GP workforce stability: how locum dependency reduces practice value

Buyers assess GP workforce stability as a direct indicator of business sustainability. Structural locum dependency, unfilled sessions and imminent GP departures reduce practice value. Seven in ten practice owners report sourcing and retaining GPs as a challenge, and only 34% of GPs under 40 express interest in future ownership. Registrar training provides a recruitment pipeline buyers value.

GP workforce stability is a direct indicator of business sustainability. Buyers purchase predictable, transferable earnings. If the practice relies on locums, has unfilled sessions, or faces imminent GP departures, those earnings are uncertain, and the sale process becomes more difficult.

Practices may use locums to support leave arrangements, which offer longer-term retention benefits. Still, when they are used predominantly to backfill regular sessions, they may be seen as a red flag for recruitment and a risk for potential purchasers, so sellers need a clear strategy and story.

Workforce vulnerability and the ownership pipeline

Most practices enter the market when a principal is approaching retirement. The assumption has traditionally been that an employed or associate GP would step into ownership. That pipeline is weakening. Research on GP registrars and recent fellows found that a strong theme of fear emerged among participants when discussing practice ownership, particularly regarding financial concerns, a lack of business knowledge and difficulty balancing clinical and management roles. The RACGP Health of the Nation 2025 report found that seven in ten practice owners identified sourcing and retaining GPs as a challenge, and only 34% of GPs under 40 expressed interest in future ownership.

This reluctance among younger GPs to take on ownership is a structural driver of corporatisation and consolidation. It also means that practices approaching sale are more likely to have workforce instability as a presenting problem, because the internal succession pathway that may have stabilised the workforce a decade ago is no longer reliable.

Workforce stability and buyer assessment

Buyers assess GP retention to model maintainable earnings under new ownership. For example, a practice with three permanent GPs who have worked together for five years presents lower transition risk than a practice with two permanent GPs and three unfilled sessions covered by rotating locums.

The difference is predictability. Permanent GPs with signed agreements and an established patient base generate consistent revenue. Locums are transient. They may not return post-sale; their patient continuity is weak; and their billings are often lower than those of permanent GPs due to limited familiarity with practice systems and patient histories.

Buyers also examine whether GPs are planning to leave. For example, in a small practice, if one of two permanent GPs retires within 12 months of settlement, half the practice's revenue is at risk. Buyers will either adjust the offer to account for replacement costs or require the seller to recruit a replacement before completion.

The locum dependency problem

Regular locum use signals workforce instability. It suggests the practice cannot attract or retain permanent GPs, raising questions about location, remuneration, culture, or workload.

The Commonwealth's analysis of locum use in the medical workforce found that increased remuneration, flexibility and autonomy were the most frequent reasons doctors chose to locum, and that the situation worsened following the COVID-19 pandemic, with increased demand and rising costs. This confirms that structural locum dependency is a market-wide problem, not a practice-specific anomaly, but buyers still treat it as a risk factor at the individual practice level.

Operational impact of locum dependency

Structural locum dependency creates problems beyond revenue variability. Most practices use locum agencies to manage credentialling, which adds costs and shifts the locum's primary reporting relationship from the practice to the agency. Accountability for clinical standards, patient follow-up and practice reputation sits with the practice, but operational control over the locum is limited.

Locums typically do the clinical work they are contracted to do and little else. Unless the engagement specifically includes reviewing previous pathology, setting up recalls and reminders, updating patient databases or completing clinical audits, these tasks tend not to get done. In practical terms, this represents roughly one full-time equivalent of medical administration work that accumulates as a deficit. The non-MBS funded tasks that keep a practice operationally sound, including recall systems, audit compliance and database integrity, erode during periods of heavy locum use.

Patient knowledge and care continuity are also compromised. Locums usually do not know the practice's patients, cultural preferences, models of care or referral networks. They are less familiar with local follow-up methods and clinical pathways. This increases clinical risk and reduces patient satisfaction. Research published in BMC Health Services Research found that professional isolation was a primary deterrent to locum work and that organisations relied on financial incentives, flexible contracts and clinical support as recruitment strategies.

Locums do not live locally. They tend not to contribute to the local economy, local health literacy efforts, relationship-building, or charitable contributions to the region. They are credentialled at a point in time but may not have the best clinical practice currency or CPD recency for a given issue. They may not attend local CPD events and may miss opportunities during the 12 months. They may be reluctant to ask for help or not know that they need it, particularly around situational judgement such as Aboriginal sensitivity issues.

Unfilled sessions and recruitment failure

Unfilled GP positions signal market or operational problems. If a practice has advertised for six months without filling a position, buyers will ask why.

