staff, you will see something very different going on from what has become a generally fixed belief about corporate medicine from the outside world. This clearly includes the RACGP, but, to be fair, also most GPs you talk to who aren’t in any orbit that goes near these businesses.
The past has, possibly correctly, branded corporates as bad for the profession in the long run.
THE WOES OF A DAMAGED BRAND
Certainly Primary did much of that brand damage. Fast throughput, cheap medicine, and riding on the PBS for all it was worth, became its tag. And staff treatment became legendary, as its previous owners foisted onerous contracts on unsuspecting younger doctors, and bought out older doctors with contracts that incentivised poor behaviour.
The doctors and the patients were last consideration in this set up.
IPN was, for a long while, seen quite differently. Led originally by the founder of Sonic, a specialist, and then by a GP, this group acquired mixed billing practices of high quality, and attempted to let them have their freedom to continue practising good, community-based medicine – albeit with the rigour of centralised economies to create better IT, logistics and financial support.
IPN and Primary were for a while seen as chalk and cheese, IPN being the good one to be acquired by.
But as the IPN network grew, so did the issues with scale. Both businesses are, in the end, people businesses. And if you get too far away from that, as you can when you are growing fast, and initiating systems to achieve economies, you start to get lost.
Many would say that IPN, too, lost touch with what is important. There are good stories and bad of IPN. Again, this is what comes from growing rapidly via lots of smaller acquisitions. Some of the IPN bad can be on par with what you used to hear about Primary.
It still feels a bit strange that the RACGP should be taking the stance it does on corporates given its overall remit to represent all GPs, but you can see in some ways how it got to this position.
What might convince the RACGP, and by default much of the rest of GP-dom, that these leopards may indeed be changing their spots for the better?
PRIMARY IS ALREADY A VERY DIFFERENT BEAST
Let’s start with Primary, as it was clearly the worst past offender, and it doesn’t need to change much at all to see anything positive happen for general practice. It had a low bar to jump over.
Already Primary is a much changed beast. Here’s a few pointers:
• Run by ex IPN GP with very good people track record
• Changed all GP contracts substantively for the better – virtually no non-compete, flexibility of hours, short easy to read contracts, generally overhauled to the favour of the GP
• Fixed balance sheet via sale of MedicalDirector and other assets for stability as a public company and creating money to invest in changing its mode of operation
• Substantive transformation program centred first on staff, based on the premise, if your staff are happy, your patients will be also
• Massive refurbishment program of centres to include staff meeting rooms, conference rooms, better overall staff facilities, and better staff/patient workflow design
• Introduction of appointments systems, rolling out to all centres. This is a substantial change to mode of operation if you understand the difference between a “walk-in” – the old model – and “appointments based medicine”
• Commitment to funding ongoing education internally of a high quality
• Targeted removal of doctors who do not fit the new patient-centric idiom, even if such doctors have been very high billers for many years
• Embracing the idea that GPs can have a portfolio career, or be part-time GP mums
• The rollout of a new type of centre between a GP centre and a hospital that handles emergencies that don’t require a hospital ER and which can do day surgery – providing further career opportunity within the groups
• The development of serious career paths which can take a GP from an entry level to a centre all the way to the top
• Commitment to new mobile technologies that will release some of its workforce to become mobile and go downwards into homes for various forms of care closer to the issues of chronic care
• The development of an international GP development intake program
• Support for the GPRA and development of registrars into its programs through its intake system
• And so on … there is a lot going on
No matter how bad you may have felt about Primary in the past, it is just not what it was, already. And it is headed at speed in a very different direction.
Says Chief Clinical Officer, Dr Kevin Bullen: “It’s a much changed Primary Health Care today. We are much more about care and trust. We are much more 21st century.”
Dr Bullen still manages to practise for some sessions each week at his Warringah Medical Centre in Sydney. He does this to stay grounded and to be connected to the coalface issues of the business as things change. You also sense he just likes to be a practising GP. That seems to be a good sign of the culture change at the top in Primary.
If that is not some sign of change, the management aren’t taking any chances in communicating the change, both to GPs and the patients. Primary is going to change its name in the very near future.
Although Dr Bullen and others won’t be drawn entirely on the reason, it’s clear the company needs to rid itself even of the name if it is to project the idea that it really is different.
According to Simon Cross, the Company’s Chief Relationship Officer, the name change will also reflect that Primary is not just about primary care, it is far more patient focussed, and it will be spreading its wings around its current assets into wider areas of healthcare. And as if to tick every box, Cross says the broader focus will in no way diminish their work to improve the lot of its GPs.
It makes sense to change the name. The company is apparently down to four choices, but it may be ready to go with the final choice soon. Expect a major blitz to both the public, and the GP community. Maybe the RACGP will even allow some ads given the nature of the changes.
CAN A CORPORATE EVER BE FOR GOOD MEDICINE?
Profit and healthcare aren’t ever fantastic bedfellows for long.
If you’re a cynic like me about corporate life, you aren’t going to believe all the hype.
