Canberra’s National Health Co-op collapse and the failure of for-profit healthcare

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The future of eight Canberra general practice (GP) clinics and their staff is up in the air after the announcement on 21 June that the National Health Co-op (NHC) was entering voluntary administration. The possibility that it may collapse altogether is an indictment on Australia’s competitive, for- profit healthcare system.

The NHC was founded in 2006 with the backing of the federal and ACT governments in response to a shortage of bulk-billing general practitioners (GPs) in Canberra’s north western suburbs. Today, it accounts for 14 percent of bulk-billed GP appointments in the ACT.

Seeing a doctor is more expensive in the ACT than anywhere else in Australia. Canberra has the lowest bulk-billing rate of any capital city, with only 32 percent of patients having their appointments bulk-billed—well below the national average of 86 percent. Canberrans also pay higher out-of-pocket costs at mixed-billing clinics that charge a gap fee.

The NHC is a symptom of this problem, not a solution. Members of the NHC are not the staff it employs, but patients, who are required to pay an annual membership fee in order to access bulk-billed appointments. The NHC’s subscription based model undermines the principle of bulk-billing and has been criticised as potentially breaching the Health Insurance Act 1973, which prevents additional fees from being charged on top of bulk-billed services.

This business model has been extended with the support of the ACT government, which has also provided substantial grants and subsidies to a similar healthcare start-up in the southern Canberra suburb of Tuggeranong.

Despite the NHC claiming to be a “member owned” organisation, neither members nor workers exercise any meaningful control over it. Prior to going into administration, the NHC was governed by a board of directors whose members wouldn’t be out of place on your average corporate board. Among them is board chair Linda Addison, a former executive with the anti-union Australian Building and Construction Commission.

Its status as a registered charity and co-operative hasn’t shielded the NHC from the same market pressures that private GP clinics are subject to. In practice, the organisation is run like any for-profit business.

Prior to going into administration, the NHC began charging patients for standard procedures such as contraceptive implants and biopsies, leaving some patients hundreds of dollars out of pocket. Chronically understaffed, but wanting to spend as little on wages as possible, it also introduced fortnightly performance ranking for reception staff, who are relied on to answer calls from the organisation’s 32,000 members.

The expansion of the NHC was aided by a lucrative 20 year contract it won with the Australian National University (ANU) when it outsourced its health service in 2017. The university justified outsourcing at the time with a promise of expanded services, but this hasn’t eventuated. This is part of a broader trend of universities outsourcing the provision of services to external companies at a lower cost, usually involving an attack on workers’ wages and conditions.

With the NHC facing potential collapse, it’s possible that it will be taken over by a private company. This will do nothing to improve the situation for staff or patients.

ACT Health Minister Rachel Stephen-Smith and the Royal Australian College of General Practitioners have pointed to bulk-billing as an explanation for the NHC’s financial woes. This doesn’t add up.

While Medicare rebates for GPs haven’t increased substantially since the reversal of Labor’s 2013 freeze, they remain some of the highest paid individuals in Australia. According to a 2018 report by Australian Doctor, the median annual income for GPs in major cities was $172,433—nearly three times the average salary. Despite this, there’s enormous incentive for GPs to work at private-billing clinics where they have the potential to earn even more. This is something that has exacerbated the NHC’s problems, with a number of GPs having left to open their own clinics or work at private practices over the past few months.

Like many businesses, the NHC benefitted from JobKeeper. It pocketed $500,000 in the first half of 2020 alone, despite Canberra being one of the cities least affected by COVID-19. At the same time, pay for “key management”, including the CEO, increased a massive 61 percent, from $546,175 to $880,993. In addition, over a million dollars was spent on renovations, including transforming the NHC’s corporate office into an open plan workspace. If you’re looking for an explanation for why the NHC is going under, overpaid executives and its new corporate office have more to do with it than bulk-billing.

That GP clinics could be facing closure during a pandemic—not due to lack of demand, but because of their inability to compete on the market—is more evidence of the irrationality of capitalism and the need to remove the profit motive from healthcare altogether.



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