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Charting the Path Ahead in Healthcare: Analysing the Payment Implications of Voluntary Patient Registration, with Insights on Payroll Tax Updates and Industry Benchmarking�

Brooke Todd

26 08 2023

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Presenter

Brooke Todd, CA

Manager

22/307 Queen Street, Brisbane Queensland 4000

(07) 3229 5100

brooke.todd@williambuck.com

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Agenda / Contents

Voluntary Patient Registration – How Payments will be Made
Voluntary Patient Registration – Impact on Practice Valuations?
Payroll Tax Update
Latest Benchmarks

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“Enter quote here…”

Name, Title, Company

MBS Items Linked to VPR

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Voluntary Patient Enrolment

Patient fees / VPR MBS items paid to Dr

Dr pays service fee to the practice on patient fees

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Voluntary Patient Enrolment

Healthcare providers

To be eligible for MyMedicare, providers must:

work at a MyMedicare eligible practice
be linked to the practice on the Organisation Register
have a valid Medicare provider number

The provider must be a GP or nurse practitioner. Eligible GPs include:

vocationally registered GPs
non-vocationally registered GPs
GP registrars

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“Enter quote here…”

Name, Title, Company

Incentives

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Voluntary Patient Registration

From the 2023/24 budget, $19.7 million over four years from 2023–24 (and $3.2 million per year ongoing) has been allocated to implement MyMedicare

$19.7 million / 4 years = $4.925 million each year

$4.925 million / 7,000 general practices = $704

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Voluntary Patient Registration

From the 2023/24 budget, $112 million over four years for the General Practice in Aged Care Incentive.

$112 million / 4 years = $28 million each year

$28 million / 7,000 general practices = $4,000

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Voluntary Patient Enrolment

Different funding bodies pay practice

rebate

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Voluntary Patient Registration

Service Fee Calculation	$
Patient Fees	5,500
Service Fee at 30%	1,650
Less: Rebate	500
Net Service Fee	1,150
GST	115
Gross Service Fee	1,265

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Voluntary Patient Registration

Up to the market to consider what the new industry norms will be

The dollar value will be a main deciding factor – immaterial $ likely to stay with the practice, material $ doctors likely want a piece of the pie

Limiting payments from the medical practice to doctors

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Teaching Subsidy

Practices may:

Retain 100%

Pay based on rates x sessions
Pay 100%

Recorded as a contractor payment and should go towards the practice’s payroll tax threshold

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Voluntary Patient Registration and Valuations

How Valuations are Prepared

Future Maintainable Earnings = FME

A capitalisation multiple is applied to the estimated FME of a business to arrive at its enterprise value.

The capitalisation multiple represents the rate of return that a knowledgeable investor would expect to earn from a business.

The multiple reflects the risk of variability in the estimated FME and the expected future growth in the earnings of the business.

FAIR MARKET VALUE

William buck prepared valuations, define fair market value as the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing, but not anxious purchaser and a knowledgeable, willing, but not anxious vendor acting on an arm’s length basis. The selection of the most appropriate valuation method in any situation rests with the circumstances of the case.

To change colour:

Right click slide > Format Background

Edit fill colour

Use Eyedropper and pick an approved colour

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Payroll Tax

On Friday 11 August 2023, the Victorian State Revenue Office and Revenue NSW released their long-awaited Payroll Tax Rulings on the application of the harmonised 'contractor' provisions for medical centres:

New South Wales PTA 041 and

Victoria PTA-041(Vic) ].

Queensland (PTAQ000.6.1) and South Australia (PTSA03) have issued similar rulings with one key difference - their State Revenue authorities have announced a payroll tax amnesty.

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Payroll Tax

Patient fees are paid directly to the Dr

Dr pays service fee to the practice on patient fees

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Many practices have been waiting for this moment to enact change in their processes and agreements. However, there has been enough correspondence released from each state to suggest that changes need to be made now.

Going forward, the new “industry norm” will see the same service fee arrangement, however, the doctor will pay the service fee directly to the practice and the doctors will be billing the patients under their own names or via their medical structures and receiving fees directly from the patients. As such, there will be limited or no payments from the medical practice to the doctors.

