Determining your fees
The value of your service should determine your fees.
Because your service fees make a significant contribution to your practice’s viability, you need to determine fair and equitable fees for the services you provide. Collaborating with your team to calculate the fee will help you consider all relevant issues, including:
- How much of the fee will contribute to the practice’s running costs?
Patient fees will generally be your largest source of income and should therefore be set at a rate that means you at least recover the full cost of the services you provide.
Unless the full cost of the service is recovered, your practice will not have a sustainable financial foundation.
To calculate a fair fee, you need to factor in:
- time that you and other GPs will spend on activities that are not “billable”, such as staff meetings and professional development
- other costs of running your business, such as wages for administrative staff, and the costs of consumables, utilities, insurance, and marketing
- any cross-subsidising of patients or services that you think will make your fees reasonable and fair.
- Fees for other services.
In addition to setting fees for your medical services recognised by Medicare, it is appropriate to set fees for other services you provide. These could include:
- writing scripts and referrals
- conducting teleconferences
- preparing reports and medical summaries, including reports for patients (eg when required to access superannuation funds)
- running disease or condition-specific clinics, such as seasonal flu clinics
- employment assessments, including health and pre-employment checks, injury assessments, fitness for duty assessments, and corporate health checks
- third parties requests (eg WorkCover willingly pay for phone conversations with GPs, however you have to sed them an invoice to generate their payment).
- Your patients’ ability to pay for services.
Setting fees that are unrealistically high might mean that your services may not be financially accessible to patients. But if you set your fees too low to attract new patients and increase patients’ ability to receive affordable healthcare, this might result in:
- increased pressure on GPs to work faster or longer than may be safe
- reduced ability to invest in professional development for yourself and others
- diminished work satisfaction.
- Your patients’ needs and expectations.
Understanding your practice’s patient profile means you can:
- effectively estimate how many patients you can expect to see in a given period (eg each hour, each day)
- predict the use of MBS items (such as the diabetes annual cycle of care) and enhanced primary care items
- identify the supporting resources and services your patients need
- cater for those experiencing financial hardship, and those who might expect to receive medical services for free.
Consider the choices available to patients in your local area. If there is not much competition, there may be less pressure to offer lower fees, and if there is a lot of competition, you might want to set your fees at a competitive rate.
- Your specialisation.
Many GPs complete specialist training and become a fellow of a specialist medical college, such as the RACGP, which takes time and money. Your fees should reflect your status as a specialist medical practitioner.
- Fees charged by other GPs.
If you can, find out what other local GPs are charging, how they determined their fee structure, and how willingly their patients accept their fees. However, if you are discussing fees with other GPs and thinking about developing or changing a billing policy, you must adhere to the legislation and Australian Competition and Consumer Commission’s (ACCC) requirements that prohibit collusion between competitors.
C1.1 A Our patients can access up-to-date information about the practice.
At a minimum, this information contains:
- our practice’s billing principles
GP1.1 A Our practice provides different consultation types to accommodate patients’ needs.
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Hourly billing calculator
Data from the Medicine in Australia: Balancing Employment and Life (MABEL) survey shows that, in 2018, the median amount GPs earned per hour was $105. Those in the 25th percentile earned $77 and those in the 75th percentile earned $147.
Our billing calculator tool has been designed to help you and your practice meet your financial goals. It is designed to demonstrate the mechanics of fee for service and to help you understand how practice billing may affect your income and the lifestyle you wish to achieve.
Use the calculator
When determining fees for your services, consider the portion of your income that you want to invest back into your practice. Investing in your practice helps you grow and improve your practice, broaden your range of services, and improve patient access, safety and care.
Examples of investing include purchasing new equipment and systems, refurbishing the premises, increasing staff numbers, and increasing opening hours.
Case study: Thinking outside the box
Dr Lim’s practice was bulk billing at 98% when she decided she wanted to lift the practice’s income to offer more professional development for staff and to increase her salary. Instead of increasing their opening hours, or increasing their regular fee, they introduced a $10 co-payment just for services delivered between 6–8 pm Monday to Friday and 12 noon–5pm Sunday.
Because the practice billed an average of four Level B consultations per hour per GP, the $10 co-payment resulted in an extra $40 worth of billings per hour, per GP. This amounted to $600 per week, and therefore $28,800 per year per GP. With an average of 40% of GP billings paid to the practice, the practice received an additional $11,520 per year, per GP.
(Options outlined in this example may not be practical for practices in bulk billing incentive areas.)