The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes.

Every attempt is made to provide accurate and well written material. Your contributions, suggestions, additional information and advice sent to the web address at the foot of the page are welcome. Where possible they will be included in revised pages.

The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Material contained here represents my views based on my study of the operation of the health care marketplace and the material available to me. It should not be assumed to represent the views of any other individual or organisation.

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GP Corporations

Primary 1995-2004
Primary 2005-2009
Revesco/Gribbles and       Healthscope

Introductory page
This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then
CLICK HERE to open it in another tab or web page.

Content of this page
This is a GP company established in the Eastern states in the early 1990s. It corporatised in 1998 and expanded. It is the only GP company which had prospered and it has done so spectacularly. In its early years it raised the ire of the HIC and of some doctors.

In 2004 Primary objected to the university about my web page written in June 2002, presumably because of my choice of words. The university removed the web page written in 2002 from their server without ever offering me an explanation. I explain on this web page why in 2002 I felt so strongly about Primary's business practices and the press reports describing them. I rewrote the web page wording it more appropriately in 2004. Primary is still growing and is very profitable. The contents oof this page is unchanged but
a second web page to update its progress was added in 2009.

 Australian section   

Primary Health Care

1st Page 1996 to 2004

There are two web pages

There are two web pages about Primary Health Care on this web site. This page was written in 2002 and last updated in 2004. Much has happened since that time. Primary has gone from strength to strength and is now a major player in the health care marketplace in Australia. There is so much additional information that I thought it would be better to create an entirely new page to cover developments over the last 5 years.

The appearance of this page has been adjusted but the contents has not been changed. If you are familiar with it you may want to move on to the second page covering the periods 2005 to 2009

Click Here to go to the to the web page describing Primary's progress between 2005.and 2009



PRIMARY Healthcare, founded by Dr Alan Bateman has become a particularly interesting company because it illustrates a major differences in the way market and health professionals see health services. On the one hand Primary is succeeding spectacularly where others have failed and it is succeeding by charging less per consultation and service than its competitors. And what is more its clinics are busy so the patients clearly don't have any problems with the way they are being serviced. On the other side there have been criticisms by doctors, by medical bodies and by the HIC who are advised by doctors.

Primary rejects these critics claiming in essence that their critics are inefficient and jealous. Primary's business model is working and this in turn reveals the inadequacy of the conventional model of care. The accusations are in essence sour grapes.

The question then is whether this is a company which has found the magic formula which makes this market work for patients, doctors and shareholders without exploiting any of them. There seems little doubt of their sincerity. Alternately is this Australia's version of Tenet Healthcare, Columbia/HCA or HealthSouth - blind to the morality and consequences of what they are doing. Will some exploitative practice be discovered and will Primary like the leaders of these companies be genuinely indignant and angry when it is brought to task.

The criticisms were so strong and so credible that I was scathing about the company in June 2002 and expressed this forcefully on this web site. In February 2004 Primary asked the University hosting the site to remove the Primary page. It has also challenged the HIC in the courts. It took defamation action against a newspaper. I do not know the outcome.

Criticisms of Primary have been muted over the last 2 years, perhaps because of this aggressive action, or perhaps because the company has reformed its practices. It is worth noting recent suggestions by ABC Four Corners hinting the HIC has become politicised. Perhaps it is under pressure not to rock the politically sensitive privatisation boat by pursuing Medicare fraud. From a politicians point of view Primary Health is strongly and successfully supporting bulk billing. Primary supports political contentions about bulk billing and challenges the AMA's position. Politicians might not want to open a can of worms.

I responded to the university's action by replacing the web page in May 2004 with one acknowledging a poor choice of words and explaining my position. As part of that explanation I described market failure in the USA. I described the enormous divide in perception between market enthusiasts and the rest of the world including citizens experiencing health care. I went on to describe what I had concluded were red flags which should stimulate close scrutiny.

Most of these red flags are in fact considered by the market to be good or at least acceptable conduct. Many of them are associated with success. In themselves they do not indicate that anything is wrong, but they are features of many of the companies which have misbehaved. Primary adopts the market model and has been very successful so is not surprising therefore than Primary seems to fit many of these flags.

