Dumped $5 GP copay! It is not over yet – 5 things you need to know!

Updated 5th March 2015

2015 welcome back!

It is fantastic to be back into the full swing of things.

For 2015, we have many new and exciting initiatives to share with you and our amazing clients. We hope you had a safe and well rested break over the holidays with your loved ones. 2014 had been an unprecedented and challenging year especially for those of you in healthcare.

As our Canberra politicians keep us all awake at night, we all plod on controlling what we can and not what we cannot. We say stay focussed on what you can do so you can stay focussed on what you do best. This year is about thriving in chaos. Health literacy is a new mantra for healthcare providers. GP’s may have won GP co-payment battle for now but there are more challenges.

As reported in the national media, do not pin your hopes on a chronic care lump sum. This will cause more problems than solutions in your practice. One thing we know for sure is there will be a 4 year Medicare freeze.  This does not require Senate approval. A Medicare freeze is like suffering chronic renal failure. You do not know it is happening until it is too late (this is a bit like our friend the frog). There has been a two year freeze on in the last few years. Prior to this Medicare rebates have been less than 1% p.a. far less than the increase the 3% p.a. annual CPI increases in the weekly wage.

Reducing bulk billing is not a choice but a responsibility. This is critical in ensuring that high quality and access to services does not deteriorate and destroy the very sustainability of a practice.

5 things you urgently need to know! Times are about to change dramatically….!

1. Expect to see a fall in your patient numbers

Any Medicare rebate cut or freeze will have a significant impact on your practice for many years to come. Overtime your practice maybe forced, to reduce bulk billing. Expect up to a 15-20% fall in demand. Many traditionally bulk billed service will be affected. It is important to appreciate that mothers are the greatest patrons of a medical practice. They bring in the kids, the spouse, Mum and Dad and the in-laws. This may have a significant downside flow on or multiplier effect if not managed carefully.

2. Revise your fees

An increase on the 1st July 2015 of a $14 to $19 gap is the only sustainable solution for patients that are not healthcare card holders or children. We note more documentation by a doctor is required in order to claim the item B consults. We will report more on this when the details are published. The biggest change that practices will need to fight for is a change in work culture.

Expect patients to be more demanding. This is a natural reaction. We all take more interest and care when we spend our own money on something. There is no point in getting angry but seeing this as a new and more viable opportunity in the long term, which it is.

3. Revise your business and clinical integration model of care there is a better way!

Practices will need to reconsider their existing service delivery model and start educating their workforce on how patients are treated.  Moving doctors away from item 23’s to healthcare prevention e.g. diabetes clinic can increase practice income up to $50k p.a. per FTE (full time equivalent) and doctors per FTE income $70k per FTE.

I was requested to present in front of 3 distinguished primary care Professors, a paper in November 2014 for the Great Pacific Medicare Locals in NSW on this issue. I have uploaded links as to the business case for using integrated care in practice and how many practice’s are missing out on Medicare income by not providing or claiming correctly their MBS and grant income. I have uploaded this paper below with some scenario’s worth considering. Please note this was before the Federal $5 rebate cut announcement.

Consider this information in light of your own practice arrangements. To this end, the fundamentals still hold true that you and the practice will be up to $50,000 p.a. financially better off if you implement a continuing care plan program properly. In the years to come, the worry of the $5 rebate cut will be seen as a good thing for practices and the community. Download* 1. How to make Integrated Service Delivery a reality from a financial point of view 2. Business Modelling Template v.3.1 PDF *Accounting clients of Health and Life will be forward full slides and working spreadsheet calculators at no charge. These will serve as a useful tool for getting the message out to practice owners and staff. 2015 we are rolling out after successful trials our external Traffic Light Performance monitoring service. The quarterly Traffic Light Report is a free mentoring chat to practice owners and practice managers to report on how they are going and what they need to be focused on and how.

4. How to change?

For more information on how to change your practice read Can you trust your doctor?. It starts by educating the owners and then practice staff. If everybody shares this vision then patients need to be engaged which this blog covers in our earlier posts. It needs to start from the top. If they are still not convinced then we are happy to have a chat with you or them about how to change. So far, many of our clients have embraced the idea and have not looked back. Those that have, have been least affected by the $7 co-pay and $5 rebate announcements during the year.

