News

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RACGP announces cost reduction program

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The RACGP has revealed its plan to safeguard the college’s financial position, after forecasting an operating deficit of several million dollars for the 2022–23 financial year.
 
The plan, approved by the Board last year, includes an initial investment in systems and processes complemented by a restructure that also involves cost reductions.
 
Once completed, these steps will be followed by efforts to broaden the college’s revenue base in 2024–25.
 
RACGP Board Chair Dr Lara Roeske told newsGP the Board has taken a proactive approach in the face of increased costs and a ‘substantial’ reduction in revenue related to higher-than-expected inflation and the ongoing impact of the COVID-19 pandemic.
 
‘The cost of delivering our services to members is currently greater than the revenue we derive from exam fees, conference and event fees, membership fees, and commercial revenue such as sponsorship and advertising,’ she said.
 
‘However, we’ve built a cash reserve fund over the past few years for exactly this scenario and I’d like to reassure members that even though we’re facing cost pressures, the college remains financially sound.
 
‘We take the responsibility of using members’ funds very seriously and fully expect to return the core membership activities of the business to being financially sustainable within a short time.’
 
Dr Roeske also stressed that delivery of Australian General Practice Training (AGPT) will proceed as planned.
 
‘GP training will not be impacted by the cost reduction program in any way. This work is funded by the Commonwealth, and it is a requirement that we do not comingle funds,’ she said.
 
‘We’re letting members know about our financial position now because we’re committed to transparency and openness.
 
‘This is about ensuring that we have a lean, nimble and efficient college.’
 
According to a member email sent on 28 February explaining the program, the cost reduction phase of the plan was approved at last week’s Board meeting and will include: 

• reducing employee numbers to a sustainable level
• investment in systems and processes that will automate some of the work undertaken by the college
• reducing other controllable expenses, such as travel and consultant costs.

RACGP President Dr Nicole Higgins told newsGP the Board is confident that the college will return to an operating surplus within the next three years.
 
‘The pandemic disrupted “business as usual” for the RACGP and also saw us invest heavily in supporting members through additional advocacy, guidance, resources and events,’ she said.
 
‘JobKeeper payments provided some assistance, but also disguised the underlying financial performance of the college. So, while we reported small financial surpluses for the first couple of years of the pandemic, it was difficult to know what a “normalised” year would look like.
 
‘As soon as we had that clarity the Board and executive drafted and enacted a plan to ensure financial sustainability.
 
‘This has involved a number of difficult decisions that we haven’t taken lightly, but now that it’s in place we have full confidence in both the future direction of the college and the progress that has made so far.’
 
Dr Higgins said the Board and executive are in the process of identifying the specific costs that can be removed without compromising the delivery of services to members.
 
‘The college will continue to strongly advocate for and support members and general practice at this most challenging time,’ she said.
 
‘We are committed to ensuring the RACGP is a strong, sustainable organisation that continues to help build a strong and healthy GP profession so that we can help keep Australia healthy.’
 
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