Frequently asked questions

Answers to your most frequently asked questions

 

Frequently asked questions

Answers to your most frequently asked questions

 

Financial Performance of the College

No, but like many organisations, COVID-19 turned our operations upside down for the period of lockdowns etc. and, as we have come out of those abnormal conditions, we have needed to look at our cost base, and the activities we are undertaking.

The reality is that the activities we have been undertaking to deliver services to members currently cost us more than the revenue we are earning from our core membership products. This has led to an underlying ‘normalised’ deficit for some years that has been masked by good performance in other parts of the RACGP business and/or one-off ‘abnormal’ items.

When the College reports its financial performance to members, it makes a distinction between:

  • the operating performance (which is essentially the surplus or deficit from the core membership activities), and
  • the consolidated whole-of-College performance, which includes grants, income from investments, and accounting treatments (such as revaluations of assets, or consolidation of the accounts of GP Synergy when we became its sole member).

There will be times when the operating performance of the College is impacted by one-off or abnormal items. To ensure long term financial sustainability of the College, it is important to measure and report on the underlying, or ‘normalised’ financial performance of the College.

Yes, we are. The College has various sources of revenue. Some of those sources of revenue (eg government grants) are required to be separated out from members funds in terms of both how we operate and how we report our performance.  That means no member funds will be used for GP training activities, and no GP training funds will be used for membership activities. This gives protection to both members and the Commonwealth. And we absolutely have the capacity to deliver GP training and to deliver great membership value.

The College expects to record an operating deficit this year (ie the cost of operating the core membership business of the RACGP will exceed the revenue that it has earned from that business), but it’s still unclear whether the consolidated result will be a deficit or a surplus, as there are still some one-off issues that might occur between now and 30 June 2023 and some accounting issues such as the consolidation of GP Synergy’s accounts into the RACGP’s, asset donations associated with GP training and others.

 
 

It’s still not 100% clear, as we have some things that are still playing out, but we are working to keep it under the original budget of $10m.

At the AGM in November 2022, the Chair of the Finance, Audit & Risk Management Committee of the Board, Martin Walsh, and the CEO, Paul Wappett, delivered the financial report and outlook to members, in which they indicated that:

  • RACGP recorded an operating deficit after tax of approximately $1.65m in the 2021-2022 financial year
  • at a whole-of-College level, the RACGP recorded a consolidated surplus after tax of $2.46m for the 2021-2022 financial year, which included a $3.67m gain on business combination from the acquisition of GP Synergy
  • in each year between 2016-2017 and 2021-2022, the underlying operating performance had been a deficit or a break-even result, but a combination of one-off, abnormal and other matters such as COVID inactivity, returns on investments and grant funding had buffered the College’s overall consolidated performance in those years
  • Federal JobKeeper payments in the 2019-2020 and 2020-2021 financial years masked the underlying financial performance of the College and allowed us to build financial cash reserves to $11m to prepare for a downturn that we predicted would come when conditions normalised
  • we had commenced investment into core systems supporting membership and exam activities that would continue into future years and potentially result in operating deficits that the cash reserves would help fund, and
  • although liquidity and members’ funds positions remained strong, given cash holdings, property and other investments, we needed to increase our cash balances over time.

Between the 2021-2022 financial year and this current financial year, we have seen:

  • a reduction in the proportion of members paying full membership fees
  • membership fees indexed at a rate less than CPI
  • a reduction in exam revenue with lower numbers of candidates sitting exams
  • a return to more normalised operational expenditure (eg in FY22, travel and venue hire were down due to lockdowns)
  • the full-year impact of a number of previously approved initiatives (IT projects, the formation of the NT Faculty, and property leases)
  • additional investment into the CPD app, online exam platforms, additional advocacy resources etc
  • increases in salaries, as the post-COVID labour market saw a catch-up of salaries in most industry sectors, making the ability to attract and retain employees more difficult without offering market-competitive salaries
  • increases in supplier costs, with the CPI now operating above 7% per annum
  • cessation of funding for Practical Experience Pathway program and first year set-up costs for Fellowship Support Program for doctors who need an alternative to the AGPT program
 
 