These flags relate to corporate conduct in health care as much as to Primary Health. I have therefore put that material in a separate more central page called "THE GREAT DIVIDE IN PERCEPTIONS about the CORPORATE MARKETPLACE". I will examine the press reports about Primary Health in relation to whether they seem to raise any of these red flags. The flags should be interpreted in the light of my comments.

I interpret the divide in perceptions and the large number of what I consider to be warning red flags as a reason for comment and greater vigilance. The reader can decide whether they agree with me

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General Press Extracts


While the AMA and specialists have stood firm and resisted signing corporate contracts, stressed general practitioners have been only too willing to swallow the corporate carrot, sell their practices and enter into contracts.

Tamworth doctors say they have no real objection to the proposed establishment of a 24-hour medical centre in the city.
The ABC understands general practitioners already working in the city are being offered $200,000 to close down their practices and go and work for the clinic.
24-hr medical centre planned for Tamworth. Australian Broadcasting Corporation (ABC) Regional News 3 September 2002

Executive wealth

Bateman is said to be worth $135 million.

Michael Christie, an executive director of medical centre operator Health Care, increased his stake in the company by 426,000 shares. That took his investment to 3.2 million shares worth $10.3 million. The company reported a $6.3 million profit in the June year, and managing director Edmund Bateman also increased his stake. He bought 20,000 shares, bringing his total to 24.1 million.
Wine chief racks up another two million shares The Age 26 October 2002

Primary Health Care managing director Edmund Bateman used the health-care provider's bonus share plan earlier this month to collect a cool $183,000 profit. Mr Bateman took up 398,746 shares at the plan's exercise price of $4.33 and immediately sold the whole parcel back for $4.79 a share.
Business HD Chief Turns Down The Oamps For A Handy $3m The Age SC 29 November 2003 SN

The Primary Health Story

Primary Health Care was set up more than 12 years ago and runs three 24-hour medical centres in Sydney, two specialist eye clinics and two day surgeries.
The Primary Vote Shaky, Australian Financial Review July 4, 1998

One of the least known but most established players is Sydney medical entrepreneur Dr Edmund Bateman, now managing director of the giant Primary Health Care, encompassing more than 200 doctors, a large chain of medical centres, pathology companies and specialist clinics. Listed two years ago, Primary is now considered something of a model, and its stock has skyrocketed, taking market capitalisation to about $400 million. With more than 30 per cent of the shares, Dr Bateman's family wealth is more than $130 million.
A questionable practice, The Weekend Australian June 3, 2000

Edmund Bateman is another low-profile entrepreneur. As a general practitioner in Sydney's northern beaches, he was ahead of the pack in setting up and running medical centres. He believes it is inevitable that doctors will turn to medical centres as the burden of running their practices increases.
Edmund Bateman : A former Sydney general practitioner. Owns 25% of Primary Health Care. Started with medical centres in the early 1990s.
Health is wealth. Business Review Weekly 23 May 2002

History: The Company was listed on the Australian Stock Exchange in 1998. Bankstown Medical Centre was opened in 1996. The Company acquired John R. Elder Pty Ltd in 1998. During 1999, five unincorporated medical practices were acquired for a total consideration of $837,000, including the goodwill and assets of medical centres at Caringbah, Campbelltown and Ingleburn in New South Wales.

In addition, two purpose-built medical and dental centres at Campsie and Fairfield were completed and two freehold sites acquired at Campbelltown and Caringbah. Also in 1999, the Company acquired Darkrow Pty Ltd, trading as General Clinical Laboratories, the third largest provider of pathology services in New South Wales.

During 2000, the Company acquired Sydney Diagnostic Services (NSW) Pty Ltd, trading as SDS, a provider of pathology services in New South Wales. Also, two purpose-built medical and dental centres at Campbelltown and Castle Hill were completed, while three freehold sites were acquired at Darlinghurst, Bondi Junction and Leichhardt for the development of purpose-built facilities.

