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SUMMARY OF FINDINGS
Introduction
This publication presents the results of the 2001-02 ABS survey of private medical practices and pathology businesses. This survey is conducted periodically by the ABS to provide a description of the financial and business structure of medical practices and pathology businesses including the composition of the income generated, details of the expenses incurred and the characteristics of the workforce.
This survey included businesses, of registered medical practitioners, in Australia that primarily provided general medical or specialist medical services, and any associated administrative service business. Pathology laboratory businesses were also included in the survey and results are presented in Chapter 4 of this publication. Only those businesses with predominant income generated from private medical practice were in scope of the survey. Businesses with income primarily generated from non-private practice medical activities (e.g. hospitals, teaching and research institutions, government and community health centres) were excluded.
For the purpose of the survey, a medical practice was defined as medical businesses, and any associated administrative service business. A medical business may be supported by an administrative service business used to manage the finances and secretarial activities of the medical business. Where this occurred, the administrative service business and all medical businesses it supported, were combined to form a single medical practice. Businesses without administrative service businesses were treated as single-business medical practices. Refer to paragraphs 7-10 of the Explanatory Notes for more information.
Chapter 1 contains summary information about general practice (GP) and specialist medical practices. Chapter 2 presents statistics on GP medical practices, Chapter 3 presents statistics on specialist medical practices, while Chapter 4 presents statistics on private pathology laboratory businesses.
Snapshot of GP and specialist medical practices
At the end of June there were 19,464 GP and specialist medical practices in Australia, comprising 9,600 GP and 9,864 specialist practices. These medical practices operated from 28,676 locations and had employment of 101,957 persons.
Income generated by these practices was $10,334.7m. Fee for service medical income comprised 87.6% ($9,053.7m) of the total income.
The total industry value added (IVA) by these practices was $7,392.5m, contributing 1.1% to Australian Gross Domestic Product (GDP) for 2001-02.
Across Australia, there were 12,091 GP practice locations and 16,585 specialist practice locations servicing a population of 19.7 million people at the end of June 2002. On average there were 6.1 GP practice locations per 10,000 population, while the average for specialist practices was 8.4.
Employment
Total employment of persons working in medical practices at the end of June 2002 was 101,957. This comprised 56,911 persons working in GP practices and 45,046 persons working in specialist practices.
Sources of income
Total income generated by medical practices was $10,334.7m in 2001-02. Specialist practices contributed $5,911.1m to the total, while GP practices contributed $4,423.6m.
Fee for medical service was the highest source of income for both GP and specialist practices, comprising 86.9% and 88.1% of total income respectively.
Total expenditure for 2001-02 was $7,118.9m, comprising $3,146.2m for GP practices and $3,972.7m for specialist practices. Labour costs were the highest single expense accounting for 54.6% of total expenditure.
Profitability
GP practices recorded an operating profit before tax of $1,107.1m which represented an operating profit margin of 26.4%. Specialist practices recorded an operating profit before tax of $1,653m, representing an operating profit margin of 28.1%. The lower profitability levels for GP practices can be partly explained by the higher incidence of bulk billing (51.7% of all income for GP practices, and 23.8% of specialist practice income).
Comparisons to other professions
The Accounting Practices, Legal Practices and Private Medical Practices surveys were conducted in respect of the 2001-02 financial year, providing an opportunity to compare the results of three private practice professions. Data for private accounting, solicitor, barrister, general medical, and specialist medical practices are compared in the results below.
The IVA for both medical (private GP and specialist medical practices) and legal (private solicitor and barrister practices) professions were similar. Medical professions generated $7,392.5m in IVA, legal professions $7,213.5m and accounting professions $5,753.2m during 2001-02.
Contributions to GDP by these professions were: 1.1% for medical, 1% for legal and 0.8% for accounting for this same period.
The graph below compares a number of ratios for GP and specialist medical practices with the corresponding ratios for accounting and solicitor practices. It shows that there was a higher proportion of single specialist medical practices than the other professional practices.
COMPARISON OF PROFESSIONAL PRACTICES - Selected ratios, by type of practice
(a) For medical practices, professional services income was fee for service medical income;visiting medical officer income; and other income from medical services.