The plan to strengthen the RACGP to financial sustainability

In the middle of 2022, as we emerged from the fog of the pandemic, and faced with the additional costs set out above, and with planned additional sources of revenue not coming through at the rate we had hoped, the Board and management did a deep dive into the underlying operating financial performance of the College. The Board and management recognised that the College was facing a substantial operating deficit for the 2022-2023 financial year, in the order of about $10m, even taking into account additional revenue and a reduction in costs across the board. We recognised that eliminating that deficit in the course of one year would likely lead to a drastic impact on the services and support the College could provide to members. And so, recognising that the JobKeeper funds had been allocated to a reserve fund for precisely this type of scenario, the Board and management put together a 3-year plan to return the College to operating surpluses that would rebuild the reserves.

We highlighted that we were anticipating an operating deficit in the 2022-2023 financial year, but we didn’t forecast the extent of that, because the AGM was held in November, and there were some revenue opportunities that we were pursuing.  However, that didn’t come through during the first half of this financial year, and so it has only been since we did a mid-year reforecast during January and February 2023 that we had a clearer picture of the deficit that was likely to result this year. We sent an email from the Chair, President and CEO of the College to members on 28 February 2023 setting out that the College was facing some financial headwinds and was about to undertake cost cutting including a restructure of our operations.

The plan’s purpose was to build a leaner and more efficient College that pursues the things that members value most.

The first year of the plan – this current financial year – sees the College undergo a restructure of our operations once we got through the introduction of the new CPD requirements and the transition of GP training back to the College. And we have done that. Over the past two months, the College has been undergoing a restructure of our employee ranks, with more than 50 jobs being made redundant across the College, and with some of our valued colleagues leaving the College or about to leave the College in the next month or so. 

The second year of the plan (ie the 2023-2024 financial year) involves restructuring the College’s membership categories, as we are currently doing, and the optimisation of our current sources of non-member operating revenue. [Our operating revenue comes from:

  • membership fees
  • exam fees
  • event fees (including conferences)
  • publications fees
  • sponsorship, advertising and commercial partner revenue.] 

The third year (2024-2025) sees some bigger opportunities for diversifying our revenue streams from sources other than membership that we will be identifying, exploring and developing over the next 18 months.


 

That 3-year plan needed to take into account that some things had been imposed on us – so, for example, the changes to the CPD requirements for members were mandated to start on 1 January 2023, and the transition of GP training from the Regional Training Organisations to the RACGP and ACRRM was mandated to take place on 1 February 2023. Those were major things for the College to get right, and starting earlier on a plan that was likely to lead to some upheaval within the College would have put them at risk. The timing is important because we have other big things coming up this calendar year (for example, the hosting of the WONCA conference in Sydney in October 2023) that require the organisation to be settled, so the window to commence the plan was small.

We expect to return to surpluses in the 2024-2025 financial year, although we are hopeful we may be able to return to an operating surplus in the next (ie 2023-2024) financial year.

The College has assets and cash that it can use to make up this year’s deficit. The RACGP’s net assets include office properties in Melbourne, Sydney, Adelaide and Perth. While we need to manage things carefully while we restructure our business, there are no concerns about whether or not the College is able to meet its financial obligations. This is not a repeat of the financial difficulties that affected the College in the early 2000s when we were forced to sell off assets.

The best thing members can do is remain a member and continue to help fund the things the College does to support the profession. The Board and management understand how tempting it might appear to members to seek out alternative CPD homes and/or otherwise give up their membership. But the impact this would have on the ability of the College to advocate on behalf of the profession, the community and members, to set the standards for GP practice, and to deliver resources for members, would be profound. Now is a vital time for GPs to unite and ensure we are doing things to strengthen the profession; not splinter and diffuse our collective influence over the regulatory and funding arrangements.

The Board and management are committed to being transparent with members about these issues. As we look to the future, we want to provide members a breakdown of our financial performance each year, broken down into:

  • our core underlying membership operating performance
  • our performance on government grant-funded activities, including GP training
  • one-off items
  • accounting adjustments that impact the financial result we deliver but not the underlying financial performance of the College

This will give you a clear picture of the position of the College.

