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Home / New Zealand

Healthcare in New Zealand: Why do GPs charge different amounts?

RNZ
23 Oct, 2024 07:36 PM6 mins to read

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By Serena Solomon of RNZ

  • GP appointment costs vary widely across Auckland, with prices ranging from $29.50 to $90.
  • Funding models, business costs, and competition influence these price differences, according to health experts.
  • Some clinics receive special funding to offer low-cost services, with Very Low Cost Access clinics charging up to $19.50.

There can be a huge difference in the cost of a GP appointment across New Zealand – and even across the street.

A typical GP appointment at Ponsonby Medical Centre costs $90, according to Health Point, a website that provides up-to-date information on New Zealand’s thousands of health practitioners.

Across the road in that same affluent area, an appointment for an enrolled patient at All Family Medical Centre costs $29.50.

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In Remuera, another affluent suburb of Auckland, two GP clinics a block from each other charge about $70 for an appointment.

Many GP appointments through Local Doctors, a network of 34 clinics in Auckland and beyond, will cost less than $20.

That’s a jumble of different numbers. What gives?

The complex way that the Government subsidises our healthcare has a massive influence on GP appointment costs. Clinics are also businesses so competition and running costs – rent, salaries, power bills, etc – are also factors.

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“There’s a massive variation, a massive, massive variation around the country on how these practices are funded, and then how they set the fees within the practice,” said Robin Gauld, a professor at the University of Otago who studies health systems.

Here’s how all those factors feed into the price you pay for GP:

Funding for typical patients

A main source of funding for GPs is called a capitation rate that is given annually to each clinic for every patient that is enrolled to subsidise appointment costs. That rate is determined by a patient’s age and gender, according to Dr Luke Bradford, the medical director of the Royal New Zealand College of General Practitioners who is also a GP and the part-owner of 5th Ave Family Practice.

“We know that 2-year-olds go to the doctors more than 25-year-olds. We know that 25-year-old girls go to the doctor more than 25-year-old boys. We know that 70-year-olds go more than anyone. So that’s what it’s based on.”

For each 25- to 44-year-old female enrolled, a clinic gets about $132 a year. The funding is $85 for males in the same age range. Children under 4 come with over $500 in funding (a clinic can’t charge a co-pay for children). For enrolled male patients over 65, a clinic will get $270 in annual funding.

If an enrolled patient of any age has a high-use health card because of increased health needs, the clinic sometimes gets more than double the typical funding. Patients with community service cards or areas where the majority of the population is in a low socio-economic bracket have different funding (more on that later).

The fee a patient pays at a clinic bridges the gap between funding, business costs and profit for the clinic.

How fee increases are capped

Since the capitation funding model came in about 20 years ago, practices have been restricted on how much they can increase patient co-payments, “which have on all but one year been under inflation”, said Bradford, citing a major criticism from the GPs in how they are funded.

In 2024/25, the increase was limited to 7.76%, to reflect stubborn inflation. The co-payment increase in 2023/24 was capped at 4.92%.

But practices don’t always increase their fees to the maximum. The fees at Bradford’s practice in Tauranga increased this year to $60, below the permitted increase.

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“It would have been better for us to go to $65. We made that decision because it was wrong for our patients to do it, but a lot of practices couldn’t do that.”

A survey of 244 practices released in August by the General Practice Owners Association (GenPro) found that 89% of respondents had recently increased or planned to increase fees. More than 80% were concerned about their business’ long-term outlook and 70% were in a worse financial situation than 12 months ago.

Market forces and business cost

Ponsonby Medical Centre, with the $90 GP appointment, is owned by Third Age Health. The company also owns clinics in Napier where appointments are around $60, says Third Age Health chief executive Tony Wai.

“It recognises that as a region, in that market there is a cost of service that is slightly lower than say the Auckland region.”

In Napier, expenses like rent and staff salaries will often be cheaper. That steeper appointment cost in Ponsonby also reflects the ability for patients to pay more in that area. The average household disposable income in Auckland is more than $63,000 and about $52,000 for the rest of North Island, including Napier, according to Stats NZ.

“What [the industry] is trying to deliver nationally is recognising that if you can afford to pay because you’re someone who’s got a higher discretionary means, then you can afford to pay.”

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Just like other businesses, GPs are struggling to attract enough staff and pay an ever-increasing electricity bill, among other heightened expenses.

Low-cost healthcare

Some practices gain special funding to cater to patients with lesser means who also tend to have higher health needs. This is separate from the capitation subsidies received by the majority of GPs.

The All Family Medical Centre is one block away from Ponsonby Medical Centre and it is able to charge $29.50 because it is a low-cost clinic. It receives higher levels of funding because of a larger portion of its enrolled patients having lower incomes.

The reason the clinic can still operate in an affluent area like Ponsonby is because it was historically a lower socio-economic area before it was gentrified by an influx of wealthy residents, according to Wai.

Then there are Very Low Cost Access clinics or VLCAs, which operate in areas where at least 50% of the population is considered high-needs (defined by Health New Zealand Te Whatu Ora as Māori, Pacific or below a specific income bracket).

The maximum charge for an appointment at a VLCA is $19.50 for an adult. Anyone can access those clinics regardless of income, says Gauld.,

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“I’m a university professor. I’m pretty well off and I would pay that low fee along with everyone else who’s enrolled in that practice.”

Then, many GPs will simply waive the charge for struggling patients, says Gauld.

“Some patients will wind up not paying and that will be because the GP knows that person is in financial difficulty and they need to see the doctor.”

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