For solicitor practices it was income from legal services, and for accounting practices it was income from accounting and other related professional services. |
Another interesting ratio comparison is return per practitioner. Return per practitioner is a measure of the average financial compensation that each practitioner receives for their involvement in a practice. This is generally calculated by summing the wages and salaries paid to professionals with the operating profit before tax of their respective practices and dividing by the number of professionals.
The table below shows that specialist medical practitioners generated the highest return per professional, followed by solicitors, general medical practitioners and accountants.
| COMPARISON OF RETURN PER PROFESSIONAL (a) |
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 | $'000 |
| Solicitor(b) | 129.5 |
| Accountant | 73.1 |
| GP medical practitioner | 101.1 |
| Specialist medical practitioner | 183.3 |
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| (a) The return for medical practitioners has been calculated on a FTE employment basis, whereas actual employment has been used for the return of accountants and solicitors. Refer to the Glossary for more information. | |
| (b) Includes a small number of barristers in solicitor practices. |
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Historical comparison
Comparisons with results from earlier surveys are useful, as an indication of the extent of change over time. However, it is important to note that the survey was not designed to provide highly accurate estimates of change, so any comparisons to results from previous surveys should be made with caution. Estimates of change can be subject to high levels of sampling and non-sampling error, changes to scope, and changes to question wording. Further information can be found in paragraphs 20-24 and 32-33 of the Explanatory Notes.
The table below shows that the number of GP practices declined from 10,349 at the end of June 1995 to 9,600 at the end of June 2002. The establishment of corporate GP practices may partly explain the reason for the decline (refer to Chapter 2 for further information). Specialist practices recorded a slight growth, increasing from 9,583 practices in June 1995 to 9,864 practices in June 2002.
Total employment of GP practices increased by 0.6% on average per year, while employment of specialist practices decreased by 1.9% per year over this same period.
HISTORICAL COMPARISON OF KEY FIGURES |
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| | General practices | |
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| | 1994-95 | 2001-02 | Average annual percentage change 1994-95 to 2001-02 | 1994-95 | 2001-02 | Average annual percentage change 1994-95 to 2001-02 |
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| Medical practices at end June | no. | 10,349 | 9,600 | -1.1 | 9,583 | 9,864 | 0.4 |
| Employment at end June | no. | 54,657 | 56,911 | 0.6 | 51,477 | 45,046 | -1.9 |
| Total income | $m | 2,836.3 | 4,423.6 | 6.6 | 4,404.6 | 5,911.1 | 4.3 |
| Total expenditure | $m | 2,058.1 | 3,146.2 | 6.3 | 3,332.5 | 3,972.7 | 2.5 |
| Operating profit margin | % | 27.6 | 26.4 | .. | 24.6 | 28.1 | .. |
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| .. not applicable | | | | | | | |
| | | | | | | |
AVERAGE ANNUAL PERCENTAGE CHANGE FOR SELECTED INDICATORS - 1994-95 to 2001-02
Computer usage
Computers were used in 89.8% of all GP practices and 94.5% of all specialist practices as at June 2002.
Computers were used for financial management or accounting purposes by 72.6% of GP practices and 85.3% of specialist practices, while 57.7% of GP practices and 55.7% of specialist practices used computers for patient records. Marked differences in computer use between the two types of practices were found in prescription packages (60.4% of all GP practices and 7.9% of all specialist practices) and research, teaching or preparation of articles (35.3% of all GP practices and 56.5% of all specialist practices).
Medical practices and administrative service and medical businesses
For the purposes of this survey, a single medical practice was created by combining an administrative service business with all the private medical businesses that it supported. Some medical businesses did not utilise administrative service businesses and were treated as single business medical practices in this survey.
Administrative service businesses supported medical businesses by carrying out administrative duties and paying various expenses (e.g. wages, rent, etc.) on behalf of the medical business. For this service, the medical business made a payment to this administrative service business for services rendered. That is, the expense to one business became income to another business. In some cases, the reverse occurred.