Membership Subscription Categories

Over time, the number of membership subsription categories has grown markedly and the administration of this large number of categories represents a significant cost to the College. It has also meant that fewer than 40% of the College’s members pay the full membership subsription , a proportion that has been declining in recent years. The work that the College does to ensure a strong general practice profession to serve the Australian community requires funding.

Not exactly. Like all organisations, it’s critical to ensure the financial performance of our core underlying membership business is sustainable. In recent years, the costs of providing the College’s core membership products, services and benefits have been increasing at a rate faster than the increase in membership revenue. The changes to membership subscription categories are needed to ensure the College can continue providing critical services to support the profession and the community in a financially sustainable way.

But the change is also about fairness. While the majority of members receive access to the same member benefits, last year fewer than 40% of members paid the full membership fee for these benefits. This means our full fee paying members essentially subsidised the cost of the College’s activities for the other 60% of members who don’t pay full fees.

If we don’t change our membership subscription categories the average fee paid by members in the upcoming financial year would be 65% of the full membership fee. Why does this matter? Because it means we’re selling our core product at an average discount of 35%. And like most organisations, the RACGP can’t survive if we do this.

 

The Board and management looked at a fairer way of determining membership fees that both underpins the value of membership and provides a safety net for those who legitimately cannot afford membership.

The first thing we did was to index the fees – not to the full CPI rate, but to the average of the education and health baskets of the CPI. That indexation is 4.2%.

The second thing we did was to assess whether the full membership fee represented appropriate value for members. We benchmarked the indexed full membership fee of $1567 against other medical colleges including other general practice colleges and similar professional bodies in other professions, and we believe the full membership fee represents good value for money for the work the College does to support the profession and individual members. Other medical colleges are increasing fees by rates between 5-8% this financial year, and they have far fewer categories other than full membership than the RACGP.

 

That’s right. We determined that $1567 is an appropriate fee for full membership, given the work the College does on behalf of members.

We then decided to retain discounted fees for members on a GP training program, recognising they have reduced income while they are GPs in training and also face the costs of exams.

Life members have always been exempt from fees, and we have retained this. We kept the discounted ‘senior’ and ‘retired’ categories to honour those who have given so much to the profession.

Members who reside overseas and don’t practice in Australia do not have access to all the benefits of membership and we felt it fair to retain their discounted fees.

For all other members, the Board and management assessed that they should pay the same amount for membership, unless there are legitimate difficulties in being able to pay the fees.

The Board and management are committed to ensuring members who have difficulty paying fees can retain their membership in the RACGP. But given that a discount off full fees is a financial benefit to those who are eligible for it, we believe income is a fairer way to determine whether a member receives that discounted membership rather than looking at how much clinical work members do. Members who are eligible for the discounted fee are still full members, but merely pay a discounted rate because of their income level.

There is no specific category for members on parental leave, sick leave or other leave. Members who earn less than AUD$150,000 from all sources before tax will pay the concession fee. If you earn less than this amount while you are on leave, this will apply to you.

Pre-tax. It is the amount that appears on your most recent tax return as “taxable income”. It is not gross billings.

No. If members claim eligibility for the discounted fee, they will be asked to declare their taxable income is below the $150,000 threshold, and that the information they have provided on their membership renewal is true, correct and complete in all particulars. We know GPs are trustworthy and honourable, and we trust members to meet their professional obligations to not make false declarations.

If your circumstances have changed, please contact our member services team to discuss options.

We expect the reduction in membership categories will lead to an additional $8-9m in revenue over the next two financial years. Combined with the cost reductions set out in the next section of these FAQs, this will lead to greater financial sustainability for the RACGP, and in turn improved services and even stronger work in advocating for general practice on your behalf.

 

No, they won’t. You’ll receive the same member benefits as you currently receive regardless of your new membership subscription category.   

Yes, members will receive a receipt automatically when they renew. Members can also call the member services team for a copy of their receipt. 

You will continue to enjoy free membership; there will be no changes to your membership.

We’re here to help

Not sure which category you belong in?

Talk to our Member Services team about your circumstances at 1800 472 247 or membership@racgp.org.au