More GP practices snapped up by health insurers — so is it good or bad for business?
Bupa will take over 68 primary care clinics and three urgent care centres after announcing its purchase of GP chain Partnered Health Group — yet another private health move into practice ownership.
Bupa’s announcement last month signalled the latest in a list of purchases that have alarmed the AMA and RACGP, which are worried about the influence that private health ownership could have on clinical and practice management decisions.
However, former RACGP president Dr Chris Mitchell says it could be a reason for improved optimism about general practice’s future.
The purchase still needs regulatory approval. If granted, Bupa — Australia’s second-largest health insurer — would become the fifth-largest GP practice owner, with about 100 practices.
Medibank is the second largest practice owner overall, behind Sonic Healthcare, after buying majority stakes in 166 practices in only two years.
Why are insurers suddenly invested, and investing, in general practice?
They argue that financially supporting primary care benefits them and patients.
“Our ambition is to improve patient care through prevention and more personalised pathways, while preserving consumer choice and clinical independence,” said Bupa Asia Pacific CEO Nick Stone when he announced the Partnered Health deal.
“We know when people get care earlier, health outcomes improve and costs fall.”
While the AMA and RACGP are concerned about the “massive conflict of interest” and the risks that insurer-owned practices start controlling what services GPs offer, Dr Mitchell is willing to believe the insurers are genuine.
“It’s less expensive to pay for someone to see a GP every week for a year than to pay for them to be admitted to a hospital for just one day,” he said.
“The concerns of private hospitals and specialists that provide care in public and private hospitals around managed care are probably real.
“But for general practice, this is about leveraging what we think is good practice anyway.”
The consultancy firm he co-founded, Medius Global, has begun tracking Australian GP practice ownership trends.
Dr Mitchell says Bupa purchasing Partnered Health from a private equity firm, Quadrant, follows a trend of private equity ownership of practices paving the way for private health ownership.
“In the absence of these groups, insurers would be making individual purchases, and that would have been more problematic.
“Signing a small group deal is strategically a much lower risk proposition for private health insurance.
“They’re also drawn by similar factors as private equity: this is a growing sector, and it’s Federal Government-subsidised.”
He said the “strategic alignment” — insurers and patients both benefiting from quality primary care — put a premium on GP practices for insurers compared with private equity firms.
Healthcare industry analyst Aishni Singh, from industry intelligence firm IBISWorld, agrees that the downstream benefits make primary care attractive to insurers, more so than private equity or corporate owners.
“Vertical integration is a way to spread fixed costs, because it’s all under one roof, and that can help improve profit margins,” Ms Singh added.
“It cuts down on administrative costs, for instance, when you’ve got the same patient paying their premiums and getting their care in the same network.”
Could smaller insurers follow Bupa and Medibank?
Ms Singh said Bupa and Medibank’s sizes would have played a role.
“According to our estimates, Bupa and Medibank account for just under half the private health insurance market,” she said.
“Keeping that in mind, they have the kind of scale and financial capital to do this.”
Will the trend lead to GPs being told by their insurer bosses what treatments to provide or where to refer?
Neither expert was willing to definitively call it.
“Regulators are going to be concerned,” Dr Mitchell said.
“But I think the sensible play for insurers is to give GPs tools to make it easier to deliver good care.
“I can’t see why an insurer would use a stick to make GPs do what they probably want to do anyway.
“It is more the quality of the individual owner that concerns me.
“I’d rather be owned by a fantastic private equity firm than a terrible private health insurer.
“But I suspect there are more good private health insurers who could be potential owners than there are good private equity owners.”
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