We regularly hear from GPs who are keen to move into a mixed billing practice, but who also want to work in a building that is purpose-built, modern and spacious. Why is it so hard to find private billing clinics with modern infrastructure?
I recently visited a new mixed billing practice in a very prestigious inner suburb of Sydney. I was excited that we had found a practice that was 85% private billing in a great location. The practice had been established for over 20 years, had a stable team of senior doctors and a strong patient base. I was sure that this practice would tick all the boxes.
But when I arrived, I stumbled around a small, dark and dinghy suburban shopping centre that hadn’t been renovated in 30 years (or so it seemed). I finally found the practice and fortunately it was newer and tidier than its surroundings, was relatively spacious and well set up. But it wasn’t comparable to the facilities in some of our outer metropolitan bulk billing practices with new, purpose-built facilities, dedicated parking and a window in most consulting rooms.
Why don’t the best private billing practices have best infrastructure?
Let me suggest a few reasons why:
- Inner suburban practices are often in locations where real estate is expensive and space is at a premium.
- At the time that those practices were established, most practices were operating out of a federation style house and/or were relatively small with two or three doctors. Having a smaller practice was the norm and it was relatively easy for doctor owners to make a good living out of that setting.
- Expensive inner suburbs usually don’t experience strong population growth and so the opportunity to new doctors to help grow the business may be limited.
- Renovations are often expensive for heritage style properties and seem unnecessary once you are accustomed to the surroundings. There are plenty of patients coming to see the established GPs, so why worry about the décor?
- Most properties cannot be easily expanded or modernized due to restrictions in their current location. I have seen one practice where it is likely to cost over $250,000 to install more handwashing basins.
Why do many of the best bulk billing practices have fantastic infrastructure?
The reasons are mostly obvious, but some might surprise you:
- External funding. Many of the larger, modern clinics have external funding and might be publicly listed or have private equity funds to support the establishment of practices. Some practice groups also have access to funding from China as the appetite for investment in Australian healthcare is insatiable for many Asian investors.
- Population growth is explosive and often families with more children live in these areas.
- Real estate is cheaper in outer urban settings and so owners and investors can afford spacious facilities.
- In the new growth corridors, there are plenty of greenfield sites where it is possible to build purpose designed clinics with everything that you need or want for a great clinic.
- The larger clinics with larger numbers of doctors can generate better returns creating better profitability.
Of course, there are exceptions to every rule, and your Alecto Consultant can help you to navigate the complex medical landscape to find the right match between a great GP and a great GP practice whether bulk or mixed billing.