Medical Centre has been bombarded with calls over the new $7 Medicare fee

Medical centre giant sends mass text message to assure patients about Medicare co-payment

Pat McGrath reported this story on ABC RADIO 'PM' Tuesday, May 20, 2014

MARK COLVIN: The Government's planned Medicare co-payment hasn't even made it to the Senate, but big health care companies are already rushing to limit the damage to their revenue.

Australia's biggest medical centre operator has begun sending text messages to patients to assure them it hasn't begun charging the $7-per-visit fee.

Shares in big health care providers have been falling steadily since the measure was announced in last week's budget.

Business reporter Pat McGrath.

PAT MCGRATH: If the Medicare co-payment plan makes it through the Senate, it will earn the Government more than $1 billion in extra revenue each year.

But it's also designed to cut health care costs for the Government in another way, by sending a price signal to encourage people to visit their GP less often.

And that's potentially bad news for companies like Primary Health Care, which has seen its share price fall from $4.77 in the hours before last week's budget to less than $4.50 today.

That's a 6 per cent fall in a week.

But Bell Potter health care analyst John Hester isn't convinced the charge will result in fewer people in doctor's waiting rooms.

JOHN HESTER: Look, I don't know that there are any patients who go to the doctor unnecessarily. I can't tell you the last time I went to the doctor unnecessarily. So, I just don't know that there's been a whole lot of research done on that argument to start with.

I certainly haven't seen anything, and there's certainly been no evidence presented by Medicare to suggest that there's been overbilling.

PAT MCGRATH: Primary Health Care seems to see at least some risk of its patients being discouraged by fee.

It's been sending text messages to its patients of its 87 bulk-billing medical centres around the country.

The text says "no co-payment required, zero dollar bulk billing available" at, and the name of the patient's clinic.

Primary Health Care has turned down PM's request for an interview, and won't say how many patients have received the text.

The company began its life as 24 hour bulk-billing centre run by the doctor Edmund Bateman in 1985 to become a share market listed company with a market value of more than $2 billion.

John Hester says, even if Primary Health Care did see a fall in patient numbers, it would find a way to limit the revenue impact.

JOHN HESTER: Primary's response will be to most likely cut their costs in order to maintain the level of earnings that they desire. That may involve some sort of potentially look at the service levels that they provide and other things which allow them to maintain the profitability that they want.

PAT MCGRATH: What are the other options for maintaining the profitability? Could they move from a bulk-billing model that relies on Medicare and potentially in the future co-payments, to a model that moves more towards service fees, like other medical centres?

JOHN HESTER: No, I think it'd be highly unlikely. Doctor Bateman, one of the cornerstones of his business for decades has been that it's a bulk-billing service.

PAT MCGRATH: Grattan Institute health policy analyst Stephen Duckett isn't so sure.

He believes the fee could ultimately lower the number of bulk billed consultations in Australia, which Medicare says is currently above 80 per cent.

STEPHEN DUCKETT: Well they've got a couple of strategies: either they can keep bulk billing and hope that they'll attract additional demand to cover that, to make up for that loss they're going to make, or they can move away from bulk billing.

PAT MCGRATH: So what would that involve?

STEPHEN DUCKETT: Introducing fees. Now, if they happen to introduce charges, it'd be unlikely that they'd just introduce a charge at the $7 level; they might introduce charges at $22 or whatever, which is the average.

PAT MCGRATH: So, this loss that these companies are making, the big chains are making through the co-payment, they could seek to completely change their businesses to charge fees rather than bulk bill?

STEPHEN DUCKETT: That's right. It depends on what their business model is; it depends how many competitors there are in the nearby areas. They'll have to make a judgement about, you know, the revenue, how much revenue they get and whether they'll lose demand and make it up for on additional fees or not.

MARK COLVIN: The Grattan Institute's health program director Stephen Duckett ending that report from our business reporter Pat McGrath.