5. Where to from here?

The continuing care plan model, is the business model that practices should consider which is significantly more sustainable if it is established to operate efficiently and effectively. Alternatively do nothing, see more patients and risk a Medicare audit or burn out. A possible solution is to join, merge with like-minded practices. The silver lining is that well-run practices will find it easier to recruit and retain their workforce. Failing that many GP’s may see it is time to retire if they do not urgently seek to change how they work. For more information contact our office at pa@healthandlife.com.au for a no obligation chat  with David Dahm    our CEO and Founder of Health and Life – national Health Practice, Tax and Accounting Advisers since 1992.

If you are seriously considering the immediate positive benefits of a practice restructure or changing accountants who better understand your needs, we hope when you click on this link it will help.

For more insights visit our blog.

About me: David Dahm BA (Acc.), CA., FCPA, CTA, FFin, CPM, FAAPM, FAIM, FGLF.

Chartered Accountant, Chartered Tax Adviser, Registered Tax Agent, Former AGPAL Surveyor 10 years of service

David Dahm is CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not for profit project the International Healthcare Standards and Ethics Board (www.ihseb.org)

After a serious work related car accident in 1989, and nine operations later I continue to be a patient and provider advocate. I enter my third decade as a national Chartered Accountant for Medical and Healthcare practices in Australia. I am a former 10-year Australian General Practice Accreditation surveyor. I come from a medico family. I have served on the AAPM national Board and was the inaugural national Chair of the Certified Practice Manager CPM post nominal. I continue to provide accounting tax and practice management advice to many practices all over Australia.

You know who you are and I thank you for this real honour and privilege to serve you and your community through you. Note, I am not a lawyer please seek appropriate legal and accounting advice. This information is for general information and discussion only.

Why Restructure?

Less Pain if you Restructure your Practice Now!

Five simple reasons why practices should restructure now before it becomes a more expensive headache!

  1. Significant health reform will affect everyone.  The government is proposing to extend the Medicare freeze for another four years but they have offered a lifeline. For specific ways to address this issue, read below (10 immediate benefits of a practice restructure).
  2. To survive, practices need to become more focused on solving the right problem and/or seizing the right opportunities.
  3. The workforce surplus is a missed opportunity.
  4. Your practice may be suffering from lower profitability, staff morale, burnout, litigation, and/or no future-proof strategy. You could be throwing away good money and time on poorly researched or executed ideas, or even the wrong kind of advice.
  5. The best and cheapest time to restructure is now, *before 1st July.

Running a successful practice is about you having control over doing the right thing, the right way, all of the time. It is time to stop worrying. Take charge and control of what you can. Keep reading to find out more. 10 Immediate Benefits of a Practice Restructure Health and Life clients who have completed a successful restructure and received our ongoing support have enjoyed*. If you don’t believe us, every point below provides evidence of what we and your practice can achieve as a team:

  1. A greater focus on patient satisfaction and development of their clinical services that patients are prepared to pay for because it meets their needs more efficiently and effectively;
  2. The skills to make better decisions faster;
  3. Greater financial literacy and increased profitability of up to $80,000 per annum per full-time equivalent provider;
  4. The ability to work on, and not just in the business. This empowers your staff and the practice to grow organically and develop to their full potential;
  5. Having a strategy that is more focused on “earn while you sleep” instead of “eat what you kill” income, which makes your practice more valuable when there comes a time to sell;
  6. An ability to profitably sell their practice. On average a 10% interest in their practice can sell for up to $300,000, with a 30% p.a. return on investment after restructure;
  7. Excellent passive income i.e. our unique market intelligence helps you achieve the highest market value and best terms and conditions for consumables, pharmacy, pathology and allied rents that are legal, ethical and sustainable;
  8. A significantly lower level of industrial disputes, employee on-costs and compliance from payroll tax, employee super, WorkCover, Independent Contractor Act, Fair Work, and other employer legal obligations;
  9. An asset protection structure so you can sleep well; and
  10. The best structures that could reduce a tax bill by up to $20,000 p.a per full-time equivalent provider.

*These are the average results of our clients who have successfully implemented all elements of our restructuring program. Results may vary more favorably depending on the size and nature of each practice. In this sample, the average practice fee income ranges from a $1.5m to $10m p.a. No job is too big or small to receive these benefits. From over 30 years of national experience on tried and tested ideas that actually work, you too can achieve and enjoy the peace of mind these benefits can bring to you and the practice.

