Considered Health

Issue 06- Medical & Allied Health Services: Special Budget Edition (May 2016)

The Government's budget measures in relation to the health sector were minimal however the pressure remains on practices' profit margins and a probable impact on patients' hip-pockets. Future business and budget planning by health professionals will be vital to manage new funding models for areas such as chronic disease care, the NDIS rollout for all age groups and changes to the dental scheme.

Medicare Benefits Schedule - Pause Indexation

This measure will continue the freeze on indexation for all Medicare Benefits Schedule (MBS) fees for a further two years until July 2020.

  • The bulk-billing rate from July to December 2015 for GP non-referred attendances was 83.3 per cent – up from 82.8 per cent in the same period in 2014.
  • The bulk-billing rate for the same period for specialist attendances was 30.1 per cent – up from 29.8 per cent in the same period in 2014.
  • This measure will save $925.3 million over the additional 2 years of the freeze.

Key Points

  • The Government believes this decision will have minimal impact because the "current pause on indexation has not affected bulk-billing rates".
  • The extension of the freeze will put greater pressure on practices to reduce their current bulk billing rates and start charging a co-payment if they are not already doing so.

Primary Care

$21.3 million will be allocated to a trial of the Healthcare Home model. Patients with chronic conditions will voluntarily enrol, with a preferred practice generally their usual GP.
The practice will then provide a 'home base' for ongoing coordination, management and support related to the chronic condition. The trial will involve 200 practices selected from 7 PHN regions.

Key Points

  • As yet there is very little detail available about the funding mechanisms to be delivered through the Healthcare Home model.
  • The Healthcare Home model puts general practices on notice that they will need to implement more effective internal financial management and reporting systems; including budgeting to manage the cash flow spikes that will be created by the shift of fee for service payments for chronic disease care, to quarterly bundled payments.
  • Practices that already have well structured chronic disease programs delivering high levels of patient engagement will be well positioned to take advantage of the Healthcare Home model.

Quality Improvement in General Practice

Simplification of the Practice Incentives Program (PIP) 

The PIP will be streamlined and simplified. The Government has committed to consulting closely with stakeholders throughout the design and implementation of new incentive payment arrangements.

Key Points

  • The savings from this measure will be reinvested directly into the trial of the Healthcare Home model.
  • There is a risk that the changes to PIP will simply erode the benefits of this program for maintaining essential infrastructure and quality programs within general practices.
  • The PIP payments are not indexed and therefore the value of these payments are gradually eroding in real terms.

Rural General Practice Grants Program

The Rural and Regional Teaching Infrastructure Grants (RRTIG) Program will be redesigned to create a more streamlined Rural General Practice Grants Program (RGPGP) removing some of the barriers that caused the poor take-up of the RRTIG program.

Grants of up to $300,000 will be provided to successful applicants who will be required to match the Commonwealth funding contribution.

Key Points

  • The most significant adjustment is that the requirement for new building work to be physically attached to existing premises will be relaxed.
  • Expansion projects on alternative sites will now be eligible.
  • The program will expand the types of entities that can apply for grants, and broaden the types of health practitioners that can use additional infrastructure provided through grants.
  • The application process will be simplified.


Child and Adult Public Dental Scheme

The introduction of the new Child and Adult Public Dental Scheme will improve access to public dental services from 1 July 2016. Payments will be made directly to states and territories to improve patient waiting times and help more concession card holders.

Key Points

  • This measure replaces the Child Dental Benefit Scheme that provided children subsided medical care delivered by private dentists and dental therapists.
  • It will provide greater access to adult concession card holders.
  • Private dental practices may be forced to consider laying off dental therapists.
  • It will create extra demand on already overwhelmed public dental services.

National Disability Insurance Scheme (NDIS)

The NDIS begins its fully operational rollout from July 2016 and in order to entirely fund the $22 billion scheme the Government is establishing a special savings fund to contribute to the cost, with the states paying the remainder.

  • $162.4 million is already set aside for the Savings Fund, but the Government announced in the Budget it will credit an additional $2.1 billion over five years, which will be funded by other welfare savings.
  • The Government will be assessing 30,000 Disability Support Pension recipients' capacity to work, expecting to save $62 million towards the Savings Fund.
  • Another savings strategy will be by removing a loophole for the Carer Allowance, to align it with all other social security payments.
  • Note that the full rollout will vary across states and territories. Details are on the website

General Budget Measures

Small Business Tax Cuts

Small businesses will get a tax cut from July 1 this year, with the company tax rate reduced to 27.5 per cent. The threshold for businesses eligible for this will rise from $2 million in annual turnover to $10 million.

This measure follows on from the 1.5 per cent tax cut, announced last year, for businesses with turnover of less than $2 million.

Key Points

  • Many practices that were not previously eligible for the tax cuts will now benefit from a 2.5% decrease in company tax if their turnover is less than $10 million.
  • From 1 July 2016, the immediate tax deduction for assets up to the value of $20,000 will also apply to the new definition of 'small business' and include businesses with turnover of up to $10 million (until 30 June 2017).


From 1 July 2017 the concessional contribution cap of $25,000 will also apply to Constitutionally Protected Funds - CPF's (i.e. Super SA Triple S). 

Previously there has been no cap on CPF's. This will affect many medical practitioners that currently salary sacrifice greater than the concessional cap into their funds.


For more information regarding the tax and superannuation budget measures view our Brentnalls SA newsletter.

Please contact us for more information or visit our Medical & Allied Health webpage


The information provided in this newsletter does not constitute advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances. Brentnalls is not a partnership or a joint venture. Instead, the business of Brentnalls SA is independently owned and operated and it is an independent member of the Brentnalls Affiliation of Accounting Firms. Individual member firms do not accept responsibility or liability for the actions or inactions of any other individual member firm.
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