‘Scary’ co-op failure sets off ‘alarm bells’ for general practice

The National Health Co-operative (NHC), which runs eight not-for-profit bulk-billing clinics in the ACT, reportedly entered voluntary administration due to an ‘insurmountable’ forecast deficit following the end of JobKeeper and recent staff changes.
 
Administrator Michael Slaven said the NHC is solvent and can operate services as normal for at least the next three months, including administering scheduled COVID-19 vaccinations.
 
But Dr Emil Djakic, a member of RACGP Expert Committee – Funding and Health System Reform (REC–FHSR), told newsGP the situation should serve as a ‘warning for the general population’ that high quality general practice is no longer being adequately provided for.
 
‘Medicare is the insurance of last resort for patients – it is not the absolute business and funding model for general practice,’ he said.
 
‘The problem is clearly that the insurance rate has not followed anywhere near the real costs of the service being delivered.
 
‘There is a breaking point where a business becomes non-viable.’
 
Dr Djakic said there are ‘a number of alarm bells going off’ that show many general practices are under financial stress by trying to deliver a viable service that also provides accessible quality care for all Australians.
 
‘I really feel for those co-ops who I think have made a really good fist of trying to do something that’s really consumer-driven,’ he said.
 
‘But all they’ve successfully done in the end, I think, is really shine a light on the fact that if they can’t do it, how can anybody else?
 
‘That’s pretty scary.’
 
REC–FHSR Chair Dr Michael Wright told newsGP the NHC’s experience shows pure bulk-billing clinics are becoming ‘less and less sustainable’.
 
‘I really feel for the patients of these practices. They should be able to access affordable high quality general practice services,’ he said.
 
‘Medicare rebates have not kept pace with increasing inflation, let alone the costs of providing quality healthcare, for many years.
 
‘Meanwhile, the Medicare freeze resulted in further loss of funding to general practices, making it harder for all practices to remain viable – but particularly impacting those practices with more patients reliant on bulk-billing.’
  
According to the NHC website, the clinics currently provide an estimated 14% of all bulk-billed GP appointments in the ACT each year, which already has the lowest rates of bulk billing attendances of any state or territory in the country.
 
It is also last in terms of fulltime equivalent GPs per 100,000 people (92.7 vs a national average of 117), and second last with regards to the number of GP services used per person annually (5.4 vs 6.8 nationwide).

ACT Health Minister Rachel Stephen-Smith responded to the news by calling on the Federal Government to consider reintroducing bulk-billing incentives in Canberra, but RACGP President Dr Karen Price told The Canberra Times such a move would be a ‘band-aid’ solution.
 
Instead, Dr Price has called for meaningful and widespread funding reform, as she believes Medicare hasn’t adapted to modern medicine and changing health needs.
 
‘You’ve got to see the system as a whole,’ she said. ‘To have one part of it working and not the whole [system] working is problematic.’
 
Dr Wright says the current Medicare funding gap has also exacerbated the stresses brought on by COVID-19.
 
‘Since the pandemic, bulk-billing was made compulsory for many GP billed items, regardless of a patient’s need or capacity to pay,’ he said.
 
‘This has increased rates of bulk billing but has negatively affected the financial viability of many practices.   
 
‘Although the freeze has been lifted, the damage continues to be felt.’
 
Dr Yee-Shing Kan, Chair of RACGP Specific Interests Business of General Practice, says small practices have been most affected.
 
‘The Medicare freeze placed a financial squeeze on all practices and … then the COVID pandemic made it even worse,’ she told newsGP.
 
‘It has driven the running costs higher due to the need to buy more PPE, sanitiser, signage and sneeze guards, and put on additional staff. And during the peak of the pandemic the total patient attendance dropped, so less income was generated.
 
‘The two factors pushed the bottom line to point that many small practices were financially non-viable, so lots of them closed down. It is also very difficult for newly qualified GPs to try to set up or own their practice, so it makes larger corporate business more powerful.’
 
The widening gap and lack of support to handle the pandemic’s impact on general practice has also taken a personal toll on people working in general practice, Dr Kan says.
 
‘From a mental health point of view, the tremendous stress put on all the GPs, practice owners, subcontractors, practice nurses and admin staff is incredible,’ she said.
 
‘Thousands of policy changes and updates, not enough PPE to go around, constant exposure risk, multiple phone calls from patients and now the COVID vaccine administration.
 
‘The need to constantly think about ways to adapt to this new normal has left everyone feeling burnt out.’
 
And while the challenges are already difficult for GPs, Dr Djakic believes the situation will only deteriorate unless significant reform is made soon.
 
‘The [current] policy settings … are taking us down a very perilous pathway to the collapse of general practice in Australia as we know it,’ he said.
 
‘That might sound a bit alarmist, but I think the workforce statistics and transition of medical graduates away from general practice shows we’re not even approaching the cliff, we’ve gone over it.
 
‘The radical rethink around funding in general practice, de-bureaucratising the primary healthcare space, and rebuilding confidence in it as a desirable professional pathway for our medical graduates requires a lot of thought and planning.
 
‘But at the moment it’s being throttled slowly with politicised solutions coming from government [that are] about being seen to do something, which is a bit like sweeping the decks of the Titanic to make sure there’s no icebergs to slip on.’
 
Log in below to join the conversation.

bulk-billing funding Medicare