Our Promise

Our benefit to you must significantly exceed your investment in us. Our guarantee is if we both believe we can increase your income and/or reduce your risks, we will work for you. Pre-approved affordable finance is available if necessary to practices who would like to know more.

 

Why is it critical to restructure right now?

 

Setting up new systems, training and business structures takes time. The cost benefits of restructuring are immediate upon implementation.  Wherever you are in Australia, contact us now at pa@healthandlife.com.au or 1800 077 222 for an obligation free assessment with our principal adviser and Founder David Dahm, to see if we can help you achieve your practice goals. For more information about us, visit www.healthandlife.com.au. For over 30 years, across Australia, we have worked with over 1200 practices like yours. We understand your practice and your industry. We do more than just your tax return. Ultimately we are about ensuring you have financial security. Click here more information about the restructuring time table.

For more insights visit our blog.

About me: David Dahm BA (Acc.), CA., FCPA, CTA, FFin, CPM, FAAPM, FAIM, FGLF.

Chartered Accountant, Chartered Tax Adviser, Registered Tax Agent, Former AGPAL Surveyor 10 years of service

David Dahm is CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not for profit project the International Healthcare Standards and Ethics Board (www.ihseb.org)

After a serious work related car accident in 1989, and nine operations later I continue to be a patient and provider advocate. I enter my third decade as a national Chartered Accountant for Medical and Healthcare practices in Australia. I am a former 10-year Australian General Practice Accreditation surveyor. I come from a medico family. I have served on the AAPM national Board and was the inaugural national Chair of the Certified Practice Manager CPM post nominal. I continue to provide accounting tax and practice management advice to many practices all over Australia.

You know who you are and I thank you for this real honour and privilege to serve you and your community through you. Note, I am not a lawyer please seek appropriate legal and accounting advice. This information is for general information and discussion only.

BREAKING NEWS – "David, should I fire my young GP Registrar?!"

Breaking News – Latest update 1st March 2015

 

We continue to express concern about the viability of training positions, that the new 2015 national minimum terms and conditions impose on practices. All GP registrars must now be employed. We note the 2015 national minimum terms and conditions wages are on average 30% higher than the Award. Special Fair Work friendly employment contracts need to be signed by all Registrars and contractor arrangements are disallowed.

Practices should speak up on this issue. We understand that this is not part of the Fair Work Act other than, it is being enforced by the training program that all Registrars are employees. It would have been great if Registrars to have the option to consider an alternate non-employee arrangement that are more favourable to both parties. This would ensure more training places were available.

We question why the training program plays an  industrial role given no other education provider in Australia does so for training accreditation purposes. With the disbanding of the General Practice Education Training body and this function now being referred back to the Federal health department, there is a clear opportunity to have this contentious issue resolved as it is not the role of the Department to legislate industrial matters.

More importantly we are receiving many reports training practices are withdrawing their interest in offering 2015/16 places.

Practices are unnecessarily undertaking a higher medico-legal risk. Furthermore they are being financially penalised. They are required to pay on a percentage of gross receipts if it is higher than the prescribed hourly wage rate. Salaries can range from $70,000 (Term1) up to $123,000 p.a. (including employer on costs e.g. employer indemnity, Workcover and payroll tax) for a final year Registrar.

Clearly Registrars that see fewer patients per hour e.g.3 per hour are affected most by this outcome. The impact of the Medicare rebate freeze and any other funding cuts should be carefully taken into consideration. The key is  to have a very efficient program and a careful recruitment and selection process.

Email our office at pa@healthandlife.com.au if you would like to discuss the business case for undertaking registrars.

Breaking News – Latest update 10th January 2015 – Stop Press!!

On the 20th December 2014, we published our concerns about the new registrar rules.

This includes our long held concerns about the nature of the employment and contractor terms.

We feel total vindicated after a Training Organisation had published their response shortly after our press release quote:

“Dear Registrars, Supervisors and Practice Managers,

Good news! 

Following our representations to GPSA and GPRA today, we are advised that:

Both GPSA and GPRA are happy to agree that all contracts signed on or before 15 December 2014 are honoured and legally binding, and cannot be overwritten by the new NTCER.  If the practice and registrar wish to renegotiate their contracts then that is up to them, but unless they do that, the existing contracts stand.

With the exception of GPT1 and GPT2 registrars who must be employees: you may continue with contract agreements already entered into prior to 15 December 2014 and for the 2015.1 placement.  However, please be sure to plan for employee agreements thereafter.