In forming the medical practice for this survey, data for medical businesses and their associated administrative service businesses were combined, but payments between businesses were netted out.
The chart below shows that there were 24,465 private medical businesses at the end of June. This total included 14,191 private medical businesses that operated without an administrative service business and 10,274 private medical businesses that used an administrative service business.
At the end of June 2002, there were 5,273 administrative service businesses supporting the 10,274 medical businesses. These businesses were combined to form 5,273 medical practices.
In total, there were 19,464 medical practices.
1.1 SUMMARY OF OPERATIONS |
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| | General practices | Specialist practices | Pathology laboratory
businesses |
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| Medical practices at end June | no. | 9,600 | 9,864 | 50 |
| | | | |
| Medical practice locations at end June | no. | 12,091 | 16,585 | (a) . . |
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| Medical practices using computers for |
| Patient records | % | 57.7 | 55.7 | n.a. |
| Prescription packages | % | 60.4 | ^7.9 | n.a. |
| Financial management or accounting practices | % | 72.6 | 85.3 | n.a. |
| Research, teaching or preparation of articles | % | 35.3 | 56.5 | n.a. |
| Any purpose(b) | % | 89.8 | 94.5 | n.a. |
| | | | |
| Employment at end June | | | | |
| Permanent full-time | no. | 22,914 | 22,913 | 9,123 |
| Permanent part-time | no. | 19,973 | 14,042 | 4,089 |
| Casuals | no. | 14,024 | 8,091 | 1,322 |
| Total | no. | 56,911 | 45,046 | 14,534 |
| | | | |
| Income | | | | |
| Fee for service medical income | $m | 3,845.3 | 5,208.4 | 1,146.2 |
| Other(c) | $m | 578.3 | 702.7 | 96.8 |
| Total | $m | 4,423.6 | 5,911.1 | 1,243.1 |
| | | | |
| Expenses | | | | |
| Labour costs | $m | 1,792.6 | 2,090.9 | 597.2 |
| Rent, leasing and hiring expenses | $m | 289.8 | 321.5 | 74.3 |
| Other | $m | 1,063.8 | 1,560.3 | 480.7 |
| Total | $m | 3,146.2 | 3,972.7 | 1,152.2 |
| | | | |
| Operating profit before tax | $m | 1,107.1 | 1,653.0 | 92.9 |
| Operating profit margin | % | 26.4 | 28.1 | 7.5 |
| Return per FTE practitioner(d) | $'000 | 101.1 | 183.3 | . . |
| Industry value added | $m | 3,142.1 | 4,250.4 | 785.2 |
|
| . . not applicable |
| n.a. not available |
| ^ estimate has a relative standard error of between 10% and 25% and should be used with caution |
| (a) There were 213 laboratory locations and 1,363 collection centres for these laboratories. Some of these collection centres are co-located with laboratory locations. |
| (b) Practices may identify more than one activity for computer use. Hence, the percentage of practices for each purpose of computer use do not sum to the percentage of practices using computers for any purpose. |
| (c) Includes visiting medical officer income, income from government medical programs, other income from medical services, rent, leasing and hiring income, interest and other income. |
(d) Diagnostic imaging practices and their practitioners are excluded from the calculation of return per FTE practitioner in specialist practices. See the definition of return per FTE practitioner in the Glossary of cat. no. 8685.0.
1.2 MEDICAL BUSINESSES AND PRACTICES AT END JUNE |
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| General practices | Specialist practices | Total |
| no. | no. | no. |
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| Medical businesses without an administrative service business | 7,298 | 6,893 | 14,191 |
| Medical businesses with an administrative service business | 6,007 | 4,267 | 10,274 |
| Total medical businesses | 13,305 | 11,160 | 24,465 |
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| Administrative service businesses | 2,302 | 2,971 | 5,273 |
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| Medical practices | 9,600 | 9,864 | 19,464 |
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| Corporate practice locations | 211 | n.a. | 211 |
| Other practice locations | 11,880 | 16,585 | 28,465 |
| Total practice locations | 12,091 | 16,585 | 28,676 |
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| n.a. not available |
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