As the exodus from solo practice continues, we look at why and how the group practice environment can work so well
Better work–life balance, a 30%–40% increase in take-home pay, and improved patient care and safety? It’s hard to argue against the benefits of group medical practice and it appears few Australian practice owners disagree.
The move towards group operations is one of the profession’s strongest trends in recent times.
Once the mainstay of general practice, solo practitioners now comprise only around one in 10 of all Australian general practices.
This is nearly half what it was at the turn of the millennium and many say group practices are the only way for general practice to remain sustainable.
In the realm of the specialties, the larger cardiology and orthopaedic groups now have as many as 20 doctors practising under the one umbrella.
Across the profession, the move has been brought about by a combination of changes in the economics of medical practice, together with new business models and the higher priority now given to separating work life and home life.
Given this shift from solo practitioners towards large group arrangements, we look at whether there is a particularly good time for single operators to consider moving towards a group arrangement, what the process involves, and the challenges and opportunities it entails.
The right time
Business adviser with national accounts and advisory group William Buck, Julie Smith, has been advising medical clients on amalgamations and group practice structuring for 8 years. She chairs William Buck’s health services focus group and says that, for many in general practice, shifting to a group practice, with more than one doctor generating an income, has become a matter of survival.
“The actual running of a general practice is expensive and it’s very easy to get just a little bit off track and not make any money”, she tells the MJA. For those still practising solo, even a small shift in government funding — for example, the shift in after-hours funding from the Practice Incentives Program to Medicare Locals — can prove the end of a clinic.
“If you are in a solo practice right now in GP land, you would financially be stressing.”
For this reason, it makes sense for solo GPs to think about moving into a group practice arrangement “anytime, all the time”, according to Smith.
Tamworth GP Dr Ian Kamerman agrees. Over the past 7 years, he has grown his regional New South Wales practice from just himself and a registrar, to six separate practice sites and 17 doctors.
It’s a financial stretch, but with a centralised phone system and record keeping system it is sustainable and enables the practice to cater for residents across the town.
“In hindsight, I should probably have had a stronger business plan but my attitude is that if you’re in an area of workforce shortage and no practice in town has any spare room anywhere, then someone has to step up to say ‘I can offer you a job and here’s a room for you’ ”, Dr Kamerman says.
Shifting to become a group practice is also a good option when it comes time for succession planning. If done with sufficient forward planning, 7 or 8 years, it will create a business with a good sale value in which goodwill is not tied to a particular individual.
This is particularly the case for specialists, says Ms Smith. “Their only way really for succession planning is to build up a big group practice that makes it nice and easy for another specialist, a younger specialist, to step up.”
The cost savings across infrastructure and staff can be substantial for both specialist and general practice depending on the model adopted.
Models vary in their detail, but can generally be classified into two broad categories: the traditional group practice in which both costs and profits are shared; and the associate group practice in which just the costs are shared.
The former is widely used in general practice and specialties such as cardiology, orthopaedics and obstetrics. The latter is more generally used by specialties without the need for high infrastructure investment such as anaesthetists.
Anything that requires procedures outside the hospital system, entailing the use of often expensive equipment, can benefit from the traditional group arrangement.
Sydney Cardiology Group (SCG) was founded 30 years ago by Dr Stephen Fenton and Dr James Wong and now employs nine cardiologists consulting across six different locations.
Chief executive Andrew Gill says that the efficiencies of multiple doctors being able to use the same equipment have helped in what is a capital-intensive specialty.
Similar efficiencies can occur when it comes to staffing costs. In this way, instead of one and a half receptionists for one doctor, two receptionists can cover the office requirements of two doctors.
Ms Smith has seen some of her specialist clients increase their take-home income by as much as 40% thanks to such cost reductions.
“For them it’s a no-brainer — they get to share costs and they get to better cover patients.”
Making it work
Ultimately, structure is everything when it comes to making a group practice work. Human nature means that there will always be potential tension over how remuneration is determined, in particular, when there are differing levels of practice contribution.
Different structures provide different levels of flexibility to alter income allocation and Ms Smith says it’s important to work out how much flexibility you want and why.
“Whether setting up or amalgamating, structure is everything, planning is everything — planning both the business and clinical side”, she says.
And for smooth planning and implementation, communication becomes essential.
“A business is a lot like a marriage in that you are with each other all the time and are making a lot of joint decisions. You have to have some common ground.”
To help find common ground, Mr Gill says that before any new doctor joins SCG, they ensure that there is a full understanding on both sides of where the practice is up to and what any new doctor expects.
Achieving that sort of understanding can be a long process, with one recent discussion/negotiation lasting 7 months.
If communication is flawed, it can quickly lead to mixed messages for staff, confusing policies or worse.
Regular clinical and practice management meetings help to overcome this.
Ms Smith offers a final caution for those entering into group practices. Even with the best structure and communication, it’s important to be prepared if things go wrong and to guard against misunderstandings; so be sure to document everything at every step.
As she tells her clients in a pearl of practice wisdom: “Let’s document everything while we’re still friends.”
Brisbane obstetrics practice Arrivals (www.babyarrivals.com.au) was formed in June 2008 when three independent obstetricians in private practice at the time — Dr Shane Higgins, Dr Paul Brett and Dr Vincent Low ― decided to begin working together in order to improve patient safety and enhance their own work-life balance.
To that end, they took their amalgamation significantly further than many specialist groups, choosing to share the patients as well as premises and infrastructure.
“By joining forces, they were able to provide a special service to their patients where the patients can have access to all the doctors who may be at the delivery”, practice manager Amy Jenkins says.
“It also increases patient safety because each of the doctors is only on call one day at a time during the week.”
The practice’s obstetricians are on call one evening each week and over the weekend on a rotating basis.
Ms Jenkins says that in addition to not being as fatigued as they might otherwise be, they are working in an environment that is very supportive as the doctors have similar beliefs about treatment and similar goals.
The efficiency of the group arrangement — there are now six Arrivals obstetricians —has enabled them to provide extra services within the practice, including a midwife, a physiotherapist and a dietitian.
It has also significantly reduced the pressure and after-hours demands on the individual doctors, allowing flexibility to cater for family obligations.
They are the only obstetrics practice operating in this way in Brisbane, Ms Jenkins says.
“We’re the one entity”, she says. “All the doctors charge the same fees, it’s the same reception staff, it is all the one program. It really is one business.”
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