Menu
Ph 02 9567 5595
 

Here's what happens to GPs if we move away from fee-for-service

Last week, economist and serial health policy commentator Stephen Duckett told a Senate committee: “Every galah in every pet shop is talking about primary care payment redesign to reduce the emphasis on fee-for-service payment.”

The galahs include Prime Minister Malcolm Turnbull who in March 2016 announced the establishment of Health Care Homes (HCHs) as “a move away from the current fee-for-service model … one of the biggest health system reforms since the introduction of Medicare 30 years ago”.

Expenditure on GP Medicare rebates grows and grows, driven by the compounding effects of population growth, more services per head and accelerating adoption of high-cost services such as care plans. Politicians see the capitation payments underpinning HCHs as a way of dampening the MBS GP spend.

Do you understand the consequences for GPs of a major shift away from fee-for-service, MBS rebates?

I have visited many primary care practices in the USA and the UK over the years. Primary care can be organised very differently from what we regard as normal in Australia.

The USA concept of Health Care Homes was proposed by Australia’s own Primary Health Care Advisory Group established after the Federal Government retreated from the 2014 co-payment imbroglio.

The group’s 90-page report is a confusing assemblage of market sloganeering, aspirational rhetoric and managerial jargon with little analysis of GP sector-wide implications of a capitation system.

The report skirts around difficult issues such as how financial risk might be shared among government, practice owners and GPs and to what extent administrative oversight might constrain clinical decisions.

The dynamics of negotiations between practice owners and GPs would change if Australia moves away from the present open-ended MBS system. Currently, under a typical 70% contract, providing more services benefits both sides financially. 

Under Health Care Homes, owners will have incentives to reduce the volume and price of medical inputs by engaging physician assistants and nurse practitioners.

One important issue is the effect on the number and distribution of GPs if HCHs are widely adopted in Australia.

There is a voluminous academic literature out of the USA on the workforce effects of Health Care Homes and similar initiatives that foster new models of care. 

Health Care Homes are not just about expanding the range of practitioners. They also substitute less expensive practitioners to provide services which in Australia attract MBS rebates if undertaken by a medical practitioner.

One study by the Rand Corporation, a USA think tank, suggest that a standard primary care model requires seven doctors per 10,000 patients and that increasing the number of physician assistants can drop that to six doctors.

While GP distribution remains a significant issue, the actual number of GPs in Australian appears generous compared to similar countries. In 2014–15, according to the OECD, Australia had 1.56 GPs per 1000 population, compared to 1.24 in Canada, 0.91 in New Zealand and 0.8 in the UK.

The following table is from the Health Department Website:



Meanwhile in Sydney “there is a GP on almost every corner”. This is the claim of a woman interviewed for an ABC Canberra news item in May. She moved to Canberra from Sydney and cannot find a bulk-billing GP. In Sydney she never paid to see a GP “in her whole life”. The bulk billing rate in Canberra, the city with Australia’s highest average personal incomes, is around 55%.

GP bulk-billing rates hide as much as they reveal.

According to the AIHW, in 2014–15 the average number of GP attendances per person (age standardised) in north Canberra was 4.0. In areas in western Sydney — areas of lower socioeconomic status with a bulk billing rates over 95% — services were provided at twice the Canberra number: 8.1 in Blacktown, 8.9 in Mt Druid and 7.6 in Bankstown.

In other parts of Sydney the number of GP services per head are similar to Canberra, for example 4.5 in Mosman and 4.6 in Manly.

Average Medicare expenditure (not including out of pocket payments) on GP attendances per person (age standardised) adds to this fascinating mosaic. In North Canberra this was $186.91, in Blacktown it was $366.04, in Mt Druid $401.47, in Mosman $228.25 and in Manly $213.80.

Many supply and demand factors influence the utilisation of medical services and averages hide wide variability.

When I studied economics in the early 1980s many health economics PhD theses comprised complex statistical gymnastics seeking to disentangle all the influences on the number of medical services provided.

