What am I doing wrong? How does a practice keep up with practice overheads and continue to provide quality patient care?

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The recent Medicare increase is equivalent to a wage earner receiving a 1.5% p.a. pay rise after a decade of pay freezes.

Practices will either have to cut costs or work longer hours, risking burnout.

On 1st July wages increase up to 3.5% but Medicare increases by less than 1.5% after a long freeze.  

The Medicare rebate will increase by 55c for standard GP visits from July 1.

For a list of other item numbers, including specialist items, that will increase from 1st July and beyond see the Fact Sheet Medicare Indexation Schedule The key question arises; how does a practice keep up with Fair Work wage increases and not affect patient care?

It is important to begin by considering why you own a practice, or work for one.


Mark Bouris has a national TV series called The Mentor. A multi-millionaire businessman, Bouris has shared some insights into the factors shared by all of the struggling businesses he sought to turn around. These can equally apply to any profession.

“I think people go into business because they think it’s a lifestyle that they’re going to achieve, or they were a good mechanic or a good skilled trades-person, for example, and they just think that they’ll be good in business doing that. But there’s a difference between being a good plumber [or Doctor or healthcare practitioner] and being in the business of plumbing… they’re two different things.”

According to Mr Bouris, the common issues he saw among the businesses he worked with on the show (and in others he has seen more widely, particularly among family businesses), result from a failure to act as businesspeople and implement business-minded ways of working.

These problems, he said, include:

  • A lack of structure
  • A lack of business systems and processes
  • Not holding regular planning and strategy meetings
  • Failing to keep proper records
  • Being under-insured

Focus on improving patient care, alternate income, productivity and reduce practice overheads waste.

Some key areas for health practitioners to review are:

  1. Get your strategy right! – Ready, Fire, Aim


The most important thing to do is to get your strategy right – start with an end in mind. Ask what the practice should look like. For example; “our practice will be multi-disciplinary in five years with five full time equivalent practitioners providing holistic 24-hour care”.

Ever heard the expression, “ready, fire, aim?” I frequently hear people use those words to describe how their organisations operate. I am always surprised at the number of people who are almost boastful about being part of a “ready, fire, aim” culture.

This refers to simply reacting to something and taking immediate action, before thinking it through very thoroughly. Like everything, taking quick action has its good and bad side. The key for success is to think things through carefully.


The Managing Complex Change Model (M. Lippitt, 1987; T. Knoster, 1991)  

Do not be afraid to ask for external help from colleagues, practices, and advisers. Making the wrong decision can be very expensive, like taking the wrong road when you reach that fork in the road.

  • Structure – do you have the optimal and most sustainable business and legal structure?


Your business structures should inherently promote good succession planning. At some stage, you will have to semi or fully retire.

Your business structures should provide the following to prospective practice owners:

  1. Succession planning-friendly
  2. Fair reward for effort and risk – i.e. passive income investment-friendly
  3. Peace of mind – providing asset protection
  4. Scaleable – it should not matter what size the practice is
  5. Tax friendly

Some practice structures do achieve remarkable results. However poor implementation or inadequate understanding of them may lead to their undoing – the devil is in the detail.

Recent tax audit activity is of concern, but is also an opportunity if you grasp the fine details. Note the example provided below.


Alternate income – time to diversify

Go big, boutique or broke – the reality is for many practices, sub-specialising is key to success, whether it is skin clinics, child and women’s health or obesity clinics.

  • Healthcare screening and prevention should be the new norm

It is interesting to note that in future, increasing amounts of money will go towards healthcare screening and preventative health activities. Practices need to continue to focus their efforts in this key area. Patients are more likely to trust and use a practice that is proactive than one that is merely reactive. Promoting patient continuity is key; see Keeping the same doctor reduces death risk, study finds.

  1. Reduce Bulk Billing by 10%

This is one of the hardest measures for practices to take. Yet many practices who do have a great mix billing policies never look back. It can improve patient engagement and satisfaction. Patient gaps can be kept affordable.

Why not simply continue to bulk bill 100%? There is no point if your practice survives and yet patients die. This may sound melodramatic, but if you continue along this path eventually patients will suffer from a lower quality of services. In the end patients will be harmed if providers are having to see more and more patients in less time, and excessively cut costs to stay afloat, causing a decline in front-line services.

We are already seeing more Medicare audits where doctors have to pay back substantial amounts of money for ‘inappropriate services’. In the absence of any Medicare Audit “proof of appropriate service” guidelines, this is a real risk for the future. The less attention a practitioner pays to documentation the more they are at risk from a complaint from Medicare, a competitor or staff member. But when you reduce bulk billing you are less exposed to the possibility of Medicare audits.

Systems – are we doing the right thing the right way the first time?


Working smarter is the key.

Many new, effective low-cost systems are available to help you monitor patients and staff. These will help keep everyone on the same page.

Get good advice from experience consultants and advisers who have a track record. It can be very time- consuming and expensive if you get it wrong. Time is your most valuable commodity. Watch your key numbers and receive timely monthly advice. It is a bit late to change things after you see your accountant 12 months after the fact.

See our A Powerful New Way to Manage your practice for some simple and great ideas.

Staff productivity – are the staff doing what they could and should be doing, and are they providing value to the practice?

Consider outsourcing if it gets all too hard – it is cost effective.

It is important staff are set clear outcomes and are provided with timely and meaningful feedback. Interacting with patients and people is their key role.


Many back-office roles have become hard to fill, requiring a high level of expertise and ongoing monitoring. So much so that it has now become much cheaper than a bookkeeper to outsource or automate these critical functions, saving much valuable time and money. This frees up your staff to work ON your practice and not just IN it. At Health and Life, we offer automation and outsourcing services, from calculating the provider payroll, to accounting compliance and monthly financial reporting, that is cost effective. We will be soon also be able to provide you with an opportunity to outsource your ongoing legal compliance.

For more information see “Fixed Fee Financial outsourcing of your bookkeeping and or accounting”.

For these and many other cost effective and practical solutions or any other assistance please do not hesitate to call David Dahm for a free no obligation consultation on pa@healthandife.com.au or 0407 620 120 on how we can help you.


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