General practices are expected to expand as larger practices can attain wider profit margins through strong economies of scale and high throughput rates.
Melbourne, Australia (PRWEB) April 19, 2015
The General Practice Medical Services industry has grown healthily over the past five years. General practitioners (GPs) are the first point of contact in the medical system, providing direct treatment to patients or diagnosing their problems and referring them to a specialist or a general hospital. GPs receive Federal Government assistance through Medicare, which covers a schedule fee for each consultation. Bulk-billing, which involves GPs charging just the schedule fee, has climbed to cover over 80.0% of all GP consultations over the past five years. This has largely been due to an increasing number of retirees visiting their GP, as pensioners are more commonly offered bulk-billing than working-age adults. Strong demand for GP services has resulted in industry revenue rising by an estimated compound annual rate of 2.9% over the five years through 2014-15, to reach $11.0 billion. According to IBISWorld industry analyst David Whytcross, “While small increases in Medicare schedule fees have supported industry growth, revenue increases have primarily been driven by growth in consultation volumes.” The age profile of Australia's population is a strong determinant of demand. Australia's population is ageing rapidly as the baby boomer generation has begun to reach retirement age. Population ageing drives industry growth because older generations are more susceptible to disease, chronic illness and minor ailments.
Over the next five years, Australia's population will continue to grow and age, increasing demand for GP services. Despite older people typically being offered bulk-billing, which reduces per-patient revenue through the absence of co-payments, patient volume growth is expected to result in revenue growth for the industry. “General practices are expected to expand as larger practices can attain wider profit margins through strong economies of scale and high throughput rates,” says Whytcross. Medicare schedule fees are expected to be frozen at times over the next five years, although the removal of proposals to reduce schedule fees by $5.00, along with patient volume increases, is expected to result in continued steady revenue growth.
The General Practice Medical Services industry is characterised by a low level of concentration and a high degree of fragmentation. The industry is made up of many small-scale businesses that are closely tied to community needs. According to the Australian Bureau of Statistics, almost half of general practices operated as sole proprietorships and only 0.9% of general practices had 20 or more employees in June 2013. While the industry is consolidating as the market share of larger players is growing, Medicare continues to allow smaller practices to remain viable despite lower economies of scale. While larger players often bulk-bill, they tend to achieve profitability via high throughput rates, spending less time with each patient. Sole proprietorships tend to provide a greater level of time and care, which can enable them to charge higher prices and thus boost profitability.
For more information, visit IBISWorld’s General Practice Medical Services industry in Australia report page.
This industry is made up of companies and practitioners that primarily provide general practice medical services.
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