The growth prescription

More patients, more services and higher intensity of care for sicker patients will drive demand for the services offered by general medical practitioners. IBISWorld estimates that industry revenue will increase at an average annualised real rate of 5% in the five years through 2008-09.

This is due mainly to an increase in the number of services provided and, to a lesser extent, an increase in the average fee per service. Medicare benefits paid for GP attendances are forecast to grow while the number of Medicare-based GP attendance services are also forecast to grow over the same period.

The factors promoting per capita demand for GP services include the low or zero cost of Medicare services, an ageing population, greater awareness of health issues and services and an increase in the range of available treatments and tests.

The Government has sought to restrain expenditure on medical services and benefits through regular reviews of the Medicare benefits schedule and restructuring of benefits in areas where rapid growth was evident.

Government measures will impact the performance of this industry in the five years through 2008-09 in a number of ways, including by providing additional funding for resource intensive services, thus improving the profitability in providing these services and introducing a practice nurse Medicare item, which increasing the ability of practices to leverage relatively low-cost labour.

Products and Services Segmentation:

Doctors are a cornerstone of the health system in Australia, and general practitioners are at the coal face. The Australian health system is expected to continuing growing at a strong pace. IBISWorld estimates that over the five years to 2013-14 revenue in this industry is expected to grow at an average annualised real rate of 2.5%, due primarily to an increase in the number of services provided. There is expected to be little, if any, real increase in unit prices for comparable services, and this will impact profit margins.

The number of GP Medicare services is forecast to also increase, which will result in a small increase in services per capita. Commonwealth Government bulk-billing initiatives, an ageing of the population, technological advances and an increase in the range of services available will each have positive effects on demand for GP Medicare services.

Major Market Segments:

The Commonwealth Government has introduced a number of measures that focus on increasing after-hours services, promoting preventative health care by providing new Medicare items and promoting care for patients with chronic diseases.

Many of these measures provide incentives for participating GPs. Government initiatives also aim to reduce the use of costly in-hospital services, such as by increasing resources for primary care and hospital-type services provided in the home, and these areas should provide opportunities for GPs to boost income.

Industry Outlook: