GP Oversupply and Medical Migration

By Bob Birrell, republished from John Menadue – Pearls and Irritations   13 January 2017

There are many indicators of GP over-supply in Australia.  … One consequence has been an escalation in the cost of GP rebates to the taxpayer. … Better distribution of GP services could be achieved by restricting new provider numbers to under-supplied districts.  

There are many indicators of GP oversupply in Australia. Over the decade to 2014-15 the number of GPs accessing primary care rebates on Medicare increased by 47.4 per cent. Over the same period Australia’s population increased by 18.7 per cent. The result was a sharp increase in the per capita number of GP services billed, from 4.7 in 2004-05 to 5.7 in 2014-15. The increase in per capita service provision was even stronger in Australia’s metropolitan areas, where GPs have been concentrating and the oversupply is most acute. Australia is close to the top in the ratio of working doctors to population within OECD nations.

GPs practicing in oversupplied locations have to chase patients. This has encouraged high throughput medicine, in which doctors prescribe multiple tests and recommend repeat patient visits. Patients, for the most part, accept this because they do not pay the costs. Currently 85 per cent of all GP services are bulk-billed. High throughput medicine depends on bulk-billing. Any GP that charges a co-payment in an oversupplied area will quickly lose patients.

One consequence has been an escalation of the cost of GP rebates to the taxpayer, from $3.3 billion in 2004-05 to $6.8 billion in 2014-15 and $7.2 billion in 2015-16. The costs for Pharmaceutical Benefits and screening tests have jumped as well.

These costs will continue to rise because of the increase in the number of domestic medical school graduates, from 1,320 in 2005 to 3,055 in 2015. The number of these graduates taking up GP training places has grown from 450 in 2004 to 1,529 in 2015. Once these Australian Trained Doctors (ATDs) obtain their GP Fellowship they can practice where they wish. Despite a raft of incentives to serve in undersupplied areas the great majority are choosing to practice in metropolitan areas.

Large numbers of Overseas Trained Doctors (OTDs) are adding to the metropolitan supply. This arises as follows. Since the early 2000s successive Australian governments have dealt with shortages of GPs in regional areas by facilitating the recruitment of OTDs on 457 visas. These 457 visas are only issued for specific jobs in GP practices and hospitals in locations defined as Districts of Workforce Shortage (DWS). Thousands of such visas are issued each year, including 2,320 in 2015-16. An indication of the scale of this recruitment is that it is more than the 1,529 GP training places allocated in 2015.

After serving a prescribed period in a DWS (from 5-10 years depending on remoteness of location) OTDs can bill on Medicare where they please (just like ATDs). Most move to metropolitan areas or to major regional centres. This movement is the main contributor to the rapid growth in the number of GPs billing on Medicare in metropolitan areas.

Given current medical migration policy this metropolitan flow will continue, because the government is allowing employers in DWS to sponsor replacements for the OTDs who leave. They are doing so in large numbers, as is indicated by the 2,320 457 visas issued in 2015-16. In time, many of these OTDs will move to metropolitan areas, where they will compete for patients with the impending surge of ATDs described above.

The Department of Health takes a stand

In 2016 the Department of Health (DoH) admitted the seriousness of the oversupply situation and announced some radical proposals affecting the recruitment and location of GPs. This arose in the context of the 2016-17 review of the Skilled Occupation List (SOL). The DoH recommended that GPs (and most specialists) be taken off the SOL. The significance of SOL listing is that migrants seeking permanent entry visas under the points-tested visa subclasses must have an occupation that is included on the SOL. The SOL does not affect eligibility for a 457 visa since almost all professional, managerial and trade occupations are open for sponsorship.

However DoH accompanied its SOL recommendations with a statement that it intended to reduce medical migration and to ensure that newly minted ATDs fill the resulting vacancies in underserviced areas. DoH can stop OTD recruitment on 457 visas by abolishing the DWS arrangements. At present OTDs can only be sponsored for a 457 visa if their employer specifies a GP position in a DWS.

The Coalition Government rejected this advice. It did so for two reasons. The first was that it does not want to remove major occupations from those eligible for its points-tested visa subclasses. To do so would gut the migration program, an outcome the government will not countenance. To this end the government has changed the criteria determining listing on the SOL. It has stipulated that the current state of the labour market in particular occupations is no longer relevant. All that now matters is the ‘medium to long term’ skill needs for the occupations under review.

To illustrate, the Department of Employment and Training’s recent surveys show clear evidence of excess numbers of applicants to job vacancies for accountants, ICT professionals and engineers. Yet each of these occupations remain on the SOL. All the occupations listed, as well as doctors, remain on the SOL because according to the government’s judgement of the medium term outlook, there will be a need for additional professionals in each field.

Our investigation indicates that these judgements are being made on the basis of outdated employment projections prepared during the resources boom era. The DoH recommendations for doctors were particularly interesting in this context because they challenged these projections (even if to no avail).

The second reason for the government’s reluctance to accept the DoH advice was fear about the likely reaction of organised medicine. If medical immigration ceased and ATDs entering the workforce were required to fill the resulting vacancies, this would abrogate the longstanding right of ATDs to practice where they wish. The policy would be labelled as conscription.

