Fact Check: Benchmarking the 2025 $8.5 bn Strengthening Medicare ("Financial Suicide") Package
Which of these 4 Medicare Bulk Billing models is right for you?
Click HERE for full article in The Medical Republic
Bottom line: less patient access to doctors.
To comply with the new GP incentives, independent tenant doctors would have to become subcontractors, following practice owners' instructions, despite previously being able to set their own fees.
Source: Health and Life's Tenant Doctor ™
vs. Subcontractor* Analysis
Work More Until You Go Broke
Source: Health and Life's Tenant Doctor ™
vs. Subcontractor* Analysis
Work More Until You Go Broke
Is your GP medical practice at risk under the recent Strengthening Medicare with more bulk billing? Tenant Doctor practitioners will be forced to become an employee-like Subcontractor. GP's want the freedom to set their own fees and working conditions. They want to be valued. Practice owners want to ensure that they can fairly charge practitioners for support services, a concern also shared by the Royal Australian College of General Practitioners, which includes implications related to payroll tax. Ethically we have decided to release the evidenced-based financial facts so you can decide. Discover how the new Medicare package could force you to work longer hours while destroying your bottom line. Learn from a 30 year nationally curated GP benchmarks and modelling, how to protect your practice with the right business model.
See The Financial Impact(Medical Centre/Practice or Independent Practitioner) Work for someone else No Freedom and Flexibility
Tenant Doctor vs. Subcontractor: Financial Impact Comparison
When compared to a traditional Tenant Doctor Model, the Subcontractor Model (e.g. Medical Centre/Practice or Independent Practitioner ) is becoming financially unsustainable under the new Medicare incentives because it faces increased regulatory risks, potential employee misclassification, and complexities in Medicare billing under the new package.
| Key Metrics | Before 100% Bulk billing Medicare incentives Tenant Doctor™ Model (e.g. Landlord-Tenant) | After 100% Bulk billing Medicare incentives Subcontractor (e.g. Medical Centre/Practice or Independent Practitioner) | Variance |
|---|---|---|---|
| Patient Services | 5,000 | 6,000 | +20.00% |
| Average Fee per Patient | $103.81 | $83.05 | -20.00% |
| Bulk Billing Percentage | 80.00% | 100.00% | +25.00% |
| Average Gap Per Patient | $20.76 | $0.00 | -100.00% |
| Average Service Fee Revenue | $31.14 | $24.91 | -20.00% |
| Average Overhead Expense | $36.59 | $38.89 | +6.28% |
| Average Profit (Loss) per Patient | -$5.44 | -$13.97 | +156.63% |
| Average PIP | $6.78 | $6.90 | +1.84% |
| Total Profit/Loss Per Patient | $1.33 | -$7.07 | -629.89% |
| Break-even Point (Minimum no. patients/FTE) (to pay creditors) | 6,357 | 31,762 | +399.62% |
| Break-even Point (Minimum No. of GP's/FTE to pay creditors) | 1.3 | 5.3 | +316.35% |
Critical Financial Warning
Under the 2025 Medicare Package, subcontractor arrangements would require 5x more patients to break even compared to the Tenant Doctor model.
With the 100% bulk billing requirement, subcontractor models face a perfect storm of:
- Medicare's Inflation Problem: Rising Costs, Stagnant Rebates. For over three decades, Medicare bulk billing rebate rates have consistently failed to match inflation. They never have kept up with the cost of a cup of coffee (i.e. inflation). Medicare is not designed to keep up with inflation. This enables "third party" bean counters to influence the doctor/patient relationship.
- No ability to charge gap or out of pocket fees that keep up with inflation and new regulations e.g. "double tap fees" to recover payroll tax, facility or consumables costs
- 11.5% employee-like subcontractor employer super liability, 10% GST on all subcontractor payments plus deemed Fair Work leave entitlements
- Payroll Tax,ATO, Fair Work and Workcover audit risks
- Workforce shortage: The healthcare workforce shortage is a recruitment and retention challenge. Doctors, particularly GPs, resist being directed on how to manage their time. Moreover, the Medicare package offers no effective incentives to encourage GPs to increase their hours without compromising care quality, making it difficult to meet the additional demand. This will accelerate practitioner and staff burnout and reduce access to care.
The 2025 Medicare "Financial Suicide" Package: Expert Analysis
Reduced Access to your GP
Practitioner Burnout. GPs would be required to work longer hours, leading to burnout among practitioners. Practice owners will be forced to subsidise non-practitioner owners. Any workforce shortage or stress will reduce patient access to high quality care
Corporate Takeovers
Major GP disruption. Initially, non pathology owned GP corporate entities would acquire struggling practices at minimal or no cost.
Cutting Corners
To remain viable, everyone would be forced to cut corners on quality and service.
Legal Compliance Risks
Non pathology owned GP Corporates and their subcontractor practitioners face high risk ATO and Fair Work audits related to deemed employee-like contractors. Without a tenant doctor model, histroy has proven, they will struggle to pay contractor employee like taxes e.g. 11.5% employee-like subcontractor employer super liability, 10% GST on all subcontractor payments plus deemed Fair Work leave entitlements . They may go broke or be forced to sell.
