POSITIVE BUSINESS OUTLOOK FOR MEDICAL PRACTIONERS
The Australian medical profession has been rated "low risk with a moderate to high growth profile" according to a new health industry report, recently released by NAB Health.
NAB Health incorporates NAB's specialist healthcare brands Medfin and HICAPS. Its Australian Industry Risk Intelligence report assesses Australian businesses and rates their risk and growth potential in the current economic environment.
"Overall the health industry segment is in a positive position. Business conditions in the health segment remain positive and general practice echoes this trend for a number of reasons" advises Medfin's CEO, Callum Davidson.
'Around 80% of Australians visit a GP at least once a year. Demand is forecast to grow faster than the broader economy due to the growth and aging of the Australian population. In addition, technological advances have resulted in an increase in service utilisation. These factors will continue to provide support for medical practitioners over the medium term' Davidson explains.
The risk of a slow in demand is minimised by the essential nature of health as a service and also by the certainty of payment via Medicare.
Demand for services maybe increasing, however doctors are concerned about their quality of life and how best to maintain a healthy work/life balance. This concern is driving GPs to make changes within their profession.
In an effort to reduce working hours, more doctors are working part time and/or turning to group or corporate models of medical practice.
At this stage though, the medical centre market remains highly fragmented with the 3 largest corporate players representing just 9% of the total market. This means that scope exists for further consolidation.
"We expect a continued move away from sole-practice to larger clinics" states Mr Davidson. "The Australian Medical Association records the average size of a general practice as being three GPs. The association believes that the evidence suggests that there is potential for scale efficiencies for up to about 6 to 8 doctors. This is consistent with the recent Federal Government initiative of establishing GP Super Clinics" he explains.
At the end of June 2002, the Audit Bureau of statistics recorded a total count of 9,600 general practices in Australia. The total income generated in 2001-2 by these practices was $10,335 million with a total expenditure of $3,146 million. Industry operating profit before tax was $1,107 million giving a healthy operating profit margin of 26.4%.
Perhaps the one note of caution for the medical profession is that Australia's rising health needs are expected to limit the Government's ability to increase funding to medical practitioners at a rate commensurable with increases in practice costs. This could result in both an increased cost burden for patients and the possibility of some margin reduction for GPs. Overall though - the outlook for General Practitioners remains positive.
Mr Davidson's summary of NAB Health's economic report presents a reason for optimism. "Australia's healthcare industry is expected to withstand the economic downturn as the most resilient sector'" he concludes.
To speak to a Medfin Relationship Manager call 1300 361 122 or visit medfin.com.au.
About the report
NAB Health's Economic research was compiled by Industry Economics, a division of National Australia Bank Group Economics department. The research was prepared for NAB internal purposes to assist in assessing risk intelligence on the Australian healthcare industry for business lending purposes. The research has been based on desktop analysis of the Australian healthcare industry.