Even where the contracts are considered “relevant contracts” for payroll tax purposes, there is no payment made by the medical practice to the doctors (also mentioned earlier regarding MyMedicare). As such, there is no amount for payroll tax to be levied upon.

We have discussed and presented this position with several legal advisors who support this position. Note that there is still a need for strong service agreements to be in place.

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Payroll Tax

Queensland Revenue

The amnesty has 2 stages to apply:

Expression of interest’
Information requirements

To be eligible, you need to complete an expression of interest form by 29 September 2023. The Revenue Office will then contact you to confirm what happens next.

Revenue SA

General practices have 12 months to fix their current structures and cashflow operations to comply with payroll tax – until 30 June 2024

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Are you feeling exhausted from all the change?

Change in billing

Covid-19

Staff shortages

Finding the right GPs

PAYROLL TAX

VPR

Financial strain

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Do you understand your own personal and business finances?

From this

To this

Understands personal financial position

Understands how business is performing compared to the industry

Has industry specialist advisory

Ready to take on change

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“Enter quote here…”

Name, Title, Company

Benchmarking

Profit is a function of two things – revenue less costs

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Benchmarking Summary Results

	Industry Benchmark
Incentives	6.50%
Rent	3.60%
Other Income	0.60%

Less Expenses:
Payments to Doctors	63.22%
Wages & Salaries	20.10%
Rental & Outgoings Expenses	6.76%
Medical Supplies	1.94%
Other Expenses	6.37%
Total Expenses	98.98%

Net Profit/(Loss) from Trading	12.29%

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Benchmarking Summary Results

Overall	Industry Benchmark
Net Profit/(Loss) from Trading	12.29%

Income	Industry Benchmark
Incentives	6.50%
Rental Income	3.60%

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Benchmarking Summary Results

Overall	Industry Benchmark
Payments to Doctors	63.22%
Admin and Nursing Wages (inc. super)	20.10%

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Benchmarking Summary Results

Overall	Industry Benchmark
Rent	6.76%
Medical Expenses	1.94%
Accounting Fees	0.30%
Insurance	0.48%

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“Enter quote here…”

Name, Title, Company

Example

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Summary

VRP – Payment assumptions

VPR MPS Payments – paid directly to the doctor. No payroll tax impact assuming all other cash flow changes have been implemented.

VRP Incentives – lump sum payments paid by different funding bodies to the practice.

May be retained by the practice; or
Portion paid to the doctor. If it is to be paid, paid as a rebate on service fee.

Limiting payments from the medical practice to doctors

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Summary

VRP – Valuations

Likely no impact short term

Potential to impact in the future – depend on the market. Not enough information to comment yet.

Payroll Tax

Start making the necessary cashflow changes / update service agreements as required etc.

Queensland - payroll tax amnesty registration

Industry Benchmarking

Tool to help with managing finances and making informed decisions and market trends

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What is the William Buck Hour?

The William Buck Hour is designed to help you assess your current position, realign thinking and maximise your business’ potential.

In just one hour, we’ll guide you through a detailed discussion structured around a range of key fundamentals including financial management, funding, people, regulatory requirements and personal wealth strategies.

Our extensive experience working with business owners and entrepreneurs in the mid-market allows us to swiftly uncover the critical issues pertaining to your business and wealth creation as well as identify untapped opportunities.

The end result is a fresh perspective and a focused strategy to help you move forward.

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We look forward to working with you

Brooke Todd

b rooke.todd@williambuck.com

qld.marketing@williambuck.com

(07) 3229 5100

22/307 Queen Street, Brisbane Queensland 4000

For your free 1 hour consultation, please email

Nothing you attended today’s session

William Buck is an association of firms, each trading under the name of William Buck across Australia and New Zealand with affiliated offices worldwide.

Liability limited by a scheme approved under Professional Standards Legislation.

williambuck.com

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The information in this presentation is general in nature and has not been prepared for any one individual or organisation. The information should not be used or treated as professional advice and viewers should make their own enquiries and seek professional advice concerning their own personal circumstances before utilising any information provided in this presentation. All examples provided are for demonstration purposes only.

Disclaimer

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