They sought to determine whether medical servicing levels were driven by patient need and morbidity, by orthodox economic factors such as price, perceived quality, access and advertising, or by the more nefarious “supplier induced demand” and doctors’ “target incomes”. This extensive academic work confirmed the view of the wit who suggested that if you laid every economist in the world end to end you would not reach a conclusion.

In recent decades studies of price and other effects on demand for GP services has taken a back seat to policies that seek to ensure Australians have access to GP services. The output of medical schools has doubled and medical immigration has boomed. Governments seek to control outlays by restraining Medicare prices to offset the growing number of services provided. Policy emphasis is now shifting towards assessing outcomes and effectiveness.

But where are the GPs? Why do many people have to wait so long for an appointment? Despite a myriad of incentive programs over the years seeking to improve access to GPs in rural areas, GPs still cluster in urban and attractive seaside settings. Some GPs limit their work to clinical niche areas such as skin cancer treatment.

Politically, in 2017 Medicare fee-for-service and the uncapped nature of the system may be vulnerable to a government seeking to constrain outlays; vulnerable partly because of what is going on at the margins.

Are there GPs providing services paid for by Medicare which other practitioners could provide at lesser cost? Or services which do not deserve Government subsidies?

When I worked at the Federal AMA in the 1980s we argued that Medicare only works because most doctors practise according to established clinical, professional and ethical norms.

Primary health care is now a more dynamic market but innovation can be perverse if designed to take advantage of outmoded regulatory and financing structures. For example, advertising is now established in general practice. It is decades since medical codes of ethics sought to distinguish legitimate informational content of advertising from advertising for commercial gain.

In June I had a cup of coffee in a pleasant heritage town near a major city. The population in the town and surrounding area is around 2000.

There are two practices in the town. One listed three GPs the other four and some worked limited hours each week.

I read the local paper as I sipped my cappuccino. One practice had a large advertisement indicating it had a “Special”. It was offering “women over 40 Bulk Billed checks for the month of June”. Readers were advised to “come in anyway” if you have “niggly health issues you have not had time to address” as “no health issue is too small to ignore in the month of June”.

Last month I was at a large private hospital in one of the State capitals. Large posters near the co-located private clinic and in the hospital lift suggested that if you have “itchy skin, watery eyes, a runny nose or upset stomach” you should make a booking, no referral necessary, at the associated allergy clinic for a bulk billed “allergy consultation” and bulk billed “skin prick tests”.

Recently in another State capital I walked past an “Integrative Health Centre”. The sign outside indicated the practice offers thyroid assessments, vitamin infusions and “bioidentical hormone replacement”. The practice website indicates services are being offered by practitioners with FRACGP and that most services attract MBS rebates.

By rejecting the 2014 co-payment general practice has rejected market-based policies aimed at reducing Government outlays.

But will the MBS Magic Pudding continue to deliver for GPs?

Or are we at the dawn of an era in which Government and corporate interests will move decisively to reshape general practice in ways that will challenge aspects of traditional professional autonomy?

Is it inevitable that the general practice “industry” will now be rationalised by imposed rules and regulations with tighter controls on where GPs can practice and more oversight of the Government’s annual $8 billion spend on GP services?

These questions raise many policy and political complexities and the future is uncertain. But there are also certainties:

·         Increasing GP MBS rebates by amounts well below the growth in the costs of running a practice will, in the absence of other policy changes, accelerate tendencies pushing aggregate GP activity towards the provision of services of marginal value.

·         Even if the new Rural Health Commissioner can walk on water, attracting GPs to rural locations will remain difficult while the MBS financing system supports all GPs seeking a living within the smell of sea air and the reach of a caffé macchiato.

·         The RACGP and AMA should reduce their emphasis on press releases and media promotion and engage their loyal GP supporters in developing analytically rigorous, credible, persuasive long term strategies to secure and advance GPs’ interests.

Subscribe to our
Newsletter

For updates on changes in the medical industry and healthcare policies sign up for our newsletter.