Critical business issues facing practices now
18 July 2019 | Minutes to read: 4

Critical business issues facing practices now

By William Buck

As experts in the business side of medicine, we understand that time-poor practice owners tend to neglect the business side of their practice and sometimes their personal wealth building as well. With a new financial year having just commenced and changes happening to the way GPs do business, we share our thoughts on some of the top issues facing practices right now.

1. RACGP 5th Edition Standards for General Practice

The 5th Edition Standards make reference to guidelines on what you ‘must’ do and what you ‘could’ do. At William Buck we have added another point of what you ‘should’ do. In particular, Core Standard 3 deals with Practice Governance and Management.

This standard clearly notes that:

‘…to operate a business successfully, strategic thinking and business planning is as important as financial budgeting and reporting.’

The standard outlines what the practice could do in relation to the development of a strategic plan but falls short in making this a ‘must.’ In an increasingly competitive environment, whether you are looking for growth, planning for succession or just trying to survive, having a clear direction and plan for your practice is a key component to improving the business.

Another area where the strategic plan can help is with business risk management. The Standard clearly outlines areas for consideration being bookkeeping, IT risks, staffing and other issues. These areas are often ones where incidents and issues arise that cost the practice money.

We have been urging practice owner for several years now about the importance of viewing the practice as not just being about the doctors. The practice consists of financial, operational, patient, services and staff elements. Ensuring that all of these elements are working together efficiently will ensure that your practice hums like a well-oiled machine.

William Buck have been working with practices to develop and clarify their strategic plans. These plans have helped to provide vision for the practice. The process is ongoing but commences with a strategic planning day where all areas of the practice are considered, and the goals of the practice formulated. The plan then considers the strategy for how this vision will be achieved and, most importantly, what will be done – and by who – to put the plan into action.

Depending on the size of your practice, a strategic plan, including an alignment exercise and planning day typically costs less than $5,000 and has been considered a worthwhile investment by all those who have undertaken the process.

2. Changes to claw backs from July 1 – what should you consider?

Under the new Shared Debt Recovery Scheme, implemented on July 1, practice owners may be liable for fraudulent behaviour of doctors in their practice. Importantly these changes apply to billings from 1 July 2018.

While historically GPs were responsible for their own Medicare billing; new rules mean that if Medicare conducts a review and finds a GP breached the rules – or incorrectly billed patients – the doctor can effectively share 35 percent of any resulting liability with the practice owners.

We asked for comment from Antony Harrison, a partner specialising in the medical industry at Mahoney Lawyers in Brisbane for his thoughts on the changes.

All Medicare needs to show is:

  • A false or misleading statement is made
  • There is a relationship between the practice and the practitioner such that the practice could have controlled or influenced the making of that false or misleading statement
  • The practice obtained a direct or indirect financial benefit from the false or misleading statement or there are other factors that make it ‘fair and reasonable to do so’
  • It complied with certain procedural steps (including giving the practice a notice asking the practice to show cause why an amount should not be payable by the practice and not being satisfied with the response)

In addition to the 35%, the practice can also be liability for an administrative penalty up to $2,500.”

We asked Antony, from a legal practitioner’s perspective, what the top 3 things that GP practice owners should be doing to guard against the claw-backs. His response,

“Firstly, ensure that you keen and maintain proper records.”

“Secondly, ensure robust policies are in place that track the flow of information to and from the practitioner so that the practice can apportion blame, illustrating how the false or misleading statement arose. That will not, in every circumstance, prevent Medicare claiming the monies from the practice. However, it will give the practice the evidence necessary to apportion blame to the practitioner.”

“Thirdly, make sure the service agreement with the practitioner is robust enough to address the audit process and potentially allow the recovery of amounts (and costs) from the practitioner where the practitioner is to blame.”

As mentioned at the conference, practices have been struggling with the issues or whether doctors can potentially be considered employees or independent business operators and the issues around entitlements which may arise. The changes to the Medicare Claw Back provisions are just another demonstration of the importance of a robust service agreement.

3. Changes to wage rates – what can you do?

While the Medicare freeze may be over, as of July 1, you would have experienced increases to your biggest cost – wages. These wage rate rises will see your costs going up by 3 per cent, while Medicare rates will only see a 1.6 per cent increase.

The financial challenges of running a medical practice will not be disappearing anytime soon. William Buck recommends that you receive regular reporting on the financial performance of your practice. One service we offer is to benchmark medical practices.

Benchmarking is a great tool to compare yourself with other practices from both a clinical and financial perspective to identify gaps where you may improve, or leverage. As experts to medical practitioners in the health industry we have access to data to do comprehensive benchmarking.

If you need help with strategic and business planning, review of your service arrangements or ways to improve your financial performance in the new financial year, contact a William Buck Advisor today.

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