Since 1998, listed public corporations have actively sought to capture a significant proportion of the Australian general practice market. They have paid generously for the "goodwill" of existing practices, entered limited contracts with the doctors in those practices, and relocated some of these doctors to large centres where general practice is linked directly with other diagnostic, imaging and treatment services owned by the corporation.

The benefits of these changes for the corporations include assuring referrals to their diagnostic and imaging services (in a competition for market share for these high-cost services), access to private insurance rebates through licensed day-procedure centres, and possible economies of scale.

General practice corporatisation and the issues involved have been described elsewhere.1-3 However, the process of general practice corporatisation is maturing, and I would like to discuss some emerging trends and their implications.

The initial enthusiasm for shares in general practice corporations is waning. Shareholders, institutions and analysts now focus on earnings rather than projections. A collapse in the price of shares in listed general practice corporations in August 2001, followed by a partial recovery, led to a more realistic focus on earnings as a determinant of share price. In addition, the collapse contributed to decisions to terminate practice purchases and to delay public listing by at least one corporation.4

General practice corporations have not shown the same earnings performance as other sectors of the health market, such as private hospital operators. Those owning their own pathology, imaging and specialist services are more profitable than those without vertical integration of referrals.

These changes, coupled with recent amendments to the Privacy Act — Privacy Amendment (Private Sector) Act 2000 (Cwlth) — which now require a patient's consent for the transfer of medical records, have caused most general practice corporations to limit new practice purchases, making their initial targets of 50% of the general practice market overly optimistic. Although corporations have a large share of the Perth market (around 40%), it is unlikely they will achieve more than 20% of other metropolitan markets, such as Sydney or Melbourne.

Future trends include corporatised practices moving away from bulk-billing of all GPs' services (this has already commenced in some areas of Sydney). Mergers between general practice corporations should further concentrate the market.

Other models of general practice integration are emerging, such as general practice market-based cooperatives, where GPs share ownership of diagnostic and therapeutic services and benefit from the profits of those services; Division-based cooperatives;5 and serviced-office arrangements, where GPs collocate, but retain ownership of their own practice (for example, Health Connectiv Pty Ltd).

In the past, some Australian doctors have been induced to act as agents of corporations, not of their patients.6,7 I have previously argued that an informed health consumer relies on the advice and assistance of his or her GP. For the health system to operate as a free market, GPs must act as their patients' agent, not as agents of third parties.3

As there is considerable information asymmetry between health consumers and providers, access to an informed agent or broker, who is free to act solely as a patient's agent in the health system, is a consumer protection issue, not just an issue of professional freedom.

This is also the primary principle of medical ethics, which for over 3000 years has required doctors to put their patient's health needs before all other considerations.8 On the other hand, directors of corporations are required to put the needs of shareholders first.9

Meeting the needs of shareholders through customer service is good business practice, but the needs of patients and shareholders will not always coincide. In such a situation, if GPs are not able to put their patient's needs before the needs of the corporation their patients lose.

Governments, health consumer representatives, health professionals and managers of health corporations must clearly understand that GPs have a role as honest brokers for their patients in the healthcare system, and must ensure GPs are free to stand up to third parties such as insurers or corporations in the event of competing interests.

The New South Wales Government was the first in Australia to respond to the potential for doctors to experience competing interests. After ministerial inquiries into the provision of male impotency services and the cosmetic surgery industry,6,7 the NSW Government introduced amendments to the Medical Practice Act 1987 (Medical Practice Amendment Act 2000). The Act can now exclude an employer, manager or director from involvement in any company providing medical services if he or she is found to have incited doctors to unsatisfactory professional conduct, or is party to either payment of pecuniary benefits for unnecessary services or directing referrals.

Although some States are prepared to act to the extent of their powers to ensure corporations do not influence clinical practice, the Commonwealth Government has encouraged corporatisation of medical practice through its own inertia. It is responsible, through the payment of Medicare rebates by the Health Insurance Commission, for most of the expenditure in this market, where listed corporations are making shareholder profits largely from the public purse. As an example, the Commonwealth Government permits vertically integrated corporations to share profits from internal referrals while continuing to enforce regulations that prohibit the sharing of profits from referrals between traditional practices.

The Australian Medical Association and some corporations, with the later involvement of the Royal Australian College of General Practitioners (RACGP) and the federal Minister for Health, developed a Code of Conduct, which was released in October 2001.10 The code was criticised as ineffective at that time.11,12 At 3 June 2002, the code had three signatories.

Finally, legislation to cover competing interests when doctors refer should not be seen as a remedy for this problem. Attempts in the United States to codify relationships between referring doctors and third parties (the Stark Laws)13 have, for little benefit, increased the clinical and legal complexity of medical practice.

These laws were passed in response to widespread public and legislative dissatisfaction about the perceived divided loyalties of US doctors, and the consequent effects on patient care, resulting from longstanding interference by insurers, governments and corporations in the relationship of trust between doctors and their patients.

Enforcing the existing prohibition of commercial arrangements between referring doctors, and between doctors and third parties, is preferable to legislating to ensure propriety in arrangements which result from corruption of normal ethical practices.

Australians are still in a position to prevent a similar outcome, but the market is operating and time is short.