Key Takeaways
- Assess profitability before expanding. A second location should not be a lifeline for a struggling primary practice. Ideally, your existing clinic should generate roughly $1 million in revenue with a healthy profit margin (15-30% depending on the specialty) before you consider scaling.
- Staffing is your biggest bottleneck. Australia faces a projected shortage of 10,600 GPs by 2032. Expanding services within your current site is often safer and more cost-effective than trying to recruit a full new team for a second location.
- Technology is the new "second location." Investing in digital transformation, telehealth, remote patient monitoring, and AI-driven admin, can expand your patient reach and service capacity without the overhead of a new physical lease.
- Location strategy matters. Don't just open nearby. Cannibalising your own patient base is a real risk. Look for growth corridors with high demand but low GP-to-patient ratios, or consider co-locating with complementary services (e.g., pathology, allied health).
- Compliance complexity doubles. A second site means a second set of accreditation requirements, provider numbers, and WHS obligations. Ensure your administrative systems are robust enough to handle multi-site governance before you sign a lease.
Introduction: The growth dilemma in Australian healthcare
For many successful medical practice owners in Australia, 2025 presents a complex dilemma. Demand for healthcare is soaring, driven by an ageing population and a rise in chronic conditions. Your appointment books are full, your waiting room is crowded, and the natural instinct is to grow. But in a landscape defined by thin margins, workforce shortages, and rapid digital transformation, what does "growth" actually look like?
Is it time to sign a lease on a second location and replicate your success? Or is the smarter move to expand your service offering within your existing footprint, leveraging technology and multidisciplinary care to boost revenue? The answer is rarely simple. It requires a deep dive into your financial health, your local market, and your risk tolerance. This article provides a strategic framework for Australian medical practice owners to navigate this critical decision, weighing the allure of a new clinic against the efficiency of internal expansion.
Option 1: Expanding services within your existing practice
Before taking on the massive capital risk of a second site, consider if you have maximised the potential of your current one. "service expansion" is often the lower-risk, higher-ROI path for 2025.
The multidisciplinary model
Modern patient care is increasingly integrated. Expanding your service mix to include allied health professionals, such as physiotherapists, dietitians, or psychologists, can create new revenue streams and improve patient retention.
- Financial Benefit: You can sublease rooms to allied health providers, turning a fixed cost (rent) into a revenue generator. Alternatively, employing them directly allows you to bill for team care arrangements (TCAs) and GP Management Plans (GPMPs).
- Patient Benefit: Patients value the convenience of a "one-stop-shop," which increases loyalty and cross-referral opportunities.
The digital expansion
In 2025, expanding your "digital footprint" can be as effective as expanding your physical one.
- Telehealth: Medicare has permanently integrated telehealth. By dedicating specific blocks of time or even a specific room to high-quality video consultations, you can serve patients who are physically distant or mobility-impaired without them ever entering your waiting room.
- Remote Monitoring: New MBS items and technology allow for the remote monitoring of chronic conditions (e.g., heart failure, diabetes). This service expansion adds a recurring revenue layer that is not dependent on face-to-face consults.
A realistic scenario:
A busy suburban GP clinic considers opening a second branch 5km away. Instead, they analyse their data and realise they refer 30 patients a week to a local skin cancer clinic. They decide to upskill two of their GPs in skin cancer medicine and invest in dermatoscopy equipment.
- Result: They retain those 30 patients, bill higher-value procedural items, and increase practice revenue by 15% without a single extra dollar in rent.
Option 2: Opening a second location
Opening a second site is the traditional path to scaling, but in the current Australian market, it is a high-stakes play. It should only be considered if your primary practice is running at maximum efficiency and you have surplus capital and leadership capacity.
The "hub and spoke" strategy
Rather than cloning your first clinic, consider a "hub and spoke" model. Your original practice remains the comprehensive "hub," while the second location is a smaller, more specialised "spoke" or a clinic in a high-growth residential corridor with lower rent.
Critical success factors for a second site
- Financial Health: Your first practice acts as the bank for the second. It must be generating enough surplus cash flow to cover the setup costs (fit-out, IT, marketing) and the initial operating losses of the new site, which typically take 12-18 months to break even.
- The "Clone" Problem: Do not assume you can just copy-paste your first clinic. Every suburb in Australia has a unique demographic and competitive landscape. A bulk-billing model that works in Western Sydney might fail in the Northern Beaches. You need bespoke market research for the new location.
- Workforce Availability: This is the biggest hurdle. With a shortage of over 10,000 GPs predicted by the next decade, finding staff for a new clinic is incredibly difficult. Do you have a pipeline of registrars or a network of doctors ready to move? If not, you risk opening a clinic with no clinicians.
The hidden challenge: Management bandwidth
Whether you expand services or open a new site, the biggest constraint will not be capital; it will be management attention.
Running one practice is a full-time job. Running two is not just double the work; it's exponential complexity. You effectively move from being a "practice owner" to a "CEO."
- Systems and Processes: You can no longer rely on being there to solve problems. You need documented standard operating procedures (SOPs) for everything, from opening the doors to handling a patient complaint.
- The "Founder's Trap": Many owners struggle to delegate. If you are the highest-billing doctor and the practice manager, opening a second site is a recipe for burnout. You must hire a competent practice manager to run operations so you can focus on strategy (or seeing patients).
Financial benchmarks: Are you ready?
Before you make a move, audit your current practice against these benchmarks. If you aren't hitting these numbers, fix your home base first.
- Net Profit Margin: A healthy private or mixed-billing practice should aim for a net profit margin (after owner's draw) of 15-25%.
- Staff Costs: Total staff costs (including clinical and admin, but excluding doctor service fees) should ideally be 20-30% of total revenue.
- Room Utilisation: Are your current consulting rooms booked >85% of the time? If you have empty rooms, you have capacity to grow without moving.
Conclusion
The decision to expand is a defining moment for any medical practice owner. In 2025, the "default" path of opening a second location is fraught with risk due to workforce shortages and construction costs. For many, the smarter, more profitable path lies in intensive growth, expanding services, embracing digital health, and optimising the current site. However, for those with robust systems, a strong balance sheet, and a pipeline of talent, a second location remains a powerful way to build equity and serve a broader community. Whichever path you choose, let data, not ego, drive the decision.
