Is Owning A GP Practice Profitable?

The Australian GP clinic business landscape is changing rapidly. With the introduction of bulk billing, many doctors are opting to work in a non-GP speciality and setting up their own private practices. This trend has seen an increase in competition for GPs who would like to set up their own business. Let’s explore this topic through the lens of profitability by examining both sides of the argument; whether owning your own GP practice can be profitable or not?

What is a GP practice and how does it work?

A General Practice (or GP clinic as it is known) is a health care organisation that provides primary healthcare services to patients. These clinics have at least one doctor who is responsible for managing the day-to-day operations of the service, as well as providing medical support and expertise.

Some doctors choose to operate their own GP business where they are both employed by themselves but also work on behalf of other GPs in private practices. These types of businesses are commonly referred to as ‘sole proprietor’ practices or simply ‘solo’ doctors due to an individual being named owner/operator of the business.

In addition to doctors, these practices also employ nurses, receptionists and other administrative staff. They provide such services as:

 Family medicine.

 Women’s health.

 Mental health.

 Chronic disease care and management.

 Medical screening.

GP businesses in Australia can be either for-profit or not-for-profit entities. Depending on the type of business structure adopted, there are a number of tax concessions that may be available to GP practice owners. For example, if a GP opts to operate their business as a company (limited liability), they may be entitled to a range of deductions such as depreciation on equipment and vehicles used for the practice, and interest payments on money borrowed to finance the purchase of the business assets.

There are also a number of government incentives available for these practices that provide services under Medicare Local arrangements. Some of these incentives include financial bonuses for meeting quality targets and additional funding for practices located in rural areas.

Despite these benefits, there are a number of factors that need to be taken into account when deciding whether or not to purchase and operate a GP practice. According to GP consulting firms, one key consideration is the level of competition in the local area. If the area is saturated with GP practices, it may be difficult to attract patients and generate sufficient revenue to make the business profitable.

Another important factor is the amount of time and effort required to operate a successful GP clinic. In addition to providing clinical services, GPs also need to be involved in marketing their business, managing staff and maintaining financial records. This can be a lot of work for those who are already busy with other commitments.

The pros of owning a GP practice

There are a number of pros to owning and operating your own GP business in Australia. The key benefits include:

 Greater flexibility.

 More control over work/life balance.

 The ability to set your own rates.

The cons of owning a GP practice

Some of the key disadvantages include:

 Increased financial risk.

 Higher workloads.

 Less job security.

It is important to weigh up all of these factors before making a decision about whether or not to start your own GP business.

Is your location right for starting up a GP practice? What is the population, median income, etc.?

Another consideration to make before starting a GP business is the location. You will want to make sure the population is large enough and has a high median income, as this will ensure that there is potential for patients to use your services.

For a GP business to be worthwhile and profitable you will need to ask yourself these questions before starting.

How do you find potential clients that would be interested in using your services as a doctor or nurse practitioner?

What type of doctor or nurse practitioner will you be?

How much capital is needed to start up your GP business; how much money do you need before opening the doors to potential patients?

Do I want a partner for my GP practice, and if so, what are their qualifications like (do they have similar experience as me)?

What are the challenges with this type of business model?

How much money can you make from this type of business?

How many hours will I have to spend each day on my new venture?

What qualifications should I have before opened my own office?

How can I one day scale my clinic?