General Practice Services in Australia
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Current trend in General Practice Medical Services
Overview
The General Practice Medical Services industry in Australia delivers essential medical services to all demographics. Over the past decade, industry has seen consistency in its growth, driven by an ageing population coupled by substantial government support through the Medicare system. The growth of the industry is projected to continue with the industry revenue expecting a compounded annualised growth rate of 3.2% over 2024-2029, reaching approximately $31.4b by the end of the forecasted date.
Core Drivers of the Industry
Several factors have been the key drivers in shaping the performance of the General Practice Medical Services industry. The recent COVID-19 pandemic stands out as a significant cause of revenue volatility. During the pandemic, there was a surge in demand for general practice services, especially with a rapid adoption of telehealth. In addition, increase Federal Government funding throughout the pandemic provided a steady revenue growth from 2019-2022, playing a crucial role in the stability and the expansion of the industry. Once vaccinations were implemented nationwide, the visits to a general practitioner fell in 2022-2024, resulting in a declining revenue. However, there still has been an overall growth over the past decade. From this, we are able to note that Medicare funding is a dampening factor to the aggravated volatility of the industry, caused by the pandemic.
Regarding industry outlook, it is predicted that the rising demand will fuel growth for GP services. Despite the expected overall population growth to continue, the population aged 65 and over is expected to grow at a fast rate which rises the median age in Australia. Older Australians are the largest contributors to revenue, as they require more prescription medications, general health check-ups and regular health consultations. This factor is a contributor to the projected revenue growth over the next few years.
So, what are the key factors to success despite the volatility in the market?
1. Developing a relationship with patients and referrers, making it more likely to generate repeated visits.
2. Price appropriately, ensuring that the prices requested from the patients reflect the patients’ capacities to pay.
3. Providing a wide scope of services tend to be more competitive than those that focus specifically on one area.
4. Producing quality service are likely to attract patients to return and also refer through the word-of-mouth.
Specific Product and Services Performances
Standard Consultations
During lockdowns, telehealth services helped maintain standard consultations (GP Standard Level B), as remote appointments became more common due to pandemic restrictions. This shift, along with increased overall demand during the pandemic, has boosted the revenue share of this segment in the recent years.
Enhanced Primary Care (EPC) Services
Despite this segment being relatively small, its revenue has grown in recent years, partly due to the increasing demand for mental health care across Australia, which was aggravated by the pandemic, further spreading the sense of isolation and anxiety, contributing the rise in revenue for EPC services.
After-Hours Medical Services
The increasing GP burnout, led to many doctors to prefer working only during normal business hours and thus, there has been a decline in GP consultations on weekends, public holidays and after regular hours. Consequently, this segment has continuously shrunk as the industry shifts away from the heightened demand experienced during the pandemic.
Other GP Consultations
Various types of consultations such as short, long and prolonged GP visits, as well as specialised services such as psychological strategies, family therapy, acupuncture, pregnancy support and telehealth, shifts attention away from the traditional GP consultations, thus the demand for other GP consultations have increased.
Factors influencing General Practice Medical Services
Influencing Factors of Demand: Age
1. Revenue from people aged under 25 has declined as the younger population became healthier.
2. People aged 24-44 are generally fit but still have been a stable market for GPs.
3. People from 45-64 are more conscious of their personal health and healthier habits.
4. People aged over 64 are still the dominant market segment.
Location of General Practices and their Impacts
General practices are mainly concentrated in densely populated urban areas, particularly in New South Wales, Victoria and Queensland where the population is highest. The distribution of GPs tends to align with the age demographics, and thus, these states with an older population have higher demand for medical services. Conversely, the Northern Territory, with a younger population, has fewer general practices.
In addition, the less populated regions like Western Australia, Tasmania and the Northern Territory, despite the number of practices increasing due to government programs such as the GP Super Clinics Programme, the growth of telehealth services since the COVID-19 pandemic is challenging the expansion of practices in these rural areas.
Assistance Available to the Industry
Medicare, Bulk-billing, The Medicare Benefits Schedule (MBS), Health Care Homes Program, General Practice Rural Incentives Program, The Royal Australian College of General Practitioners, Industry Associations, The Rural Doctors Associations of Australia and The Australian Primary Health Care Nurses Association.
Trends that Impact Industry Costs
Past few years, the profitability of the General Practice Medical Services industry has seen growth, with both large and small practices achieving notable margins. The smaller practices’ profits may appear understated as many self-employed GPs draw their income directly from their profits, however, the larger practices enhance profitability by leveraging economies of scale, allowing them to see more patients in shorter appointments.
Despite high wage expenses of GPs, innovations such as HealthEngine and telehealth have helped to reduce costs associated with administrative staff, further improving profitability. This can also be seen as HealthEngine, which is an online booking system, has decreased the need for administrative assistance, thereby lowering wage costs.
Meanwhile, rising inflation and increased demand have pushed up the costs of medical supplies. During the pandemic, the need for items such as the face masks and disinfectants caused a sharp increase in these expenses, and ongoing supply chain issues have continued to exert upward pressure on costs.