Key Takeaways
- It’s about survival. The primary driver for the return to private billing is financial viability. With Medicare rebates failing to keep pace with inflation, bulk-billing is no longer sustainable for many Australian practices.
- Private billing enables better care. Moving away from a high-volume, bulk-billing model allows GPs to offer longer, more comprehensive consultations. This is crucial for managing the one in two Australians with chronic conditions and reduces clinician burnout.
- Communication is everything. When transitioning, you must clearly explain the "why" to your patients. A transparent communication strategy focusing on the need to maintain a high quality of care is the key to retaining your patient base.
- You don't have to go all-in. A mixed-billing model, where you continue to bulk-bill pensioners, children, or concession card holders, is a common and effective strategy. It balances financial needs with community service obligations.
- The financial advantage is significant. By charging a private fee that accurately reflects the cost of your time and expertise, you can improve practice profitability, invest in better equipment, and create a more sustainable work environment for your team.
- Set your fees with data, not guesswork. Calculate your practice's true hourly operating cost, then benchmark against your local market and the AMA's recommended fees to ensure sustainability.
- Focus on value over volume. A mixed-billing model can significantly boost net profit even with a small drop in patient numbers, providing the capital to reinvest in better patient care and equipment.
Introduction: The tipping point for Australian general practice
For years, the sound of a Medicare card being swiped was the sound of Australian general practice. But in October 2025, a growing number of clinics are making a difficult but necessary change. The long-standing model of universal bulk-billing is under immense pressure, forcing a widespread return to private billing. This isn't a decision driven by greed; it's a strategic response to a fundamental economic reality.
The gap between the Medicare rebate and the actual cost of providing high-quality healthcare has become a chasm. A recent report from the Australian Medical Association (AMA) highlighted that the costs of running a practice, from rent and staff wages to medical supplies, have consistently outpaced the modest indexation of Medicare rebates. For many practice owners, the choice is no longer between bulk-billing and private billing; it's between private billing and closing the doors. This article provides a practical guide for Australian practice managers on the benefits of making the switch and how to manage the transition effectively.
The primary driver: Financial sustainability
The core reason private billing is making a comeback is simple: the financial model of 100% bulk-billing is broken for many.
The Medicare Benefits Schedule (MBS) rebate for a standard Level B consultation has seen only minor increases over the past decade, a period during which inflation and operational costs have soared. When you factor in your non-billable time, administrative overheads, and the rising cost of compliance, the rebate often falls well short of covering the true cost of the service.
A realistic scenario: The cost of a consultation
Let's break down the real cost for a hypothetical 15-minute consultation in a suburban Sydney practice:
- GP's time (pro-rata): Based on a modest salary.
- Nursing & admin support staff time.
- Practice overheads: Rent, utilities, insurance, medical software licences, and consumables.
The true cost to the practice for that 15-minute slot might be $80-$90. The current Medicare rebate for a Level B consult is approximately $41.40. Every time you bulk-bill that service, your practice is effectively losing money or operating on an unsustainable margin. Private billing is the mechanism to bridge this gap, allowing you to set a fee that reflects the true cost and value of your service.
The clinical advantage: More time for better care
Beyond the financial necessity, a key benefit of moving to a private or mixed-billing model is the positive impact on the quality of patient care. A business model based on high-volume, quick consultations is often poorly suited to the needs of modern Australian patients.
With the Australian Institute of Health and Welfare (AIHW) reporting that chronic diseases are the leading cause of ill health and death in Australia, patients require more than a five-minute script renewal. They need comprehensive, preventative care.
Private billing enables clinicians to:
- Offer longer standard appointments. By moving to a private fee, you can make 20-minute appointments the standard, giving GPs adequate time for thorough examinations and patient education.
- Focus on complex care. It allows doctors to dedicate the necessary time to creating detailed GP Management Plans (GPMPs) and coordinating care for patients with complex, multi-morbid conditions.
- Reduce clinician burnout. A relentless "churn and burn" model is a leading cause of burnout. A more sustainable pace of work, enabled by private billing, is a powerful tool for retaining your GPs.
Making the switch: A practical guide to the transition
Transitioning from bulk-billing to private or mixed-billing can be a source of significant anxiety for a practice. The fear of losing patients is real, but it can be managed with a clear, empathetic, and well-planned communication strategy.
- Give ample notice. You must give your patients at least one to two months' notice before the change occurs.
- Communicate the "why". This is the most critical step. Your messaging should not be about profits; it should be about sustainability and quality of care. Use clear, simple language in posters in the waiting room, on your website, and in a letter to your regular patients.
- Sample messaging: "To continue providing the high level of comprehensive care you expect and deserve, and to cover the rising costs of running a modern practice, we will be transitioning to a private billing model from [Date]. This change will allow our doctors to continue spending the time needed to manage your health effectively."
- Train your team. Your reception staff will be on the frontline of this change. You must train them on the new fee structure and equip them with scripts to handle patient questions and complaints with empathy and confidence.