Main Activities: Primary Health Care operates as a service company for medical, para-medical and related services, as a daycare surgery operator and as a provider of pathology services within New South Wales.
Primary Health Care Limited. Jobson's Yearbook of Public Companies 5 January 2004 SN

Primary' unsuccessful takeover of IPN

In late 2003 Prmary made an aggressive and hostile takeover for Independent Practitioner Network (IPN), the old Foundation Healthcare. Primary was having difficulty in recruiting more doctors and so in expanding its empire. Foundation was founded by Michael Boyd of Sonic Healthcare. It acted as a source of referrals for Sonic's diagnostic services located in IPN medical centres. This hostile takeover bid put Sonic in a difficult position. It had openly refused to own general practices and so compete with independent GP's who referred to it. This philosophy was put on the line by Primary's bid and Sonic had to defend its referral base. It ended buying two thirds of IPN and pretending it was still independent.

There were side issues but this was all about money. This is an interesting exercise. Had Primary succeeded it would have virtually cornered the market in Eastern Australia.

Rumours circulated the market yesterday that pathology and medical centres operator Primary Health Care planned to launch a takeover bid for the financially troubled Independent Practitioner Network (Previously Foundation Healthcare).
IPN's Market Pattern Sparks Takeover Talk The Sydney Morning Herald 7 August 2003

Primary bought a 9.2 per cent stake in IPN for $4 million in August. The predatory move led investors to question Primary chief executive Edmund Bateman's motives, given that Sonic Healthcare owns 18.5 per cent of IPN and has a strategic relationship with it.

IPN has fallen on hard times. Its share price hit a low of 3.5 ¢ in July after issuing a profit warning.
IPN manages 82 medical practices with 700 general practitioners and 74 physiotherapy clinics, of which 43 are franchises. Primary has 21 medical centres with 300 GPs.

Primary Moves On Rival IPN Australian Financial Review 8 October 2003

A statement to the stock exchange on Friday revealed Primary had raised its strategic stake in IPN to 19 per cent from 11.7 per cent.
Primary Health Shows Its Hand In Raising IPN Stake Australian Financial Review 29 May 2004

Primary Health Care Ltd is to make an off-market takeover bid for Independent Practitioner Network Ltd at 5c a share.
IPN fell 0.1c to 5c and Primary was steady at $5.60 ahead of the announcement.
Primary Health Care $38.9m bid for IPN at 5c a share Australian Business News 7 June 2004

Primary appeared to be taking a hostile tone yesterday, saying it "remains concerned that there has been a progressive and serious decline in the IPN share price over a number of years, to the point that there cannot be a lot of satisfied IPN shareholders".
In one measure of the relative productivity of the two groups, Primary is understood to own 21 medical centres serving two million patients a year, while IPN has 80-plus centres serving three million patients.
Primary Plans $40m Investment For IPN Target The Sydney Morning Herald 9 June 2004

Diagnostics and pathology operator Sonic, which currently holds a 19.63 per cent stake in IPN, will offer eight cents per share for two out of every three IPN shares.

IPN directors, who previously described the Primary offer as opportunistic and insufficient, today recommended acceptance of Sonic's offer.
IPN recommends Sonic bid unless higher offer (update) Australian Associated Press Financial News Wire 22 June 2004

Sonic is keen to protect its pathology referral revenue stream but Primary is seen as desperate to bring more doctors on board to secure its growth, having had difficulties attracting doctors to its model. Primary also owns a pathology operation, SDS Pathology.
IPN Bid Lacking, Says Primary The Sydney Morning Herald 23 June 2004

Sonic is offering to buy two of every three IPN shares, ensuring that IPN remains listed and countering criticism that IPN is not an independent entity.
The takeover highlights the high stakes in the control of Australia's medical centres and corporatised GP sector, with Primary having a profitable track record but desperate to grow by attracting doctors to add to its 21-centre network.
Primary boss slams IPN 'puff' The Sydney Morning Herald 3 July 2004

Primary Health Care has pulled out of the race to acquire Independent Practitioner Network, and it now looks likely that rival bidder Sonic Healthcare will take over two-thirds of the company.
IPN directors plump for plumper Sonic offer The Age 29 July 2004

Primary's different business

Because Primary depends entirely on bulk billing it is able to move into areas where other doctors are reluctant to go. It seems able to make money out of deprived areas where no health care would otherwise be available.

