Primary Health takes a scalpel to medical centres

THE challenge of retaining general practitioners is weighing on Australia’s primary healthcare players, with one operator writing down the value of its medical centres and another selling out on a torrid day for the sector.

Primary Health yesterday booked a full- year loss of $ 517 million for the year to June, down from a $ 74.7 million profit a year earlier, after taking a knife to its medical centres division.

The nosedive into the red came on the back of a previously flagged $ 587 million non- cash writedown on the goodwill of Primary’s 71- strong medical centre unit and underperforming sites.

Primary’s underlying net profit, which excludes one- offs, was down 4.9 per cent at $ 92.1 million.

Total revenue was up 1 per cent to $ 1.66 billion, with above- market revenue growth in its pathology arm offsetting the 3.3 per cent dip from its bulk- billed clinics.

Primary has altered its paysharing deal with doctors in the past year in a bid to boost retention levels, offering GPs a bigger slice of total billing revenue in lieu of generous frontloaded contracts.

Interim chief Malcolm Ashcroft said while the new pay arrangement had led to a record 153 GPs joining during the year and significantly reduced capital costs, the transition was weighing on the medical centres division’s performance.

Analysts said Primary’s incoming chief Malcolm Parmenter would inherit a business undergoing “massive transformations”.

“The medical centre busi- ness is a particularly big drag on Primary. Its imaging and pathology businesses are OK but they’re not going to shoot the lights out,” The Lucas Review’s chief market strategist Evan Lucas said.

Primary’s former chief Peter Gregg stepped down in January after being charged by the corporate regulator with falsifying records while at construction company Leighton Holdings.