This is not the case. GPs are public servants, as the 85 per cent bulk-billing rate indicates. Public servants, such as teachers, can choose to work wherever there are vacancies. Likewise for GPs. Under the reforms implied by the DoH, GPs who finish their training would be free to work in any of the many locations — mainly in regional Australia, but also in after-hours service in metropolitan areas — where their services are needed. This could easily be accomplished by restricting new provider numbers to undersupplied districts.

This article is drawn from Mike Moynihan and Bob Birrell, GP Oversupply – Ignoring the Evidence, The Australian Population Research Institute, December 2016.

Bob Birrell is head of The Australian Population Research Institute. 

Population growth, polls and politics

Katharine Betts
13 June 2016

For the past ten years Australians have been subjected to an exceptionally high level of population growth and now they are losing patience.

The graph shows the steep increase in numbers since 2006 (data from here). If this continues the population will grow from 24 million today to around 41 million in 2061 (see the 2013 ABS projection series 29 and 41).

KB's graph

In November 2015 a survey commissioned by Sustainable Population Australia (SPA) found that 51% of voters thought Australia did not need more people. Then in May this year a survey done for SBS TV found that 59% of people thought that the level of immigration over the last 10 years had been too high.

The SPA survey asked respondents to give reasons for their opinion. Many of those who thought we did not need more people said our cites were overcrowded (with too much traffic)—consequences of rapid growth all too apparent to urbanites. Others spoke of job competition. And many worried about the effects of growth on Australia’s fragile environment. Concern about too much cultural diversity and migrant enclaves was also high on the list.

The SBS survey focused on immigration and found that dissatisfaction with immigration was even higher than with growth in general. It asked about multiculturalism and 46% of respondents said that this had failed. It had brought social division and religious extremism to Australia (43% of those who were immigrants themselves agreed).

It was reasonable for SBS to focus on immigration because this accounts for the major part of the current population boom — around 58%.

Immigration is a product of government policy. It’s the outcome of decisions made by political elites, prompted by lobbyists for property developers, employers, and other businesses that profit from population growth. The two surveys show that the electorate is fed up with the unwanted growth that this power elite has wished upon them.

The record numbers of migrants in the 2000s were partly justified by the push to keep affordable skills coming during the investment phase of the resources boom. But since 2012 that justification has evaporated and economic growth has slowed. Despite this, Governments, both Labor and Coalition, have kept immigration high. Now the motivation is to keep the housing and development interests happy. They continue to profit from a stream of new customers, a stream which also keeps the construction industry going and creates the appearance of a busy economy. But this strategy has not increased per capita income. Quite the reverse.

It’s not just that forced population growth leads to clogged infrastructure, cultural disruption and environmental deterioration, it is also comes with financial stress.

Leith Van Onselen writes that:

While headline GDP growth across Australia has held-up reasonably well over the past decade, thanks to high immigration, per capita real GDP is trending down so sharply that it has fallen to levels not seen since the early-1980s recession. …

While real GDP has been rising since December 2011, net disposable income (NDI) per capita has been falling. See graph below. (NDI is explained here.)

LvanO's graph

Urban voters are also angry about the level of densification forced on them by undemocratic planning authorities determined to accommodate developers. Groups such as Planning Backlash, BRAG (Boroondara Residents Action Group), Save our Suburbs, RAGE (Residents against Greedy Enterprise) and the Carlton Residents Association all express deep frustration about over-development, loss of heritage and declining quality of life.

So far the growth lobby has been able to keep on profiting from ballooning numbers, partly because few voters fully understand what is being done to them. They know that conditions are getting worse but they don’t fully understand the key role played by population growth.

The SPA survey tested respondents’ knowledge of demographic change. The minority (16%) who had a good understanding were the most likely to say that Australia does not need more people. But 82% knew very little. Though they were unhappy about time-devouring traffic jams and ugly new high-rise apartments, they didn’t always know why these miseries were being wished upon them, or why they felt so powerless.

But their unhappiness has political effects, effects which can explain why governments have been toppling so fast. Kelvin Thomson calls this the witches hat theory of why governments fail. Mark O’Connor summarises it thus:

[S]taying in power, and keeping the electorate happy is a little like an advanced driving course, one in which a government is required to thread a kind of slalom course between a series of witches’ hats — meaning the orange inverted cones that mark out the course. These hats, which the government, like the driver, needs to avoid knocking over, include such things as keeping electricity and water costs down, reducing hospital queues, keeping housing affordable, preserving the environment, providing full employment, restricting inflation, etc.
And the faster a country’s population is rising, the harder it is to do this… It’s like trying to negotiate the course at double speed

As Thomson himself puts it:
[W]hen politicians … look in the mirror and ask ‘Why don’t they like me?’, the answer might well be that they are driving the car too fast and knocking over those witches’ hats. They should slow the car down and focus on solving people’s real-life problems.

It is not surprising that Dick Smith, outspoken critic of mindless population growth, is now the most trusted public figure in Australia. Or that mainstream politicians are among the least trusted.

An op-ed piece based on this blog was published under the title ‘Exceptional rates of population growth are causing stress on many fronts’ on 22 June 2016. It appeared in The Canberra Times, The Age, and The Sydney Morning Herald.