Business structures are the most common way of organising the flow of patients, the systems and equipment that is needed to care for them, the care team and the money that pays for it all.
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1. Threat of new entrants: establishing a new GP practice is as easy as hanging out a shingle with the exception that you need to have a medical qualification and provider number.
This restricts new entrants more than in most other sectors. However, technology and changing patient expectations could change the foundations of general practice care more quickly than we might think…so nothing is assured long-term.
2. Bargaining power of buyers: many patients use the MBS as a signal about what healthcare should cost. In bulk billing environments, the patient is separated from the cost of the service.
3. Threat of substitutes: GP care can be replaced by non-VR doctors, specialist physicians, some nursing activities and functions of allied health.
4. Bargaining power of suppliers: private health insurers have recently started making moves into primary care.
5. Rivalry among existing competitors
General practices can be run as either:
Sole trader: An individual who runs a business in their own name.
Partnerships: One or more persons in business together with a common view to profit. Partnerships are usually formed via a partnership agreement, which sets out how conflicts will be managed, partners admitted and the relationships dissolved.
Associateship: Two or more independent doctors agree to share facilities and expenses. No profit sharing or joint goodwill is created in the association. Prices charged for services must also be set independently to avoid accusations of collusion.
Assistantship: Doctors can be sub-contracted and included in a business via an assistantship agreement. The agreement needs to clearly define how the relationship will work so that the doctor is not deemed to be an employee by the ATO.
Company: A registered entity under Australian Corporations Law. Companies are legal entities discrete from their founders. For this reason founders can protect their liability to their share of capital invested in the company.
A company is often mostly suited to larger medical practices. In many cases incorporated medical practices are run for the benefit of shareholders who are not themselves medical practitioners.
A trust is a very historic business format where trustees (can be an individual or company) carry on business activity for the benefit of others (beneficiaries). Frequently, trusts are used to hold assets which are then leased to incorporated medical practices or involved in partnerships.
Some practices are owned and managed by the practice principle or practice partners. They usually hire spouses or partners to do the basic management tasks under their direction.
This model requires the doctor/s in charge to take considerable time each week to attend to business management decisions. It also means the onus is on them to stay up to date with legislative, funding and other changes in the business environment.
They need to be exceptionally competent with financial matters, team development and systems to ensure they run an efficient and effective operation which satisfies staff and patients.
Some practice owners hire practice managers to undertake most management functions.
It is becoming increasingly common for professional practice managers to have a component of their package related to profitability and growth targets. Many are even part of the ownership group.
This involves hiring professional management groups to undertake tasks such as payroll, accounts, rostering, staff management, purchasing consumables, managing IT and submitting compliance paperwork.
This model ensures practice owners get the right people and right skills when they need them.
Outsourced management can occur in even very small practices through contractual agreements with external groups.
In the case of large corporate medical centres, the outsourced management effectively creates a central 'corporate management' group that takes a margin from each site to pay for a head office.
|A. Self-management||B. Professional practice managers||C. Outsourced management|
Owner: up to 15 hrs/wk
Bookkeeper: 5 hrs/wk
IT Support: 2 hrs/wk
Senior receptionist: 30 hrs/wk
Owner: up to 6 hrs/wk
Bookkeeper: 3-5 hrs/wk
IT Support: 2 hrs/wk
Senior receptionist: 30 hrs/wk
Business strategy can be assessed by asking the 'Why' questions:
The business strategy of the Virtual Practice is to:
Having a clear business strategy will give you clues about the systems and business rules you should establish.
For example - if your 'why' is to provide hope to the hopeless, you will probably find yourself attracted to working in palliative care, mental health, infectious disease or with the disadvantaged. This will typically lead to business rules like:
Being clear about your 'why' is the best way of:
Always hire for a passion for the goals you share and the values you live by and train for skills if you need to.
Getting organisation across the team so clarity is achieved in relation to what everyone is supposed to do is critical.
Primary Healthcare Networks (PHNs) replaced Medicare Locals on 1 July 2015. PHNs receive funding from the Commonwealth to:
Divisions of General Practice came about in the 1990s in response to the fragmentation of primary care and the need to organise GPs' responses to changes in technology and government policy.
They were funded by the Commonwealth to provide regional data, professional development, support for rolling out new business systems and advocacy.
Divisions still exist in some regions, however, with the advent of Medicare Locals they were defunded by the Commonwealth in an attempt to broaden the participation in primary healthcare planning and delivery to groups outside of medicine.
Before business owners draw income from their companies they should:
Effective management of finances reduces the likelihood of Medicare fraud
Delivery is a trade-off between time, cost and extent of output.
You can always achieve one, often two, but almost never three of these things.
This affects the quality of the output.
There are simple things you can do to keep your patients and clinicians safe:
Insurance is a very common form of risk mitigation, however, even if you have insurance you still need to manage risk — if the insurer can show you did not follow reasonable steps, you can be left exposed.
Health care is increasingly being asked to account for itself.
This scrutiny is entirely novel. In addition, new equipment, new categories of worker and new mechanisms for providing healthcare are creating options for substitution of care.
The reality is that medicine is facing the sharpest declines in real incomes it has ever seen.
This means that pressure in sectors like general practice, which have even less of a mystique than professional cousins in surgery, is rising. Maintaining the status quo is almost a lost battle.
The real question in such changing times is how to minimise the fall? What can you do to improve your chances of building business success in primary care in such a changeable and price-contained market?
Change fatigue is endemic in healthcare. This is especially true for health professionals who wear more than one hat (e.g. as both a provider and a practice manager).
Long wait times for hospitals create an opportunity to provide additional chronic disease or speciality services to your community:
When do general practices fail as businesses?