GPs working in Australian General Practices are not paid on a salary basis as an employee. You’ll work as a contractor, and rely on billings generated through the fee-for-service model.
we’ve compiled this overview, to help explain.
As an experienced Specialist GP, you will realise that this system encourages you to provide excellent standards of care, develop excellent relationship’s with your patients, and work smarter, not harder.
This will enable you to have an excellent income, and to achieve a healthy work-life balance.
Total Billing
We’ll start by looking at total billing, and then calculate the GP’s Income.
- Billings is the total amount of income generated for your consulting activity, this income doesn’t all come to you
- Your Billing is made up of the building blocks of payment for each consultations (consult)
- These are paid by Medicare, and usually with additional payments by the patient
- Medicare is Australia’s universal health insurance scheme https://doctorconnect.blog/49J9BlE
- A standard face-to-face consult that lasts 6 – 20 minutes, is listed as an Item 23 https://doctorconnect.blog/MBSItem23
- The Medicare payment for an Item 23 is $41.40. typically patients pay an additional fee to cover the gap, and bring your total income for this consult up to $80
GPs on the RACPG PEP Specialist Pathway, are paid the full Medicare rebate so that you are paid the same for each consult as any GP who has qualified in Australia.
Calculating Total Billings
- If you see 4 patients each hour for 38 hours of your week, then your billings can come up to around $10,000 for a week of work
- If you work 46 weeks of a year, then $10,000 / week will become an annual billing of $460,000
GP Earnings are calculated as a % of Total Billings
GP Earnings come from the % of billings, this is listed in the Services Agreement that you have with the practice.
The practice will use their % of income to cover their operating and business costs including: rent, nursing and support staff wages, supplies, advertising, utilities, and all the other costs that you can imagine in a modern medical centre.
- Typical splits between GP and the practice are:
- 60% to the GP – 40% to the Practice
- 65% to the GP – 35% to the Practice
- 70% to the GP – 30% to the Practice
In the case of a nonVR GP -someone who requires supervision- its possible that this may start 5% lower, and come back to the practice’s normal % when you become a fellowed GP. This is because you’ll be receiving additional support during that time.
Calculating Your Total GP Income Before Tax
If your total Billings for a year is $460,000, and your split is 70%, then your total GP income, before tax, will be $322,000.
Calculating Tax, and Income after Tax
The Government has an up-to-date tax Calculator https://doctorconnect.blog/Tax
- Tips: Select the most recent year, and assume that you are a resident for a full year.
- Remember – its showing the tax that you pay, and you need to deduct this from your total income above.
In this case: the GP with a total GP income of $322,000 will have an after- tax income of $206,000.
Will this Provide a Good life for my family?
The Australian Bureau of Statistics reports on earnings and hour statistics across the country, and shows that median weekly earnings are around $1,300, meaning an annual income of $67,600 before tax https://doctorconnect.blog/Earnings
So that a GP, seeing 4 patients and hour, earning $322,000 before tax, will earn around three times the average person’s income – and this will provide you and your family with a very comfortable lifestyle, including the opportunity for you to save money and build an excellent future.
When using Cost of Living calculators, we recommend that you compare the cost of living in your new home, with that website’s listings of costs in your current location – so that you know you are comparing apples with apples https://www.numbeo.com/cost-of-living/comparison.jsp
Other Components of Package
- Minimum hourly rate:
- Its common that the practice will pay a fixed minimum amount per hour for your first three months. This will enable you to settle into your new workflow
- This may be written as something like, $150 per hour, or 65% of billings – whichever is higher
- This is a positive sign to you that the practice expects that in your initial months you will have enough patients and be a competent and successful GP, to be able to cover that amount
- Minimum annual income:
- Some practices are happy to pay a minimum of $150,000 for the first year, which can provide an excellent level of stability when moving country with your family – this same practice will also pay you the higher amount for 65%, or 70% of billings when you are earning it, so that you still have the opportunity to be rewarded for your hard work
- Relocation Payment / Sign-on Bonus
- Some corporates, and some independent practices offer a one-off payment when you first start
- This is to help with all of the costs that a GP is accruing to be able to move and start work
- Usually, this is paid shortly after you start work
- Some practices offer to spread the amount over three payments, starting from an initial payment when you first sign your contract, and then when you arrive
- The business model of smaller and independent practices can make it harder for them to pay these payments, but many GPs will have an excellent experience moving and working with practices that don’t make these payments
- Car and accommodation payments
- These have been a part of GP’s packages previously, this is usually in the more remote, smaller towns. These may be available occasionally, but in the current times, where there has been a significant increase in the number of GPs applying for jobs in all locations, we don’t expect these perks
- Rural Incentives
- Moratorium Reduction
Ways to Increase Income
Compared to having a fixed salary, this fee-for-service model provides you with an opportunity to increase your own income.
- GPs and practices always report back to us that the best way to be financially successful in this model is to provide excellent care to your patient base.
- In your orientation, you’ll be taught how to make sure you are using the Medicare Benefits Scheme (MBS) correctly. You can find out more about the MBS here today https://hpe.servicesaustralia.gov.au/eLearning_MBS.html
- Some GP’s alter their hours to be earlier, later, or on the weekend if there is patient demand in your community
- Typically, when you provide a more complex consult, then the billing is higher. Remember that the RACGP provides support for you in nurturing your knowledge of special interests, currently supporting 33 different specialty groups https://www.racgp.org.au/the-racgp/faculties/specific-interests
- If you work in a location that has statistically proven GP shortage, then you will ensure that you will be fully booked
- Bulk Billing Incentive Payments are also higher in rural areas https://doctorconnect.blog/4d21540
- With the increase in the number of GPs moving to Australia, there are now cases where practices in MM2 locations -those closest to the largest cities- have many more GPs in the town, so that some of these GPs are not fully booked every day
Financial Responsibilities to Consider
- Because you’re not a salaried employee, you need to hold back some of your income, and make tax payments. There is a very standard part of doing business, there are processes in place, and is support available
- You’ll need to hold Medical Indemnity Insurance. The amount differs for each individual, typically it’s a monthly payment and its great to contact a specialist to guide you in this https://www.amainsurance.com.au/medical-indemnity-insurance/
- You will need to put some income aside to cover your leave from the practice. Typically GPs take 4 – 6 weeks leave a year.
- On a related note: remember that on your 482 Temporary Visa, you will need to pay for Health Insurance, until you become a Permanent Resident. There’s a helpful government site for you to compare health insurance policies https://privatehealth.gov.au/dynamic/search/start
- You will encounter costs for your registration, as listed here https://doctorconnect.health/2023/06/14/registration-overview/
Doctor Connect will be grateful for the opportunity to work with you to help you find the best opportunity for you.
Note: we are a recruitment agency, and this is general information. There are some GP’s who earn much higher, and some who earn less than these amounts, we can’t guarantee you these incomes, but we can help you find the right opportunity for you to flourish and be successful.
Dave Bell