Common causes include:

• Uncompetitive remuneration (service fees too high or take-home pay too low)
• Poor location (insufficient patient demand or an undesirable area)
• Inadequate infrastructure (outdated systems, insufficient support staff, or poor facilities)
• Cultural issues (difficult practice owner, staff conflict, or poor GP relationships)

Buyers will investigate the cause. If it is fixable (adjust service fees, improve systems, hire support staff), they may proceed, but will adjust the offer to account for the cost and risk of remediation. If the cause is structural (a declining patient base, an uncompetitive location), they may walk away.

Practices with unfilled sessions should address recruitment issues before sale discussions. This might involve adjusting GP remuneration, improving practice infrastructure, engaging recruitment agencies or considering registrar placements to build a pipeline.

GP retention and departure risk

Imminent GP departure creates valuation risk. Replacing a departing GP involves recruitment costs, onboarding time, revenue loss during the vacancy, and patient attrition, as some patients follow the departing GP or transfer elsewhere.

What buyers look for in workforce stability

Buyers assess:

• GP tenure – how long each GP has worked in the practice
• Contract status – current signed agreements with clear terms and notice periods
• Billing consistency – stable or growing billings over at least two years
• Planned departures – whether any GPs intend to leave within 24 months of sale

Buyers also evaluate how the practice uses locums: they assess whether locum work is occasional coverage or a structural dependency, whether the practice can fill unfilled positions, and, if not, why those positions remain vacant. They assess retention risk, such as what incentivises GPs to stay post-sale.

Registrar training as workforce infrastructure

Practices that train GP registrars demonstrate workforce planning and create recruitment pipelines. Registrars constitute 14.7% of the Australian GP workforce by headcount and retention of registrars post-fellowship is a potentially valuable issue for practices, especially in areas of workforce shortage.

Research published in Rural and Remote Health (2024) found that 59% of early-career GPs surveyed were currently working in a practice where they had previously trained as registrars. Among those working in regional-rural locations, the retention rate was 69%. Practices that offered out-of-practice care and after-hours opportunities during training had higher retention rates.

Beyond the direct financial benefit, registrar training positions the practice as professionally managed, connected to training organisations and workforce agencies, and capable of meeting accreditation standards. Buyers value this infrastructure because it demonstrates a recruitment pathway and reduces dependency on expensive locum agencies or external recruitment firms.

Practices with established registrar programs can point to their training infrastructure (accreditation status, supervisor training, relationships with training organisations) as evidence of workforce stability systems. This is particularly valuable in regional and rural areas where GP shortages are more acute.

Regional and rural workforce constraints

Regional and rural practices in Modified Monash Model areas 4 to 7 face more acute GP shortages and greater recruitment challenges due to location, lifestyle, and professional isolation. These practices are eligible for rural and regional workforce incentives, including bulk billing incentives and the Workforce Incentive Program, which can improve buyer appeal if properly documented.

Buyers assess regional practices differently and may accept higher locum use if it reflects market norms rather than practice-specific problems. They value practices with established registrar training programs or relationships with rural workforce agencies, as these create GP recruitment pipelines.

Regional practices should document their workforce infrastructure (accommodation support, professional development funding, registrar placements) when preparing for sale, to demonstrate that they have systems to manage recruitment challenges rather than simply absorb them.

Stabilising the workforce before the sale

Practices planning to sell within three years should audit their GP workforce immediately:

• Identify permanent GPs and their tenure, contract status and billing trends
• Assess locum usage and whether it is occasional or structural
• Confirm whether any GPs plan to leave within 24 months

If the workforce is unstable, take action. Adjust GP remuneration if service fees are uncompetitive. Improve practice infrastructure through system upgrades, additional support staff or facility improvements. Engage recruitment agencies or workforce programs to fill unfilled positions. Consider registrar placements to build a GP pipeline.

Formalise GP retention through:

• Current signed agreements with notice periods and restraints
• Documented service fees and billing arrangements
• Clear post-sale transition planning

Address planned departures proactively. If a GP plans to retire, recruit a replacement before sale or disclose the departure and negotiate a fair price adjustment. If multiple GPs are considering leaving, delay the sale until the workforce is stabilised.

Workforce remediation timeline

Workforce instability can be remediated, but it takes time. Recruitment alone typically takes 3 to 6 months in metropolitan practices and longer in regional locations. Onboarding, panel building and billing stabilisation add further time. Owners who address recruitment and retention issues 12 to 24 months before sale avoid valuation adjustments and deal complications.