Identify and categorise fixed and variable business expenses
To ensure that your fees remain fair and equitable, and provide you with an appropriate income, it is necessary to regularly dedicate time to identify, assess, and control the costs associated with delivering high-quality health services.
You will have a different set of costs depending on whether you are a practice owner, an independent practitioner or an employed GP. Costs may include:
- wages for staff (including tax and superannuation)
- occupancy expenses (e.g. rent or mortgage and associated costs)
- overhead costs (e.g. utilities, building insurance, practice cleaning, cars/petrol/parking)
- infrastructure and technology costs (e.g. hardware, software, website hosting, online booking systems)
- medical consumables (e.g. dressings) and personal protective equipment (e.g. gowns, gloves, masks, eyewear)
- administration and other consumables (e.g. stationery, brochures, printer cartridges, kitchen items, postage)
- fees for accounting, legal and other professional services
- professional costs (registration and accreditation, indemnity insurance and membership fees for professional bodies). Although some of these could be considered personal costs, some practices agree to pay some or all of these costs because the practice also benefits.
You will likely have both fixed and non-fixed (variable) costs.
Many of the costs incurred by general practices are fixed and do not vary much or at all, regardless of how many patients you see. Examples of fixed costs can include rent, some insurance premiums, wages for permanent staff, cleaning services, IT subscriptions and website hosting. Some fixed costs may increase at regular intervals (e.g. rent, wages). Generally, you can do little to control your fixed costs, although you can aim to reduce some of them by, for example, negotiating a rent reduction with the premises' owner, and shopping around for cheaper providers.
Examples of non-fixed or variable costs include utilities and consumables, which can differ depending on how many patients you see and what their needs are, how many hours your practice is open and procurement activity (e.g. buying printed stationery in bulk to reduce unit costs). You can control some of these costs by asking staff to turn off equipment and lights when not in use and comparing costs of different suppliers before ordering to reduce waste.
Download the template to collect and identify fixed and non-fixed costs associated with delivering general practice services.
Download task 1
Use the data collected in Task 1 to answer the questions below. You can choose to note your responses in your own document or download the template below.
- Question: Identify the 3 highest fixed and non-fixed costs associated with providing care to your community.
- Question: What are the top 3 fixed or non-fixed costs that have risen the most for you over the past 5 years?
- Question: What costs could be reduced? How will you go about seeking to reduce these?
Download task 2