Malcolm Parmenter's move confirms Primary’s serious intent to engage meaningfully in the future of general practice
What a difference a couple of years can make in business. Two years ago, Primary Health Care was approaching pariah brand status in general practice. Now, the appointment of former IPN boss Dr Malcolm Parmenter confirms Primary’s serious intent to engage strategically and meaningfully in the future of general practice.
IPN, owned by Sonic, would have to have been shocked by Parmenter’s decision to leave for the long-time direct competitor. Indeed, Primary’s chairman, Rob Ferguson, was surprised the company managed to snag Parmenter.
Ferguson told The Australian newspaper that he had “formed a view that it was hard to recruit from within the sector because of the competitive nature of the industry. I didn’t think people were prone to move”.
And people such as Parmenter aren’t. He’s wizened, considered and a loyal trooper. He has spent much of his corporate career building IPN, which has for years been the upmarket competitor to Primary’s mainly bulk-billing portfolio.
Parmenter believed strongly in what IPN was doing and was committed to the development of a business that had, as a strategic pillar, the betterment of the life of GPs, along with the company. He’s a brand in himself for the work he did building and positioning IPN.
Above all else, though, he’s a GP. He’s been there and done that. He has experience and learning that very few senior commercial managers in healthcare can demonstrate.
So why did he move?
Parmenter isn’t saying. He is being kept under wraps by his new minders until he starts in September. We presume he is serving out a well-delineated non-compete period. In these period it’s not legally, or commercially, wise to say anything.
But the move and his likely reasons are important for a whole host of reasons to any GP who is thinking of going down the corporate path.
There’s a few background reasons that would have made the jump attractive to Parmenter, despite his many years spent developing IPN:
- The money is pretty good at about $1.6 million a year, plus bonus. It would probably be up to double what he was getting at Sonic as the head of Clinical Services.
- He’s a much bigger fish in a smaller, albeit not unsubstantial, pond. Sonic is huge and global. At Sonic he was a middle manager in the scheme of things. At Primary he’s the boss. Well, he’s the top manager, reporting to a board, and facing off as the lead person in a public company. In this role he can decide and implement with much more impunity.
- As the boss of Primary, he is in charge of a multidisciplinary business that encompasses not just corporate primary care, but, specialists, pathology and diagnostic imaging. There are new challenges in running such diverse portfolio.
But the key reason Parmenter may have left, from what we know of him (a few of us at The Medical Republic have engaged with Malcolm off and on over the years), would have to be a real worry for IPN. That is, Primary is now sufficiently committed to what Parmenter is committed to in terms of GP engagement and healthcare service delivery. And Primary is ripe for transformation into a business driven by a purpose that, at its core, is good for Australian Health.
Primary previously did not have that feel as a brand, even though most recent CEO, Peter Gregg, has done much to start turning the business that way. We doubt Parmenter would have moved unless he genuinely felt the Primary board and senior management were committed to this different future, and, perhaps, to some other interesting strategies we are yet to see.
This all means that the competition between IPN and Primary should intensify quite quickly. And that should be very good for general practice. Notably, Primary has already started its upmarket brand in Health & Co.
As upset, initially, as IPN and parent Sonic might be, they won’t be standing still for long to ponder the implications. Under Parmenter, the Clinical Services division of Sonic was already pushing the boundaries of changing the health system by organising significantly for a future that embraces the Medical Home, capitation and comprehensive chronic-disease management via the GP network. Sonic will do all it can to maintain its lead with IPN in technology and in mixed-billing servicing.
With Parmenter at Primary, the march towards this future will no doubt scale quickly.
The very presence of Parmenter at Primary will be a huge reassurance factor for GPs contemplating a move into the corporate sector, and may go a long way to resolving Primary’s current recruitment and retention issues. It would be interesting to try to calculate the value of what Parmenter’s brand might achieve here for Primary.
Primary pushing alongside Sonic is going to put a lot of much-needed extra pressure on the federal government to get its act together and actually commit properly to evolving a funding model to achieve outcomes via concepts such as Medical Homes.
Combined, these corporates have a reasonable degree of political sway. Witness the government cave-in last year to the pathology divisions on bulk billing. Now both companies see a future in Medical Homes and are structuring for that future.
The government’s current healthcare strategy could be summed up as “cost cutting, with the odd platitude to quality outcomes via things like Medical Homes”. Whether IPN likes Primary catching it up or not, there isn’t any question that together they create a powerful reason for GPs to believe that a more-effective funding mix is on its way.
IPN and Sonic have done much to push the technology boundaries in helping the delivery of outcome-based funding through things such as Best Practice and MediTracker. While at times can also retard progress in healthcare for commercial reasons (eg, interoperability and secure messaging), on the GP front, both are pushing strongly for technology efficiencies at the GP, and the patient, level. Although Primary no longer owns MedicalDirector, its agreements with the new private equity owners means Primary has leverage with technology as well.
One thing which will slow a move towards better funding models, however, is the lack of data the government has to work with. In New Zealand, the data coming out of the patient management systems is comprehensive and live, and is used to target funding in both in social and geographic terms. The data also moves well between primary care and allied health, something that MediTracker is trying to do.
IPN is pushing the boundaries in this respect through Precedence Health’s MediTracker product, and, to some degree, through Best Practice. Best Practice is about to move in a big way into New Zealand and take on the dominant provider there, called MedTech. To do that, it’s had to write a lot of additional routines to handle the additional data reporting requirements of the New Zealand system.
So all the elements are out there, and in some respects they are starting to come together. Technology, by rights, should make the system a lot more efficient. This is important because more money is needed, and anything that helps ameliorate that will be welcomed by the government. But the government isn’t really watching the technology carefully and helping in this respect. Not yet, anyway.
Parmenter’s move is a final aligning of the major corporate medicine providers in a way that will be hard for the government to ignore. Both these corporates are gearing themselves for a funding model based on Medical Homes. That’s a model that’s better for patients, and should be better for GPs. That’s if the government can be convinced to fund the model, as it’s likely to be more expensive, at least in the short term.
It’s a lot of change. Moving to mixed funding will be hard at first for GPs to forecast and make their businesses work. This makes the change scary. But all change is scary, and at least it’s change that is moving in the right direction.
