What is the future for small practices?

The writing was already on the wall when Dr Justin Oughton, a GP in regional NSW, spoke with his accountant.
 
An associate partner in a small practice in Bellingen, Dr Oughton and his colleagues had stayed afloat for the past few years, temporarily boosted by the COVID-19 vaccination clinic they had opened in 2021.
 
But when his associate partner told him he wanted to leave the business earlier this year, Dr Oughton was unsure if the practice, which has operated for 40 years, could survive.
 
It was a sense confirmed when the numbers were crunched.
 
‘The accountant basically informed me, because I would be the one remaining associate, that we would be unable to sustain the practice even with reducing the staff down to the bare minimum – which would be one nurse, one receptionist and one practice manager,’ he told newsGP.
 
‘The following day, I announced to the practice manager that we’d have to close the practice, and we started to prepare for that, including announcing to staff and then to patients.’
 
For Dr Oughton, the disappointment is all too clear. Having begun at the practice as a GP in 2015, he became an associate partner in 2018, and had a first-hand view of the shifting business climate for general practices.
 
‘My dream was to be a practice owner, and maybe to own multiple practices,’ he said.
 
‘I think lots of GPs had this business dream that one day they’ll be able to work part time, still earn a reasonable income, manage a practice or several practices, and have a good financial future.
 
‘This was just confirmation for me that wasn’t going to happen, that it was not possible in this current location, and in this current climate.’
 
He is not alone in thinking that way.
 
According to last year’s Health of the Nation report, more and more GPs are unsure about the dream that Dr Oughton once had. The report documents rising concerns about viability of general practice, and there has been a correlating rise in the proportion of GPs who have no wish to become a practice owner in the future.
 
More than two-thirds of the non-owners surveyed (68%) said it is not a prospect that interests them. In 2018, the year that Dr Oughton became an associate partner, that number stood at 55% – a significant shift in five years.
 
Yet-to-be published data from this year’s Health of the Nation survey shows the trend is continuing along the same trajectory, with fewer GPs than ever wishing to set up on their own.
 
Dr Yee-Shing Kan, Chair of RACGP Specific Interests Business of General Practice, told newsGP the pressures shaping that shift are apparent.
 
‘You’re looking at such a big hurdle to trying to set up your own practice,’ she said. ‘It is no longer viable to have one or two friends to work together and build a practice.
 
‘So the easiest way, and it’s very flexible, is to go to one of the bigger clinics, and you don’t have to worry about anything.’
 
There is debate about the impact on patient care this increasing gravitation towards larger practices will have. Concern is not new, although the evidence behind the worries remains a discussion point.
 
Dr Kan, who owns a practice in Perth after being recruited by a previous owner who was actively seeking to train a successor, believes the disappearance of the street corner general practice is likely to be to the detriment of patients.
 
She says GPs working in smaller practices are more likely to do the under-funded aspects of the role, mentioning home care and palliative care as examples.
 
‘The community will lose out for that one-to-one more personal care, and especially the very vulnerable type of patient,’ she said.
 
Dr Oughton’s perspective, unsurprisingly, is also that patients are likely to suffer.
 
‘We have always tried to have a patient-first approach to treatment,’ he said.
 
‘We have never shied away from spending time with patients who need more time. When you’re associates working at the practice, you can make those decisions on the ground.
 
‘The larger, more corporate-style practices, which are going to be the ones that survive into the future, that’s not going to happen.
 
‘You’re not going to have the freedom to have longer appointments, because you’ll have many more appointments.’
 
According to Dr Oughton, there were multiple factors behind the challenges facing his practice, with stagnating Medicare rebates, reduced practice incentive payments, rising insurance costs, high overheads, recruitment shortages as well as red tape and compliance pressures all playing a part.

The Bellingen clinic in NSW where Dr Justin Oughton has worked for the past eight years.
 
And while the pandemic provided temporary relief with the vaccination clinics, the border shutdowns worsened an already fraught recruitment market.
 
‘COVID helped keep us going for a period of time and delayed the inevitable,’ he said.
 
‘We shifted from a predominantly bulk billing practice and initially we tried to be a predominantly private billing practice.
 
‘Then we had to shift back to a more mixed billing model as the patient numbers dropped off so badly that we weren’t able to provide enough patients for our registrars, which is what forced us to not have another registrar.
 
‘It reduced our capacity to train.’
 
He says that like many small practices, they were unable to keep much of a buffer for tougher financial times – and believes that viability now hinges on a practice having four or five full-time doctors with waitlists to generate income to pay the overheads.
 
For Professor Anthony Scott, the Director of Monash University’s Centre for Health Economics, Dr Oughton’s story is a familiar one.

His publication for ANZ Bank and the Melbourne Institute, Trends in the structure and financial health of private medical practices in Australia, also suggested that the vaccine rollout initially benefited practices.
 
‘Viability is an issue for many practices, especially in some rural areas,’ he told newsGP.
 
‘Our report found that COVID support cushioned practices and there were fewer exits, but this might have just delayed things for some practices who would have already closed.’
 
He says different business models – some of which are already in place – may play an increasing role in providing GP-led care, particularly in rural areas.
 
He also wonders whether the nature of government support could evolve too.
 
‘Should Primary Health Networks be given a role to provide some functions to practices? [For example] running admin support and appointment systems in “vulnerable” areas,’ he said.
 
With his clinic closing later this month, Dr Oughton is taking on contractor work at another practice in the area and feels fortunate that he can take his patients with him.
 
‘It is certainly going to relieve some of the administrative and economic pressures,’ he said.
 
While he wonders if there is enough open dialogue about the challenges clinics are experiencing, he does not believe the pressures that led to the closure of his clinic need to be inevitable.
 
‘There needs to be a bit of a reprioritisation,’ Dr Oughton said.
 
‘I think that the distribution of money in healthcare is quite uneven, not necessarily because one group is being favoured over another.
 
‘It seems to be uneven because there are different interest groups in terms of state, federal and local governments.
 
‘There needs to be a conversation between the Federal and state governments and the public about what the public wants and expects, and what it’s going to take to take to deliver that.
 
‘Whatever the model is, it needs to be a frank discussion.’
 
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