- Consider a mixed-billing model. You do not have to make the change for everyone. Many practices successfully transition by continuing to bulk-bill certain patient groups, such as:
- Pensioners and concession card holders.
- Children under 16.
- Patients attending for specific preventative services (e.g., vaccinations, care plans).
This approach demonstrates goodwill and ensures continued access for the most vulnerable members of your community.
Which patients are most likely to respond positively?
While some patient pushback is inevitable, you will find that a significant portion of your patient base will understand and accept the change, particularly those who value the specific qualities your practice offers.
Patients who are more likely to accept a private fee are those who:
- Have a long-standing relationship with a specific GP. Patients who value continuity of care and the trust they have built with their doctor are often willing to pay a gap to ensure they can continue seeing them.
- Have complex or chronic health needs. These patients understand that their care requires more time and are often willing to pay for longer, more thorough consultations.
- Value convenience and access. If your practice offers a superior experience, such as easy booking, minimal wait times, and a pleasant environment, many patients will see a private fee as a fair price for a premium service.
Setting your private fee structure
Deciding to switch to private billing is one thing; determining how much to charge is another. Setting a fee requires a careful, data-driven approach that balances your practice's financial needs with your local market conditions. Your goal is to set a fee that is both sustainable for the business and justifiable to your patients.
1. Calculate your true hourly cost
Before you can set a profitable fee, you must know your baseline cost of operation. The most effective way to do this is to calculate your practice's "cost to open the doors" per hour of clinical time.
- The calculation: (Total annual practice overheads + Total annual non-clinical staff salaries) ÷ Total annual clinical hours available for booking = Your hourly operating cost.
- Example: If your annual overheads and salaries are $800,000 and your doctors provide 4,000 hours of clinical time per year, your operating cost is $200 per hour. This means that for every hour a doctor is seeing patients, your total billings for that hour must significantly exceed $200 to cover the GP's own income and generate a practice profit.
2. Benchmark against your market
Once you know your internal costs, you need to look at external factors.
- Local Competitors: Research the fees charged by other private or mixed-billing practices in your local area with a similar demographic and service offering. This will help you understand the local market rate.
- The AMA Fee List: The Australian Medical Association (AMA) regularly publishes a list of recommended fees for medical services. This is an invaluable benchmark that reflects a more realistic value for clinical services than the Medicare rebate. Using the AMA fee as a reference point can help you justify your pricing structure to both patients and staff.
3. Create a clear fee schedule
Transparency is key. Develop a clear, simple list of your top 10-20 most common consultation types and their associated fees. This schedule should be displayed on your website and at your reception desk. For each item, clearly list:
- The total private fee.
- The standard Medicare rebate.
- The final out-of-pocket cost for the patient.
This schedule is an essential tool for your reception team and is the foundation of obtaining Informed Financial Consent.
A financial case study of the transition from bulk-billing
The theoretical benefits of private billing become much clearer when you look at the real-world financial impact. This case study illustrates how a transition can transform a practice's viability, even with a slight drop in patient volume.
The "before" picture a 100% bulk-billing practice
Let's consider a hypothetical 3-GP practice in a metropolitan area.
- Model: 100% bulk-billing, focused on high patient volume.
- Consults per year: 23,000 standard (Level B) consults.
- Gross Revenue: 23,000 x $41.40 (MBS rebate) = $952,200.
- Annual Operating Costs: (Rent, staff, insurance, consumables) = $850,000.
- Net Profit (before GP income): $102,200.
This leaves a very slim margin to cover the income for three doctors, reinvestment in the practice, and any unexpected costs. The model is high-stress and low-profit.
The "after" picture six months into mixed-billing
The practice transitions to a mixed-billing model, continuing to bulk-bill concession card holders and children (approx. 50% of their patients). They introduce a private fee of $85 for other standard consults. They experience a 15% drop in total patient volume as some price-sensitive patients leave.
- New consults per year: 23,000 x 0.85 = 19,550.
- Bulk-billed consults: 9,775 x $41.40 = $404,700.
- Private-billed consults: 9,775 x $85 = $830,875.
- New Gross Revenue: $404,700 + $830,875 = $1,235,575.
- Annual Operating Costs: (Slight increase due to inflation) = $870,000.
- New Net Profit (before GP income): $365,575.
The tangible benefits of increased profit
Despite seeing fewer patients, the practice has more than tripled its net profit. This financial turnaround allows for significant reinvestment back into the business, enabling the owners to:
- Hire an additional practice nurse to manage chronic disease, improving patient care.
- Invest in new diagnostic equipment that was previously unaffordable.
- Provide a much-needed pay rise to their administrative staff, improving morale and retention.
Conclusion
The move back to private billing represents a necessary evolution for Australian general practice, driven by economic reality and a desire to provide higher-quality, more sustainable care. While the transition can be challenging, it is a strategic decision that empowers you to run a financially viable practice that can afford to invest in its facilities, its staff, and, most importantly, the time required to care for patients properly. By communicating the change with transparency and empathy, you can strengthen your practice's long-term health while reinforcing the trust of the community you serve.
