Tim Woodruff

Dr Tim Woodruff is a Melbourne rheumatologist and President of the Doctors Reform Society of Victoria.

(This article is based on a paper presented to the 2000 National Conference of the Doctors Reform Society in Melbourne, 21 October 2000.)

Corporatised Medical Centres

Corporatised medical centres have been around for some decades now and despite major concerns when they were introduced, have not been expanding in their market share until recently. However there has been a recent change in this pattern with figures suggesting that over 30% of GPs in Perth, Melbourne, and Sydney are now in some type of corporate centre. For the purposes of this discussion I would like to take the example of the buy-out model. This is the most worrying of the models as it appears to have the most potential for harm to patient care, costs to patients, and costs to taxpayers.

In this model a GP is offered an upfront fee by the corporation which may be called goodwill and which is a percentage of the gross earnings. The GP is then paid either a salary or a percentage of generated revenue and the owners take the rest. The medical centre has GPs, specialists, pathology, radiology, pharmacy, physiotherapy, and other allied health services on site.

Such a medical centre has advantages for the patients and for the doctor. For the patients the advantages include:

• Co-location of services
• 24 hour cover
• Comprehensive cover

For the doctor advantages include:

• Reduced or absent administration fees
• Cover for after hours/ holidays/other leave
• Access to support staff eg nurse etc
• Increased accessibility/communication to specialists, allied health.
• Up front goodwill

However, this model raises several interlinked concerns. There is excellent evidence now available to indicate that patients treated in a fee-for-service environment receive more procedures than those treated in the public system. One could argue that this is due to either underservicing of public patients, overservicing of private patients, or a mixture of both. The latter is by far the most likely.

In the corporate medical centre there is ample scope for both direct and quite subtle pressure on doctors to overservice either by seeing patients more than is necessary, seeing patients for inappropriately short consultations, or for referring to pathology, radiology, allied health, pharmacy, or specialists inappropriately. The presence of these secondary providers on site will facilitate this.

Indeed, in a Government-commissioned paper, one of the points made was that these centres are unlikely to make much money from the general practice throughput. They are likely to depend heavily on these secondary providers for a return on their investment dollars. Thus, vertical integration appears to be the key to corporate interest in such centres.

Many GPs will resist the above pressures. Some will not. We are all human. Without external controls on behaviour, pressures to practice inappropriate medicine will be effective in varying degrees, depending on the circumstances.

We already have precedents for regulating doctors to prevent inappropriate servicing in order to generate extra income. Doctors cannot sell prescription drugs. There are limits on doctors owning private hospitals to which they refer patients. These regulations exist because doctors are human and thus, as a group, need regulating to prevent, or at least reduce inappropriate behaviour.

The results of such overservicing for patients will be:

• Unnecessary services (including dangerous ones)
• Increased expense (there will often be a copayment)
• Decreased consultation times

The results for the community will be:

• Increased costs through taxes to fund the Medicare component of services
• Increased spending of private income on health services

The results for the government will be:

• Increased Medicare payments for unnecessary services
• A happy private health industry sector

Additional concerns include:

• the possibility (already realised with the current level of corporatised bulk billing clinics) of adverse patient selection wherein patients attend the clinics for simple problems but attend the non corporatised GP for the complicated problems
• the possibility of decreased choice for patients as the buying power of corporations leads to a concentration of GP services in such centres. The patient is left with the choice of the centre or travel well out of their area or visiting a non corporatised practice which is struggling because of adverse patient selection and undercapitalistion.

Possible Solutions:

• Decrease incentives for overservicing in centres
• No Medicare funding for services referred in-house from a GP employed or contracted by a company which also has a business interest in the provider of the referred service
• Ownership by doctors only (an interim measure only). May reduce the likelihood of several large players dominating the industry
• Fixed rent for facility and service, independent of throughput.
• Share register for all doctors working in the centre
• Capping of pathology, radiology, etc, and even GP consults on a time basis. Such capping would need to be centre specific however. The current capping system leads radiology and pathology to expand their copayments. This leads to the usual inequities such payments have previously been demonstrated to cause i.e. decreased use of service by the poor, no change in use by the rich.
• Decrease incentives for GPs to move into corporate centres e.g. lack of available GPs, increased administration, decline in remuneration, relative value study implementation especially with respect to longer consultations.
• Increase provider numbers

Concluding Comments

Having made the above points, I conclude that the problems outlined above would not arise to a significant extent without the fee-for-service funding system for providers of referred services (especially radiology, pathology but also procedural and other specialists).

Medical centres with different types of health service providers on site have many advantages. Funding these capital intensive entities by corporations whose main interest is profit, is a medically dangerous and economically wasteful exercise. The government has a responsibility to act to control this process.

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