Adapt to survive: New report on the future of Australia’s medical practices

New business models are transforming Australia’s medical practices as they wrangle multiple pressures on the healthcare system, from changing demand and complexities in patient care, to rising costs and government spending constraints.

Trends identified in a new report, Time to Optimise and Adapt, by Westpac in partnership with AMA NSW, reveal how progressive healthcare businesses are being reimagined in 2024 via vertical integration, diversification and colocation of services promoting the rise of health hubs.

These strategies are helping medical businesses to develop new income streams and cut costs to deal with a confluence of factors impacting their balance sheets, and playing to the expectations of a new breed of medical consumer who prioritises convenience and embraces digital delivery.

Increasing numbers of medical practices are already offering quality healthcare through innovative service models, but others must consider the future viability of their business models, insists Fiona Davies, CEO of Australian Medical Association NSW in the report.

 

Practices under pressure

The heat is on practices due to population shifts, from immigration and Australians living longer, along with the rising incidence of chronic diseases. Statistics show 81% of Australians had at least one long-term health condition in 2022, with an estimated 20% living with multimorbidity, two or more chronic conditions.

New data from Westpac also shows inflation is outstripping income in the healthcare sector. Revenue levels for commercial businesses (with a turnover of more than $5 million) were only 32% above pre-pandemic levels (to March 2024), while expenses grew 48% in the same period, exacerbated by workforce shortages and the need for medical practices to pay higher remuneration to attract staff. For SMEs, revenue levels rose only 1% while expenses were up 13%.

Next generation healthcare

On the upside, digital health became business-as-usual during the pandemic with a meteoric uptake of telehealth. More than 100 million telehealth services were delivered to around 17 million Australians between March 2020 and March 2022. About 70% of Australians are now willing to use virtual healthcare services.

Patients’ willingness to embrace digital tools from automated booking processes and check-ins is increasing efficiencies for practices and giving them the opportunity to build out online consultations and use technology to improve efficiencies, Davies points out.

Westpac is also strongly supportive. “It's an area that we are really doubling down on,” says Kaizaad Mehta, National Head of Healthcare and Professional Services, Westpac Business Bank. 

“We’re seeing ways that the sector can use technology and different forms of innovation to drive more cost-effective care that meets consumer needs and delivers strong care outcomes.”

The one-stop approach

Diversification and colocation of services are also being seen in the rising number of one- stop health hubs, notes Mehta. The hub model frequently combines general practice services and specialist services to support each other and reduce accessibility issues while maintaining continued care.

Patients like hubs, not only for their availability of a range of health services in one place but, in some instances, they can have all their appointments sorted in one visit.

"It also lets businesses invest in their level of technology, because they're able to drive greater revenue from being located with complementary services and allows diversification of income through rental streams,” Mehta says.

 

Speak to a Westpac Specialist Healthcare Banker today to learn more about how we can support you and your business.