How this GP illustrated Medicare’s four-decade slide

Jolyon Attwooll

1/09/2022 4:24:48 PM

While the rebate freeze put the spotlight on the value of GP services recently, Dr Christian Allen has gone a step further and compared MBS items since 1984.

Dr Christian Allen
Dr Christian Allen believes the system cannot continue in the same direction.

The pressures on Medicare are well known. Most obviously, GPs across the country felt the impact of the six-year freeze on Medicare Benefits Schedule (MBS) rebates.
One Gold Coast doctor, however, decided to take the longer view and try to work out a truer value of rebates since 1984, the year Medicare was introduced .
Dr Christian Allen, who became an RACGP Fellow in the past year, took two common MBS item numbers – 23 and 110 – and dug through the archives to compare the inflation-adjusted value of rebates from their inception until now.
‘What I was seeing seemed to imply that funding had gone up steadily over time, but also that the gap in terms of what patients needed to pay to fill the gap between the rebate and a suggested fee was steadily widening, particularly after the Medicare freeze,’ Dr Allen told newsGP.
‘But I also thought it was odd that even though the gap was widening, it wasn’t really compared to what people were paying back in the day.’
He has set out to put that right by going through MBS books and finding historical equivalents (equating the old item 5 for item 23, for example) then putting the values through an inflation calculator to cross-check with the modern day.
Few GPs will be surprised that the trend is steadily downward.
The work suggests that the current $39.75 patient rebate for item 23 – a consultation lasting less than 20 minutes – has declined in value in real terms by more than a fifth since it began.
The fall has been even greater for item 110 – a professional attendance at consulting rooms or a hospital by a consultant physician – with Dr Allen’s calculations putting its current value of $161.90 as more than a third down on its equivalent real value 38 years ago.
‘I wanted to make people aware that [with] these numbers, even if tomorrow the health minister comes out and says, “Look, we’re going to bump up item 23 by 20%” … that’s all well and good as a one-off,’ he said.  
‘But unless you change the trajectory of this graph … it’s a bit meaningless.’
He has been sharing the results – recently signing up to Twitter – to draw attention to the disparity.

‘This to me would be almost the equivalent of the nudge letter, but [in] reverse towards the Government saying, “Hey, I’m just nudging you and letting you know that we’re aware you’re not really paying your fair share”,’ Dr Allen said.
Given more time, he would like to do a more detailed trawl through the MBS to see if any items follow a different pattern.
‘From what I can see … most of it is fairly similar,’ he said. ‘It starts off a lot higher in the 80s, and it tends to trend downwards.
‘Over time, I can’t think of any particular item off the top of my head [which] would buck that trend.’
Dr Allen, who first studied business before swapping to biomedical science then medicine, said he noticed a substantial difference when swapping from hospital work to general practice, noting that hospital interns can earn more than GP registrars.
‘It is definitely eye-opening,’ he said.
‘A lot of this stuff is more real than when you’re in the hospital and you’re earning a steady paycheque.
‘[In hospitals] you don’t really consider the cost of consumables if you make any decision, or if you decide to send a patient for a test, you don’t think about the cost.’
In the Gold Coast practice where he works, Dr Allen says prices are not going up this year, despite the impact of inflation.
‘Staff are saying, “that’s eating into our profits by 5 or 6%, how are we going to be able to continue to bulk-bill the pensioners?”,’ he said.
‘There isn’t really an answer for it.
‘Realistically, and we’ve probably seen it more with the rural practices, doctors either leave the town, or the practice closes. Some of the bigger chains where they purely bulk bill, they can’t survive.
‘The realisation that this can’t continue indefinitely is very much coming.’
He hopes the Strengthening Medicare Taskforce will improve things and says the calculations on his graph are all the more relevant given the rapid current inflation.
The graph’s trajectory will show no sign of changing direction this year, however, with MBS indexation confirmed at 1.6%, compared with a Consumer Price Index of 6.1% over the 12 months to the end of June.
‘In the same way that as soon as the interest rates rise the banks are happy to pass on the costs, we’re going to have to, as a collective, move towards that unfortunately,’ Dr Allen said.
‘Either we have to pass on the cost, or the public needs to pass on their concerns to the Health Minister and try to rise the rebate in line with inflation at the very least.’
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Dr Scott Andrew Finlayson   2/09/2022 6:56:57 AM

What this doesn’t illustrate though is the overheads that go into running General Practices. The CPI doesn’t at all reflect the real increase in cost of living let alone practice costs. The General Practice of 1984 was a world away from that of 2022. I’d love to see the cost of the biggest inputs compared over the decades, I don’t think a consultant physician’s would have budged significantly. And IT costs didn’t even exist at the start of this comparator. Side by side with surgeons would also be interesting.

Dr Dhara Prathmesh Contractor   2/09/2022 7:41:55 AM

Nicely narrated.

