The Medicare rebate for a standard GP consultation was $22.15 in 1990, when I started in general practice. In 2026, it is $43.90. If that rebate had kept pace with average weekly earnings over the same period, it would now be over $82. The Australian Medical Association's recommended fee, which accounts for actual practice costs including staff, rent, insurance and administration, is $102. The 2026 Budget applied an indexation factor of 2.6% to most general medical services from July, against a Consumer Price Index increase of 4.2% over the same period. The gap is real, it is widening, and nothing in the current policy settings suggests it will close.
If Medicare Benefits Schedule rebates had been indexed to politicians' base salaries since 1990, the standard Level B rebate would now be approaching $98 per consultation, and that doesn't include MPs' generous superannuation and pension benefits since 1990.
This is the context behind Beyond Medicare, a report I have put together on the commercial pressures facing general practice and the options available to practice owners. The pressures are real. The practices that manage them best are not waiting for policy to shift. They have tightened their operations, reduced their revenue dependency and applied the same discipline to the business side that they bring to clinical care.
Medicare rebate indexation and practice costs
GP rebates are not a crisis; they are a management issue.
The indexation problem is structural and long-standing. MBS rebates have been indexed below wage growth, commercial rent increases and general inflation for most of the past two decades. For a practice that bulk bills heavily and has no other revenue sources, the effective margin per consultation erodes each year without a mechanism to recover it.
Since 2023, Level A consultations have required six minutes, up from five. Level B consultations now carry a six-minute minimum that did not previously apply. Both changes reduce the number of consultations billable at each level in a standard session. The transition from GP Management Plans and Team Care Arrangements to the new GP Chronic Condition item in 2025 was positioned as a simplification, and for many practices it is. The Budget described it as a $300 million saving over three years. That saving comes directly from general practice billings.
Pharmacist prescribing, expanded under recent reforms, will direct some short consultations away from general practice. The practical effect is a patient load that skews toward longer, more complex presentations, where the return per minute of consultation time is lower than for standard consultations.
A single day in a public hospital costs more than fifteen years of GP consultations. An emergency department visit that does not require admission costs more than $700. That's sixteen times the rebate for a GP visit. An Urgent Care Clinic visit costs almost $250, which is five times the rebate for a general practice visit. The Medicare rebate to see a specialist is 2 to 3 times that for a GP.
This lack of respect for and investment in general practice is sad to see and is unlikely to encourage the next generation of doctors to train as GPs.
Australia is heading for a serious undersupply of GPs. By 2030, there is an anticipated shortfall of 11,392 full-time GPs, which is almost 28% of the general practice workforce.
Payroll tax, pathology rents and contractor classification
Three external pressures have added to the compliance burden and, in some cases, to the direct cost base.
- Court decisions on payroll tax over the past several years confirmed that many standard GP contractor arrangements may trigger payroll tax liability. State governments have introduced exemption frameworks, but they are not uniform and generally do not cover specialists, allied health or dental practitioners working within the same practice. Whether similar reasoning might apply to superannuation obligations remains unsettled law, but the question is live, and practice owners should be aware of it.
- Pathology rental income has declined structurally. Since the Healius decision and the tightening of Health Insurance Act enforcement, major pathology providers have cut rents by up to 50% or declined to renew leases within clinics. For practices where pathology room rent was the third-largest revenue line, this reduction is largely permanent.
- Contractor classification more broadly requires current attention. Service agreements set up under assumptions no longer supported by case law are a compliance risk and a personal liability risk (especially in NSW) for practice owners acting as company directors, and a risk to practice value when a compliance notice is on the table.
Billing gaps most practices can close
Not all the financial pressure is externally imposed. Underbilling is common in general practice and usually significant enough to quantify before concluding that revenue is fixed.
GPs regularly bill Level B where the consultation warrants a Level C or sometimes even a D. Chronic disease management items are underutilised relative to the eligible patient population in most practices. Health assessments for patients over 75, for Aboriginal and Torres Strait Islander patients and for patients with intellectual disabilities are underutilised, as are home medication reviews. DNA rates above 5% erode daily capacity in ways that compound meaningfully over the course of a full year.
In my own practice, a few years back during a flu clinic, I noticed how many of my colleagues' patients were eligible for care plans and health assessments. A billing audit found even more. That's revenue that had been consistently available and not captured. The same is true in most practices I have seen. Closing these gaps requires neither new services nor capital outlay. It requires a practice that tracks its billing data and responds to the findings. Most clinical information software already captures the relevant information, and tools such as Doctors Control Panel, Cubiko or MBSPro make the process more straightforward.
Revenue diversification that holds up under scrutiny
Diversification is worth pursuing, but not all additional revenue sources are equally durable. The pathology rental experience is a useful reference: what appeared to be stable ancillary income carried a compliance basis that did not survive enforcement. Revenue that depends on a single contract, a single practitioner or an arrangement that has not been tested against current law is not genuine diversification.
The forms of diversification that hold up are less dramatic than they might sound.
- Allied health tenants on market rents reduce dependency on GP billing without requiring clinical change.
- A nursing workforce that generates revenue through chronic disease management and health assessment cycles earns income that is not directly tied to GP time.
- Mixed billing, where the patient base supports it, removes the ceiling on per-consultation revenue.
None of these requires structural transformation; they require intention and follow-through.
Focused clinics in women's health, mental health, skin cancer, allergy or aesthetic medicine add genuine commercial diversification and, for many GPs, the kind of clinical engagement that a standard consultation schedule does not provide.
From a buyer's perspective, each additional genuine revenue line reduces risk and supports a higher valuation multiple. A practice generating income across two or three streams is a better commercial asset than one relying on a single source, even where that source is substantial.
Practice value and owner dependency
The commercial characteristics that drive practice value are consistent and well-documented:
- Low owner dependency.
- Compliant and current agreements.
- Diversified revenue.
- Disciplined cost ratios and succession planning that began before transition became urgent.
Owner dependency is the variable most consistently underestimated. A practice where the owner is the top biller, the primary decision-maker, the HR function, and the first call for every problem is worth measurably less than a comparable practice where the owner could be absent for a month without operational disruption. Buyers pay for a functioning business, not a role. The practices achieving the strongest multiples are those with documented systems, current agreements and a practice management layer that operates independently of the principal.
Staff cost ratios deserve the same attention. A well-run practice keeps wages at around 20 to 30% of billings. Practices that have drifted above that range often do not realise it until they prepare for a sale or a financing conversation. The correction is usually achievable without structural change, but the longer it runs unaddressed, the more it affects both valuation and options.
Succession planning started three to five years out from a likely transition produces materially better outcomes than planning that begins when the owner is ready to go. Early planning allows time to reduce owner dependency, update agreements, close billing gaps and document operations in ways buyers and financiers can assess. Owners who start early have more options. Those who start late have fewer and usually accept less.
Australia is heading for a serious GP undersupply. A shortfall of around 9,300 full-time equivalent GPs is projected by 2030, close to a quarter of the current workforce. That context will change the buyer pool and the succession landscape for many practice owners. Practices that are well-positioned now will hold their options as conditions shift. Those who are not will feel the pressure from both directions.
Beyond Medicare is available as a free download, with the full detail behind the pressures and options outlined here.