IMPORTANT:  We advise that the option provided to continue under contractor agreements is not to be taken as a recommendation or advice by GP Synergy to do so.  If the parties (training practice and trainee) elect to undertake a contractor relationship, it is recommended that each considers their circumstance and obtains professional advice pertaining to taxation and regulatory issues including superannuation liability, indemnities, insurances and other factors that may be material to the contract. This is to ensure that each party is compliant with the regulatory environment and is suitably protected.

Kind regards,

John Oldfield Chief Executive Officer”

GP Synergy (NSW) On Sat, Dec 20, 2014 at 6:54 PM

We feel this statement only validates our concerns that it is not the role of a training program to interfere on how trainees are employed. So we welcome the above response. Please read the rest of our article below and then check with your adviser and training providers before taking any action.

BREAKING NEWS!  “David, should I fire my young GP Registrar?!”

 

(published 20th December 2014 2am)

 

– Four important things to consider

Just when I thought, I could rest my keyboard for the Xmas break a serious problem has surfaced this week affecting all young general practice registrar training positions.

All week the phones and emails had been running super hot at my office from practices enquiring about whether to withdraw their offers to 2015 GP registrar trainees. I have some good news. However, there are also some challenges.

The change may threaten the actual viability of future training positions. This includes a practice’s succession plans. Practices that have invested heavily in new consulting rooms in the hope of securing the “tsunami” of GP registrars, are maybe in for a rude shock.

  1. General practice hit with another big blow!

1.1 The first blow: Significant changes to Medicare

Practices are facing a decline in patient numbers. Please see How to beat the $5 rebate. This is due to the 1st July 2015 proposed $5 Medicare rebate cut. In addition, there is a four year Medicare price freeze on rebates and the new 10 minute rule for item 23 consults starting on 19th January 2015.

1.2 The second blow: 2015 New National Minimum Terms and Conditions (NMTC)

Great practices train our future generation of hardworking young trainee general practitioners. Many in Australia this week would have received an email on Monday. Please see http://bit.ly/1w6Nvz5 from the General Practitioners Supervisors Australia (GPSA)in relation to the new 2015 NMTC’s.

The NMTC’s is just like a collective union agreement except it is not a legally binding at law. It is unenforceable. It is essentially a tripartite document between the Australian Medical Association (as facilitator), General Practice Registrar Association and General Practice Supervisor Australia.

The devil is in the detail. There are some good things and also some challenges.

For example, a new requirement, is that wages to move in line with the Medicare Benefits, schedule which is currently being cut or frozen. The Fair Work Act that does not allow an employee to be worse off as a matter of principle. The Fair Work Act calls this the Better Off Overall Test (“BOOT”).

Like many of the pseudo collective union agreements, they can be negotiated to a point. We understand the NMTC is not a collective agreement. However, it seems to force the same outcome just like a collective agreement. It prevents employers from individually negotiating different arrangements between employers and employees. Under the Fair Work Act, this is called an Individual Flexibility Agreement. These are legal and supported by the Act. 

They must not violate the Act or their relevant Awards.

 

Practice’s report that they are conflicted. They fear they will be disadvantaged by training providers if they do not toe the line. Furthermore, that they risk failing accreditation for non-compliance or financial ruin with these industrial terms. The NMTC’s arrangement is unusual and unique to the healthcare industry. Sometimes NMTC’s may do more harm than good. It is a conflicted process.

 

NMTC’s can become too complex or expensive to implement for a small practice. Inevitably this means fewer training places are on offer. Ultimately this forces our local young doctors overseas.

If a practice does not comply, with the new National Minimum Training Conditions by February 2015, then a trainee’s work experience will not be accredited. All trainees must now be employees. This is a change for Advanced trainees. Significant employment on-costs such as payroll tax, super and hidden worker entitlements, administration and accounting costs will render such arrangements unviable for practice owners.

2. How are practice owners reacting!?

We all need time to digest this news. Overwhelmingly, the initial reaction is the new arrangements for many practices are they are simply unsustainable, especially in light of the new Medicare changes. We have received many reports and calls to advise on whether to cancel offers of training for 2015.

A range of concerns was raised last week:  

  1. “Why only 2 months short notice” – “I cannot afford it. I want to cancel all my 2015 training positions?”
  2. “Why the lack of consultation with practice owners?”;
  3. “Is the Medical Practitioners Award 2010 relevant?” If I do comply with this request will I run the risk of being prosecuted with a fine up to $51,000 per incident under the Fair Work laws? Is it worth all the trouble and expense?”
  4. “Why are now all trainees from Term1 to Advanced Term forced to become employees even though they are happy with their existing employee or contractor arrangements
  5. “Do these training bodies or organisations have the legal authority to unilaterally enforce these arrangements between consenting employees and employers?”; and
  6. “Many conflicting opinions continue to exist surround whether such arrangements comply with the Medical Practitioners Award and Taxation laws, is there a better way”.

With the best of intentions to seek some clarity, I had contacted midday yesterday, the National Chair of the General Practice Supervisors Australia– Dr Bruce Willet.

“Practices and registrars who have signed a contract in good faith before the release of the NTCER on 15 December 2015 should not be forced to renegotiate their contracts.”

Chair – December 2014 5 pm eNews for GPSA Member

3. There are 4 simple steps to solve your concerns….

3.1 There is time!

The good news. There appears to be a 12 month moratorium, so you do not have to withdraw any offers. Just make sure all offers are signed and agreed by all parties in writing. Our best advice also get the monitorium in writing from your local training provider;

3.2 Understand your arrangements – get independent legal advice if you have to.

 

The following article, should answer concerns about the difference between Employee Registrars v Contractors and the Awards;

 

https://www.healthandlife.com.au/what-we-do/news-and-archives/employee-v-contractor-and-gp-registrars/

Make sure all your advice is in writing. Don’t rely on opinions from professional bodies. Ask them to identify their legal advisers and opinion’s in writing with appropriate references. Please note we are not lawyers and are simply assisting you in asking better questions from your advisers.

3.3 Do not be afraid to sign a contract!

You should have a signed employment contract or agreement. Do not leave any room for doubt. It is a big risk to leave arrangements based on a “verbal misunderstanding”. It is an accreditation requirement if you want to rely on your existing arrangements and not the new 2015 NMTC. Put everything in writing and sign it;

3.4 Do not re-invent the wheel, “it is cheaper and can be more effective”

For a full list of our templates see

https://www.healthandlife.com.au/what-we-do/services-peace-of-mind-solutions/specialised-services/products-for-medical-practices/templates/

This should be a simple way to get everyone out of a tight spot. These can be customised to meet where commercially possible the National Minimum Terms and Conditions.

Our research…

We had extensive verbal written dialogue at a national level with the Federal Australian Medical Association, General Practice Registrar Association and General Practice Superviser Australia and the Federal Tax Office especially in the last 12 months. These agreements have been also been reviewed by the soon to be defunct the national General Practice Education Training Program (GPET) that oversees the training bodies.

4. Where to from here?

For more information, contact our office at pa@healthandlife.com.au or 1800 077 222 for a no obligation chat,  with David Dahm our CEO and Founder of Health and Life – national Health Practice, Tax and Accounting Advisers since 1992. Alternatively visit our website at www.healthandlife.com.au.

Please consult us or your legal adviser before acting on any information. Please note we are not lawyers and are simply assisting you to ask better questions from your advisers.

If you are seriously considering the immediate positive benefits of a practice restructure or changing accountants who better understand your needs, we hope when you click on this link it will help.

Join our discussion on Linked In for further updates or keep watching this space.

For more insights visit our blog.

About me: David Dahm BA (Acc.), CA., FCPA, CTA, FFin, CPM, FAAPM, FAIM, FGLF.

Chartered Accountant, Chartered Tax Adviser, Registered Tax Agent, Former AGPAL Surveyor 10 years of service

David Dahm is CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not for profit project the International Healthcare Standards and Ethics Board (www.ihseb.org)

After a serious work related car accident in 1989, and nine operations later I continue to be a patient and provider advocate. I enter my third decade as a national Chartered Accountant for Medical and Healthcare practices in Australia. I am a former 10-year Australian General Practice Accreditation surveyor. I come from a medico family. I have served on the AAPM national Board and was the inaugural national Chair of the Certified Practice Manager CPM post nominal. I continue to provide accounting tax and practice management advice to many practices all over Australia.

You know who you are and I thank you for this real honour and privilege to serve you and your community through you. Note, I am not a lawyer please seek appropriate legal and accounting advice. This information is for general information and discussion only.