Dr Peter James Strickland   2/09/2022 11:04:12 AM

The house I owned in 1984 was valued at about $50,000, and now would be worth $1.5 mill to buy. My car cost me $8,000 in 1984, and would now cost about $60,000 (Toyota Crown). My children's school fees were about $6,000 in 1984, and now would be about $44,000 for 2 children. The rebates for Item 23 today should be in the region of at least $60 plus, and that would equate to being able to run a successful practice with all the costs of staff, rent, electricity, supplies etc and an income for the doctor that is commensurate with their work and profession. The Governments + Public Servants have slowly denigrated the role of GPs by fiscal and restrictive-practice regulations ever since the Whitlam era from 1972 on (original Medibank Mk1). I've seen it all over the last 50 years, and it is a disgrace. Pay GPs properly, and all the hospital ED costs will drop dramatically, and more doctors will become GPs , and wasted costs drop substantially. Stop bulk-billing --everyone!

Dr Abdul Ahad Khan   2/09/2022 12:25:07 PM

We all have known for Decades that the Medicare Rebate has not kept pace with CPI Rises.
GPs have been pleading incessantly with the Govt. of the day, to increase the MC Rebate.
Some GPs have actually used the Word " PAY " - that they need to be :" PAID " better.

The MC Rebate is not our PAY - it is meant for our Patients, in order to subsidise their Payment of a GP Consultation Fees.

WE ARE NOT GOVT. EMPLOYEES - We are in PRIVATE PRACTICE & we should charge a Fees commensurate with our True Value & leave the Pleadings to our Patients.

GPs in total numbers constitute less than 1 % of our Populace.
No Political Party will ever attempt to appease this 1 % of the Voting Populace.
But, all Political will want to please the other more than 99% of the Voting Populace.

When the more than 99% of the Voting Populace, CRY that the MC Rebate is inadequate, all Political Parties will try to outbid each other, in their attempts to win those Votes.


Dr Martyn William Thomas   2/09/2022 3:08:34 PM

Thank You Christopher,
The figures and charts speak for themselves. I would be interested to include other measures of the CPI other than the official inflation figures. Because official inflation figures particularly now are causing an even worse erosion of incomes
I am, still in General Practice at 81 (part time) I am encouraged to continue in a rural practice because of the shortage. . For a while I was the only doctor in the practice covering several towns in Yorke Peninsular.
I am now more aware that General Practitioners are a very scarce and under appreciated resource. . As a group we should remember how scarce and valuable we have become.
I go back historically to the introduction of Medibank under Whitlam. GPs weren’t as scarce then.
A colleague in Whyalla , who had escaped from socialist Hungary angrily tried point out the folly of blindly accepting the pro

Dr Martyn William Thomas   2/09/2022 3:11:07 PM

Out of the population of Whyalla’s GPs he and I both put up some pathetic resistance by not complying with Medibank paperwork .for a while while watching the income bonanza enjoyed by our colleagues.

Financially we couldn’t keep this up. Paperwork was easier under Medibank However This was the only chance Australia’s medical practitioners had to reject the system
The Dentists weren’t. So stupid
I don’t need to state the obvious Now we are forced to join the lowest common denominator or lose to our bulk billing competitors.
Did you all note P2 in the Mail 31/8/22 ?

“The Aussie town so desperate for a doctor it's offering $750,000 salary – but the job ad is leaving other GPs furious
Ad offers $750,000 to GP willing to practice in district 240km outside Adelaide
SA government offering the salary with other perks and no clinic overheads
Average salary for a GP is $232,903 with doctors often covering clinic c

Dr Jo   4/09/2022 12:30:42 PM

Very well put Dr Abdul Ahad. And not to mention the numerous item numbers that were slashed and no longer exist. Many that were devalued like ECG item number, mental health care plan review 2712 and antenatal care 16500.

Dr Andrew Robert Jackson   5/09/2022 3:48:02 PM

Good work, however.

The long-published AMA Gaps Poster demonstrates the dramatic gap better, as it takes a more realistic index of practice costs - CPI doesn't cut it for practice business costs.

Indeed it was the early 90's that I looked at this chart and forecast that it would continue in the same way, and it has.
I then introduced a 'gap' of $2.50 for all pensioners and card-holders. Gradual adjustments means that for Item 23 the fee is now $108.00 and Discount (cardholders etc) $83.75.

The AMA said three years ago that the rebate for Item 23 should be approximately 2.4 times what it is at the present ie. around $96 if it had kept pace with practice costs and inflation. If so then looking at my fees it would mean that
- for non-cardholders the gap would be a mere $12
- pensioners etc would be given a cash refund of $12 at the front desk as the Medicare rebate would exceed our fee by this amount! Amazing.

Dr Lorenzo Susino   10/09/2022 2:10:18 PM

Bulk Billing is not sustainable in General Practice. To run a quality and safe practice clinicians need to invest time with their patients. Time = money. How can the Australian Government continue to undervalue our expertise and service to our community? We let them.