Back to the future: The Tenant Doctor Solution
A proven and market tested Tenant Doctor Model allows practitioners to operate independently within a shared facility, maintaining control over their clinical practice while renting space and services. This setup is designed to be viable, tax compliant, reducing risks associated with payroll tax and work related audits. By automating service agreements and accounting systems, practitioners can privately bill and offer services on their own terms, potentially increasing profitability up to 25 x individual results may vary*. This model streamlines operations, reduces administrative costs, and enhances efficiency, allowing practice owners to focus on patient care
The Only Sustainable Way Forward
A focus on the right Tenant Doctor (practitioner) Business Model (even for non-pathology owned corporate practices) is the only sustainable way forward. This includes:
- Practitioners Free to bulk bill or fairly charge patients appropriate out-of-pocket fees
- Tenant Doctors being charged a fairer higher or lower service facility fee based on consumption pricing
- Practitioners can use a 24/7 automated accounting and tax service to assess whether they can afford to bulk bill patients. This system provides near real-time access to financial records via a personalised mobile device, helping manage shared practice costs. The Doctors Pay Calculator web app further aids in evaluating financial sustainability by factoring in various expenses. For more information, visit our Doctors Pay Calculator web app site
*Disclaimer: Use for discussion purposes only. Each practice must consult their professional legal, accounting and tax adviser before acting on this general information.
Industry Performance Benchmarks (2018-2024)
How does your practice compare to these industry standards?
| Revenue Metrics | 2020/2021 | 2021/2022 | 2022/2023 | 2023/2024 | Monthly (2024) | Annual Change |
|---|---|---|---|---|---|---|
| Patient Fees Earned/FTE | $417,537 | $496,269 | $530,130 | $519,044 | $43,253.65 | -2.09% |
| HIC PIP Payments/FTE | $40,664 | $38,361 | $40,555 | $33,890 | $2,824.19 | -16.43% |
| Other Income/FTE | $32,676 | $34,391 | $39,914 | $30,657 | $2,554.75 | -23.19% |
| Service Fees/FTE | $205,700 | $207,049 | $247,790 | $181,801 | $15,150.12 | -26.63% |
| Service Entity Revenue/FTE | $279,040 | $279,802 | $328,259 | $246,349 | $20,529.05 | -24.95% |
| Expense Metrics | 2020/2021 | 2021/2022 | 2022/2023 | 2023/2024 | Monthly (2024) | Annual Change |
|---|---|---|---|---|---|---|
| Net Receipts per FTE | $229,924 | $284,864 | $313,970 | $152,295 | $12,691.25 | -51.49% |
| Rent/FTE | $27,798 | $30,438 | $35,683 | $27,765 | $2,313.78 | -22.19% |
| Wages & Salaries/FTE | $91,995 | $98,738 | $121,116 | $93,819 | $7,818.26 | -22.54% |
| Medical Expenses/FTE | $7,944 | $8,565 | $12,384 | $9,124 | $760.31 | -26.33% |
| Superannuation/FTE | $9,394 | $10,602 | $13,665 | $11,136 | $927.96 | -18.51% |
| Profitability Metrics | 2020/2021 | 2021/2022 | 2022/2023 | 2023/2024 | Monthly (2024) | Annual Change |
|---|---|---|---|---|---|---|
| Operating Profit Margin/FTE | 34.10% | 30.57% | 29.54% | 25.74% | 25.74% | -3.80% |
| Variable Cost/FTE | $92,586.72 | $100,066.23 | $123,402.07 | $95,773.04 | $7,981.09 | -22.39% |
| Fixed Cost/FTE | $91,309 | $94,194 | $107,895 | $87,161 | $7,263.41 | -19.22% |
| Service Entity Expenses/FTE | $183,896 | $194,261 | $231,297 | $182,934 | $15,244.50 | -20.91% |
Want to see your practice's performance compared to these benchmarks?
Get access to our full 2024 Industry Benchmark Report and find out how your practice measures up and how many of your competitors are bulk billing.
Get Your Personalised ComparisonSave Your Practice from the Medicare "Financial Suicide" Package
Enter your business email to receive:
- Complete 2024 Industry Benchmark Report
- Tenant Doctor vs. Subcontractor detailed financial comparison
- 30-minute consultation with our Medicare package experts
- Legal strategies to optimise your practice structure
We respect your privacy. Your information will never be shared.
Do not waste valuable time. If you remain unsure contact us for no obligation video chat.
Trusted by Leading Medical Practices Across Australia
It is without hesitation I recommend the services of Health and Life under the wings of David Dahm. They have been instrumental in structuring our business and practice management, allowing us to run a well-oiled and legally safe medical practice."
"Tenant Doctor's guidance saved our practice over $120,000 in the first year alone. Their financial analysis was invaluable during Medicare changes."
"Health and Life's expertise has helped us attract and retain top doctors. We now find ourselves turning doctors away!"