As a self-employed General Practitioner you are in control of how you charge your patients, unless your practice has restrictions. This means you can choose to bulk bill a patient by billing Medicare directly or privately bill patients so they receive a rebate on part of their consultation fee.
But what is the best way for GPs to bill patients?
Here are some questions we are often asked about the financial aspects of a GP’s billing model.
What is the difference in my take home pay?
This will depend on several factors, including the fee you set, the service or facility fee you pay to the practice and the impact of government incentives like the proposed triple bulk billing incentive.
Case study 1
Dr Den is a GP at Glen Medical Centre and is required to pay a service fee of 35% to the practice. Dr Den sees four patients per hour and bills a standard consultation (Item 23) for each patient plus a mental health consultation (Item 2713) for one of those patients. Let’s compare Dr Den’s take-home pay under different scenarios:
Scenario A: Private Billing
-
- Dr Den charges a private fee for all consultations.
Scenario B: Bulk Billing (Without Triple Incentive)
-
- Dr Den bulk bills all consultations, receiving only the standard Medicare rebate.
Scenario C: Bulk Billing (With Triple Incentive)
-
- Dr Den bulk bills all consultations and receives the standard Medicare rebate plus the tripled bulk billing incentive for eligible standard consultations (Item 23 in this case). Note: Item 2713 is assumed not eligible for the triple incentive in this example and is scheduled for removal Nov 2025.
Here’s how the hourly earnings compare:
| Billing Scenario | Total Billings Received | Less: Service Fee (35%) | Dr Den’s Take Home Pay |
| A: Private Fee ($597 total fee) | $597 | ($208) | $389 |
| B: Bulk Billed (No Incentive) | $253.10 | ($88.59) | $164.51 |
| C: Bulk Billed (Triple Incentive) | $345.65 | ($120.98) | $224.67 |
As shown, private billing yields the highest take-home pay for the GP. While the triple bulk billing incentive significantly increases the bulk billing take-home pay compared to no incentive, it still falls considerably short of the private billing scenario in this example.
Detailed breakdown for Scenario C:
Patient 1 (Item 23): $42.85 rebate + $21.35 incentive = $64.20
Patient 2 (Item 23 + 2713): ($42.85 rebate + $21.35 incentive) + $88.85 rebate = $153.05
Patient 3 (Item 23): $42.85 rebate + $21.35 incentive = $64.20
Patient 4 (Item 23): $42.85 rebate + $21.35 incentive = $64.20 Total Bulk Billed with Incentive = $345.65
Private fees and gaps: When private fees are charged, patients receive a Medicare benefit back, but there is usually an out-of-pocket cost, known as the ‘Gap’. Typical private fees and gaps might look like this:
| Medicare Item (GP) | Example Private Fee $ | Medicare Benefit $ | Example ‘GAP’ $ |
| 23 | 103 | 42.85 | 60.15 |
| 36 | 185 | 82.90 | 102.10 |
| 44 | 275 | 122.15 | 152.85 |
| 2713 | 185 | 81.70 | 103.30 |
Can practices afford for GPs to bulk bill?
The sustainability of a practice often depends heavily on the billing model adopted by its GPs. In our experience, the costs to run a practice may not be covered if doctors predominantly bulk bill, even with incentives.
Case study 2
The Practice Manager of Glen Medical Centre and the accountant have analysed the practice costs and determined that the cost for each consulting room is $110 per hour. These costs include rent, overheads, wages for the administration and nursing staff and other operational expenses. Using Dr Den’s hourly billing from Case Study 1, let’s see the impact on the practice’s bottom line:
| Billing Scenario | Service Fee Received by Practice | Less: Costs per hour | Practice Profit/(Loss) per hour |
| A: Private Fee | $208 | ($110) | $98 |
| B: Bulk Billed (No Incentive) | $88.59 | ($110) | ($21.41) |
| C: Bulk Billed (Triple Incentive) | $120.98 | ($110) | $10.98 |
The difference for the practice is stark: a $98 profit per hour when Dr Den private bills compared to a significant loss ($21.41) when bulk billing without incentives. The triple bulk billing incentive turns the loss into a small profit ($10.98) in this specific scenario. This analysis highlights that even with tripled incentives, the service fee generated from bulk billing ($120.98) may still be below the level required ($140 in the original example) for the practice to achieve its desired sustainability or profitability targets.
If we assume Dr Den works 8 sessions a week for 46 weeks of the year, the annual difference in practice income between private billing and bulk billing (even with the triple incentive) could still be substantial (approx. $160,000 difference between scenario A and C profit per hour over the year).
Some practices operate as dedicated bulk-billing clinics. Their viability often relies on high patient volume, long working hours for doctors and minimal overheads, which some practitioners feel could potentially compromise patient care.
How should I decide on my billing model?
Choosing your billing model requires careful consideration beyond just ‘winging it’. Key factors include:
- Take home pay: Ensure you are compensated fairly for your expertise and the significant investment made in your qualifications. As Case Study 1 illustrates, private billing generally offers higher personal income compared to bulk billing, even with incentives.
- Practice sustainability and profits: Consider the financial health of the practice. As shown in Case Study 2, widespread bulk billing can make it difficult for practices to cover costs, let alone invest in facilities or staff. Practices may need a certain level of private billing to remain profitable and may factor this into agreements.
- Patient situation: Many GPs consider their patients’ financial circumstances and may choose to bulk bill individuals facing hardship, offering a mixed billing approach.
- Government incentives: Factor in available incentives. The triple bulk billing incentive improves the financial return on bulk billing for eligible consultations. Additionally, other incentives exist, such as potential quarterly payments for practices where all doctors bulk bill every patient (though this requires universal bulk billing across the entire practice).
If you’d like support choosing the best billing model suited to your practice, contact your local William Buck Health Team Advisor.