The Primary change is particularly on the corporate transformation script. They have an expensive consultant helping all the way. The company is doing things from ground up. Talking to the staff, engaging them, putting in place appropriate values, which all tie to a mission statement.
These are all very sensible rules for a running a big organisational-change program. Big organisations are organisms which are very hard to guide to be better, so structure and rules, like values, are a good thing. And a little outside help can be useful in providing reflection and feedback.
But there are odd things you still want to worry about. Like when I asked senior management what is mission statement now, given all this great work and progress, and I was told that I would find out very soon. The management explained it was still working with the staff and testing things. It was all part of the announcements to come.
From my experience of being in a very big company, if you’re this far into a transformation, you can’t help but blurt out exactly the mission statement, as you’re already living it.
My sense is that CEO Dr Malcolm Parmenter could probably do this, and he probably even could have done it before his first day on the job at Primary. He and the board must have had a vision in mind that contemplated how far down a rabbit hole Primary had gone and what was needed to find the way out.
But the corporate way sometimes dictates these things must come as a big-bang surprise. It shouldn’t be. It should be entirely obvious to everyone already. It is to me, and it’s one word funnily enough – PEOPLE.
Primary can’t be anything but much better on its current path. The changes being foisted on GPs by the need to embrace new technology, the need for connectivity, the issues of patients becoming more powerful in the traditional information assymetry in medicine and even more government red tape around all of it to make sure no one gets hurt, mean that being a GP in isolation these days, be it a single doctor practice, or even the small and much loved community practice of five to eight GPs, is pretty lonely and hard.
Economies of scale, combining resources to improve professional learning, and to bring modern organisational development principles to a GP organisation, all point to the potential for a modern corporate to be good for general practice in some ways.
Primary had been a bloody big leopard with some bloody stubborn spots on it. Ironically, today it is far more corporate than it has ever been in the past. Good corporate, though. In the past it was family run, albeit still public. Today it’s run as corporate in every sense.
That can be good, but you will always have the tension in a public company between meeting short-term shareholder demands and the needs of your most important stakeholders: your staff and your customers.
IPN’S DIFFERENT CHALLENGE
If you cross the road to IPN, our largest corporate – which has nearly double the GPs of Primary – then you are entering a world of an entirely different challenge, and perhaps not surprisingly, an entirely different approach to change.
For starters, IPN built itself out on a far more sustainable revenue model than Primary was built on. It grew by acquiring good-quality mixed billing practices. As the PBS got more and more squeezed over the past decade, it became increasingly clear that this was a much firmer base for success.
IPN was always known for being a lot more staff and customer-centric than Primary. Essentially it was trying to buy well-run, community-based practices with reasonable scale and a good revenue mix. The intention was to add to this with economies around technology, logistics and other services.
If you think about it, Primary, for now, has the much easier job. It had a revenue model that was sinking fast. Just shifting to appointments and building some mixed billings will help change the revenue profile. If it then gets its staff to actually enjoy working for it, and get some subsequent productivity, Primary is well on the way to improving its business commercially. IPN has had most of that for many years now.
IPN’s challenge is probably much harder. IPN is reportedly much more profitable. It already has network-wide IT systems with billing analysis and feedback loops on logistics and productivity. So what does IPN do to improve?
Talking to CEO Dr Ged Foley is a refreshing experience in corporate transparency, and potentially, as IPN moves forward, trust. Dr Foley is very open and honest about his challenges and how IPN is approaching them. His problem is people based mainly. And his approach could not be more different from that of Primary.
But it might be just as effective.
Dr Foley, who reported to Dr Parmenter until the latter left to take up the Primary CEO challenge, has spent the time since then travelling to the outer edges of his company and talking to as many practice managers and GPs as he can. No big accounting firm consultants here. Just plenty of travel expense and footfall and listening on Dr Foley’s part.
And if his immediate mentor left to become his nemesis, he still has a pretty good one left in the parent-company Sonic’s CEO, Dr Colin Goldschmidt.
Dr Goldschmidt built Sonic into a global healthcare empire and Australia’s largest healthcare company by a big margin. Sonic overall turns over more than $5 billion compared with Primary’s $1.7 billion, and has more than 34,000 staff spread over eight countries. All that from a relatively small start as a local pathology group in 1987. That’s a mentor that you probably want to have, especially given he previously mentored Dr Parmenter.
So Dr Foley isn’t alone in his battles. But given he is backed by a much larger company and he is facing what looks like a highly geared and full-speed-ahead corporate transformation in Primary, his approach might feel a little left field. It’s hardly by the big money corporate book.
When I ask him what his plan is its disarmingly simple: “We have a lot of good operating units, and some poor ones. My job is to work with them all to make them each better.”
Apart from the worry that this seems like an extraordinary amount of work for one person – he does say he has a long tail of fantastic regional support managers so that’s a relief – this, for IPN, is a very sensible and practical strategy. And if he succeeds, it will likely set IPN apart from Primary in the future in some significant ways.
In essence,Dr Foley says that the heart of IPN is good community medicine, and the heart of that is a practice that relates well to, and operates tightly within, its community.
