Cuts to Medicare funding of short visits to GPs, which are being fought by the powerful doctors’ lobby, might cost corporate medical giant Primary Health Care millions in revenue and significantly hit profit, a healthcare analyst has found.
A drop in the scheduled fee paid to doctors for visits that last less than 10 minutes from $37.05 to $16.95 is part of a revised Medicare funding plan put forward by Prime Minister Tony Abbott in December.
Mr Abbott also revealed a freeze on Medicare rebates to July 2018 and a $5 co-payment on doctor visits by adults and non-concessional patients under a plan that would save $3.4 billion over three years.
The Australian Medical Association and other doctors groups are fighting all elements of the plan but ramped up recently their campaign against the funding cut for short visits, before the change is introduced on January 19.
AMA president Brian Owler has warned that doctors will pass the funding gap on to patients in the form of out-of-pocket costs, so their practices can remain financially viable.
Underlining the financial incentive for doctors to fight against the changes, Credit Suisse analyst Saul Hadassin called the pricing reform the “most material change in a decade”.
Analysts have warned previously that “high-volume” operators of bulk-billed medical centres, like Primary, would be hit hardest by the changes.
Mr Hadassin’s analysis showed if about 20 per cent of Primary’s doctor visits in 2013-14 were between six minutes and 10 minutes, this would equate to $13 million in lost revenue and a 4 per cent fall in earnings before interest and tax.
Assuming a third of attendances were 6 to 10 minutes, EBIT would fall by about 7 per cent, he said.
“While Primary has the ability to claw back some of this lost revenue through implementation of co-pays for non-concession card holders, we do not believe these co-pays will be more than the $5 fee reduction that is due to commence on July 1,” Mr Hadassin said in a note to clients.
Primary declined to comment.
Shares in the $2.4 billion company have had a volatile 12 months and are down 8 per cent on this time last year. The stock had lost 5¢, or 1.1 per cent, to $4.61 at 1:46pm AEDST.
The AMA has created posters and pamphlets for display in doctors’ waiting rooms that encourage patients to complain to new Health Minister Sussan Ley. The lobby group will also hold meetings and rallies of GPs in February.
The Royal Australian College of General Practitioners posted an online petition on Change.org on Wednesday calling on Ms Ley to “quit targeting general practice and the health of all Australians”.
The petition had about 8500 signatures on Friday afternoon.
Source: The Age