New figures from the Australian Bureau of Statistics reveal that health sector inflation reached 6.1% over the 12 months leading up to April, marking the third highest increase after alcohol and tobacco, and insurance and financial services.
The surge in healthcare inflation, as outlined in the ABS Monthly Consumer Price Index (CPI) Indicator, has far exceeded the overall economic cost increases, which stood at 3.6% during the same period. This escalation in costs is placing mounting pressure on general practices across the country, threatening their viability and resulting in heightened patient fees.
Dr. Yee-Shing Kan, Chair of RACGP Specific Interests Business of General Practice, expressed concerns about the detrimental impact of rising costs on the profitability of clinics, particularly in light of impending payroll tax changes. She emphasized that many smaller practices are on the brink of closure due to the financial strain.
Smaller practices, particularly those reliant on patient rebates for their income and located in underserviced areas, are bearing the brunt of these challenges, according to Dr. Kan. These clinics, often catering to populations with lower socioeconomic status, are particularly vulnerable.
Dr. Kan stressed that increasing Medicare patient rebates would provide much-needed relief to general practice and the broader healthcare system. The inability to cover rising costs while maintaining bulk billing for patients is exacerbating the strain on clinics, leading to compromises in patient care.
Despite a 3.6% annual fee indexation applied to most Medicare Benefits Schedule (MBS) services in July last year, supplemented by a 0.5% rise in November 2023, the 2% gap between healthcare inflation and indexation has effectively eroded rebates over the past year. This trend, initiated in 2006–07 and exacerbated by the Medicare freeze, has significantly impacted general practice finances, amounting to a loss of $4 billion since its inception.
Dr. Kan urged the government to carefully consider the implications of these challenges, particularly in light of the upcoming round of indexation slated for July 1st. Addressing these issues, she emphasized, is critical to safeguarding the accessibility and quality of healthcare services for all Australians.
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