IPN’s average practice size is small compared with the average of the Primary super centre – something around 12 GPs. The logic of Dr Foley’s distributed and individualised approach to the management of his centres is that the needs and wants of staff and patients vary a lot by geography and patient demographic. That means some degree of managing each practice differently. He has to facilitate that across Australia.
The secret in the end, says Dr Foley, is the leadership of each practice. He says his mission is to assist the managers of his practices be the best they can, and when they can’t, inevitably to seek out alternative leadership. In this way, each practice is armed with the ability to manage themselves individually and in tune with their community, but still be able to have leaders who see the need for economies of systems servicing their practice, and relate that well enough to their staff so they aren’t disaffected.
It’s a very pragmatic approach. And a very transparent one. And a hard one.
But if you ever meet Dr Foley, you’ll meet someone you oon realise is passionately committed to what he’s doing, and who is a very hard worker. He says he still has much work to do. That parts of IPN aren’t good.
The future of IPN might be better as well.
SHOW ME THE MONEY
OK, both corporates have a plan. Both appear to have good leadership. And both appear to have developed strategies which coincidentally or not, align to a better deal for any GP who feels that the practice ownership path isn’t for them – this appears to be a big trend among millennial GPs.
But given the trajectory of the PBS, the attitude of the government to GP remuneration and to red tape, and the changes being thrust on GPs by ever more digitally information empowered patients, where is the money coming from for all these great changes?
A quick check of Primary’s share chart isn’t playing to the visionary tune.
In 2017 they reported a loss of $517 million.
The good news is that the share price is way up from a low of $2.16 on Feb 12, 2006 at a current price of $3.48. The bad news is that it’s a long way down on its high of $5.34 only three years ago.
One more thing. Given both our big corporates are now getting their respective acts together, aren’t they going to run into each other in a new revenue model world of mixed billing, and cause ever more potential grief for each other?
In other words, is this all just great corporate speak, PR ,and perhaps just a little bit of visionary delusion? Known in the non-corporate world as wishful thinking?
Although Primary has already done a lot, it clearly has a long way to go. But as far as energy, plans and vision go, it has laid a lot of groundwork to improve the commercial position in the near future. Again, it’s coming off a low base and some of those wins, like mixed billing, will be easy.
Where does Primary get the money to invest in all the new things outlined in the dot points earlier in this article?
Dr Bullen points out that while the medical centres business has been under pressure, the pathology and imaging businesses have been performing well. Some investment is coming from here.
Market analysts suggest that the current institutional holders of Primary shares are prepared to spend a little in the short term at least for this plan to take. That’s a good sign.
And then, according to Dr Bullen, there are clear restrictions on investment within each division which limit the investment in certain areas to any money made via short term improvement. That in corporate speak is called a “virtuous circle”. If you get it going, the more you get better, the more you make and the more you invest, and so on for ever.
It isn’t a visionary delusion on the part of senior Primary managers and strategists. It does seem doable.
As to IPN, the strategy is very down to earth, practical, and, to use a favourite corporate term “cheap” to execute.
It’s also doable, although IPN wants to ensure that Dr Foley’s hard work is being supported by a cascade of supporting managers, and that it does have robust succession plans in case of burnout. It is a very labour intensive plan.
And what about the two companies running into each other?
Both say that the future of corporate medicine and of general practice is so good that there is plenty of room for them both to grow and not run into each other that much. There goes that high-level optimism and corporate-speak again.
The room to grow might be debatable. The argument, largely goes that we are seeing substantive growth in the GP sector overseas in Europe and US, based on general practice being the most efficient and logical space to manage the issue of healthcare shifting from acute to chronic care management.
But that belies our current funding system for GPs to a large degree. Yes, both groups will embrace technology and that will allow them to move upwards to more hospital-like services, and downwards, even into the homes of their patients, for close by chronic care management.
But will our funding system keep up with this? It’s doubtful.
Both groups say they aren’t modelling that funding will keep up, so it doesn’t matter. They are planning to move their services into areas of healthcare which aren’t government funded.
An immediate potential example is non-subsidised telehealth consulting payments to practices. For that you will need scale.
IPN, via Sonic, owns a good chunk of the Best Practice patient management system which is on the desktop of about 43% of all our GPs, and a few specialists as well.
This system will soon have access to 12 million patients directly via a new mobile patient app due to be released late next month.
A later iteration of that release will include a telehealth app, which means that every patient in the Best Practice ecosystem can have a telehealth consult with their trusted doctor.
That won’t be subsidised, but it will likely evolve into a new marginal revenue stream for IPN surgeries. How big, we don’t know yet. But it’s only one of many non-government GP funding ideas that these groups are looking at with innovative eyes.
Both IPN and Primary seem to accept that the funding environment will remain difficult for some time, but they are determined to get to the future with their GPs with all sorts of innovative thinking, technology, but probably most of all, bringing their GPs with them on the journey.
Which makes our two biggest corporates exactly what, in the eyes of the greater GP community these days?
Overcoming past wrongs is never easy and trust takes a long time to build and a very short time to destroy.
Just ask HealthEngine’s Dr Marcus Tan.
