General Practice is in crisis, so what happens next?

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No, I am not talking about Australia but about New Zealand 20 years ago.

New Zealand is geographically closer, and more similar to ourselves than any other country, however Australian doctors probably know more about the NHS in the UK and US models of care than they know about the GP model of care in NZ.

So as an ex NZ doctor (I did some GP training in NZ but sat my FRACGP in Australia) I have picked up the phone to a friend and colleague, Dr Richard Medlicott and had a chat about the funding crisis in NZ 20 years ago. What led to the problem and how was it resolved?

First of all, tell us a bit about yourself

Well, I am a GP, I live and work in the suburb of Island Bay in Wellington, which is which is a moderately affluent suburb, 10 minutes from the city centre.  I have been a practice owner for 20 years and now work 24 hours a week seeing patients and spend the other working time doing paperwork, assisting with practice management and I am on a few committees. I was the Medical Director of the Royal NZ College of General Practice for several years until 2019. Outside work you might find me still going out to music gigs, mountain biking or skiing in Ruapehu (when they have some snow!!)

So why were GPs in crisis 20 years ago?

Well, we had a funding model that was usually referred to as “Section 51 GMS”. This was a fee for service model a bit like Australia. However rather than the fee going to the patient, the rebate goes directly to the practice, so there weren’t any issues charging gap fees to the patient and then collecting the rebate from the government. However, there are other differences between NZ and Australia as well, that is we don’t have universal standard rebates for everyone. The rebates paid by government in NZ were tiered and GPs were paid higher rebates for seeing kids and people on lower incomes than the rest of the population. And some people attracted no rebate at all. The problem came about as this system had been in operation for about 40 years and there hadn’t been any proper indexation. When it was set up, Section 51 payments covered about 40% or more of running a GP practice and then by the late 1990’s it was only covering 25%. So GP incomes were eroding and private fees to patients were going up.   

The problem of rebates not keeping up with inflation will sound familiar to Australian doctors, so what did they do to resolve this?

They bought in patient enrolment or capitation and under this system practices are paid a set amount per year to look after patients. The biggest fees are paid for children (0 to 5 years) and these are up to $500 a year, and the lowest fee is for males between 25 and 45, at about $80 per year.

This meant that all people in NZ attracted a government payment and this actually put allot more money from the government into general practice. GPs were still free to charge private fees, but with the patient enrolment payments, private fees to patients went down.

This also freed up GPs to delegate work, and incentivised them to invest in patient education so that patients were better able to self manage and there was much less incentive to over service. It has really helped drive innovation in GP care and also helped improve doctor incomes.

Some practices in low socio economic areas have signed up to something called the Very Low Cost Access (VLCA) model. They get increased capitation funding, but have to set lower fees to the patient.

We are all limited in how much we can increase fee’s to the patient, if we go much above CPI there is a review process.

I think the model works, but is underfunded, especially the VLCA system which is more problematic as the higher funding doesn’t cover the increased patient complexity in deprived areas. In NZ, GP business sustainability is all about keeping annual patient visits close to or below the funding model. A well run practice in a less deprived area can do well. Others may not do so well. Like all things the devil is in the detail and we need to change some of the funding formulae, but not the model in my opinion.

If you don’t mind me asking what do GPs earn in NZ?

Well there are really 2 types of GP in NZ. They are the associate GPs who are paid on a sessional rate. The going rate is about $450 per session. So I suppose if you worked full time or 10 sessions that would be $4500 per week and if you worked about 46 weeks a year that is around the $200k mark. Although with the amount of paperwork, not many GP’s these days work more than 8 sessions of patient contact time per week. Most of our associates do 4-7 sessions.

However if you are a GP owner then you can earn more than that. It would be reasonable to assume that GP owners are probably getting a 30 – 40% uplift from what an associate earns. Maybe half of GPs are owners and the other half associates. Of course this is variable, depending on both he patient demographics and practice management. At Island Bay we have a low doctor to patient ratio, a high nurse to patient ratio and very low admin overheads. It’s a formula that works for us.

What are the benefit to patients ?

It meant that back in about 2002 when this came in there was a drop in patient fees, so patients were happy about that.

And as I was saying earlier our practice and many others have really invested much more heavily in nursing support and patient education.

It has also helped the introduction of technology because we are incentivised to use it and not get the patient into the practice. Pretty much every GP practice has a patient portal. And when I say patient portal I really mean a practice app which the patient has on their phone. When a pathology result comes in on my PMS, I will check it off and make a comment. For example the PSA may be normal and unchanged and I can make a comment to that effect. Once I do that the patient is pinged on their phone and can view the pathology result and my comment inside the app.

Or another example if the patient wants a repeat script, the patient requests the script in the app, I get pinged in my PMS and then if I am OK with that I click ‘accept’ and the PMS/EHR creates the electronic script, and goes to the pharmacy and the patient is pinged to say their script is at the pharmacy. We charge the patient for this. So for routine repeats of scripts we have no incentive to see the patient. So I think it has assisted in allocating time to what is actually important.

One of the main patient portal companies is manage my health and they have about 1.3 million kiwis using it.

Do you have pay for performance ?

Quality payments have changed over the years and may depend on where you are. In Wellington our practice can set its own areas of interest and targets. We also get payments for diabetic reviews.

All up I would say that quality payments make up about 5% of practice funding and New Zealand has not gone down the NHS Quality Outcome Framework (QOF) road which gave large payments that were shown to be damaging in some respects.

So what is the rough split of practice funding in New Zealand?

In our practice I reckon it is about 60% patient enrolment or capitation payments from the government , 35% private patient fees and 5% quality payments.

 And what do patients pay in NZ to see a GP?

Hamish, if you were to come in and be seen and you were enrolled here, it would cost you $50 per visit. If you weren’t enrolled at our practice it will cost you $100.

Enrolled patients under the age of 14 are always seen for free.

If you are 65 and over and enrolled it will cost you $50 per visit. However if you are a low income person of any age, and on a community service card there will be a discount. So that same example of someone over 65 and on a community card, we would charge them $20 per visit.

The most profitable patients for the practice are the ones that stay well and don’t come in. But remember enrolled patients are not locked in to the practice, they can stop their enrolment any time and transfer their enrolment to another practice. So if you don’t provide reasonable access and service they will enroll somewhere else.

So how many patient do you need to have enrolled to be viable?

What people usually say is a full time GP needs to have about 1200 – 1800 patients enrolled to make a good living and of course you need good admin and nurse support to make that work. Personally, I have 1550 patients registered to me, I can cover them with a 1-2 days wait for appointments, and I do 5 sessions a week. My colleagues with similar hours have 1000-1500 patients. Each session is 12-15 patients. Usually, I will have appointments available when the phones open in the morning. Of course, most patients use the portal for online booking, which helps keep the admin cost low.

Its not all sweetness and light over here, and many GPs are close to burnout and feeling the struggle. I’m fortunate to work in a practice with a long history of good leadership and quality.

What do you think of the Australian GP system?

I am no expert. Australia seems to have the advantage of having more money to work with than we do in NZ, but to me your system looks pretty antiquated and my guess is that it stifles innovation.

Great to chat , but have a nurse waiting with a spirometry to read. Take care.