This centre (new in Dubbo) illustrates that the Primary model offers an outcome of healthcare delivery that is not only profitable for our shareholders, but can produce outcomes that multiple Government initiatives and others have failed to achieve. The healthcare outcomes, as measured by serious diseases, death and disability in the Western area of New South Wales (Dubbo location) is the worst in the State - essentially due to lack of affordable and accessible health care for many. In the long term, I believe, our initiative will have this situation changed.
Primary Health Care : Letter to Shareholders re Full Year Results ASX Document No: 273424 September 3, 2002

Primay continues to believe bulk billing to be the most efficient and effective form of health care delivery with equality of access to all. It sees its competition as remaining fragmented. Negotiations for further new sites in South Australia and Victoria are in progress.
PRIMARY HEALTH CARE FULL YEAR UP 98.9 PER CENT TO $12.59MILLION Australian Company News Bites SC 20 August 2003

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 Red Flags
Pointers to problems in health care corporations

There are large numbers of interesting press reports about Primary Health. My interest on this site is whether companies are following the US model and might behave similarly. On another page I have listed the things which have characterised US health care corporations, particularly those which have been dysfunctional, usually the most successful. The page "THE GREAT DIVIDE IN PERCEPTIONS about the CORPORATE MARKETPLACE" explains each of these. This is not repeated here.

Most Red flags are also markers of success. I have as far as possible arranged the material roughly under these red flags but am not claiming that each is a typical example. The reader should decide. Many extracts could equally be put under other red flags.

I stress that the red flags do not indicate dysfunction but call for cautious observation and evaluation. They also reflect the successful adoption of market principles.

1. Large Profits particularly disproportionate profits. Strong investor support. Market praise. Rapid expansion, particularly when others are struggling.

Funding is designed to cover costs and is capped to allow limited profit taking. When large profits are made one must ask where it is coming from. Note the number of institutional investors. Institutional investors have a ruthless eye on profits and exert strong pressure.

AXA-UAP and National Mutual Holdings raised its relevant interest (in Primary Healthcare) from 6.87 per cent to 9.48 per cent, while Bankers Trust Australia increased its stake from 5.31 per cent to 6.35 per cent.
Fund Moves, Australian Financial Review March 6, 1999

AMP became a substantial shareholder in Primary Health Care with a 5.56 per cent holding
Fund Moves, Australian Financial Review March 13, 1999

In other moves, Deutsche Australia increased its interest in Primary Health Care from 7.42 per cent to 8.47 per cent
Fund Moves, Australian Financial Review July 17, 1999

Medical services provider Primary Health Care climbed to a record high yesterday, having being rewarded by the market for its recent acquisitions and strong potential for earnings growth
The stock has risen 109 per cent since January 1, with much of the recent gains coming on investor expectations of a strong earnings season.
Health Provider Hits Record High, Australian Financial Review July 20, 1999

The medical practice management company has been something of a market darling over the year, with its shares having gained 245 per cent since new year, closing 10cents stronger at $5.35 yesterday.
Reweighting Telstra: Weird Echo Of AMP Australian Financial Review December 1, 1999

BT Funds Management was also a buyer. On the back of continued positive retail funds flow, it increased its holding in Primary Healthcare from 7.4 per cent to 8.4 per cent.
Fund Managers In Selling Mood After Market Surge, Australian Financial Review February 9, 2001

Mr Fleming (Rothschild Australia Asset Management) highlighted quality, well-managed businesses such as Primary Healthcare, run by Mr Ed Bateman, and - - -
Big Challenges Ahead For Small Caps, Australian Financial Review October 25, 2001

 Among the medical centre operators, results have ranged from flat to really poor. The Sydney company Primary Health Care was the best performer: its 2001-02 profit was steady at $6.3 million on revenue that increased 14.5%, to $102.9 million.
A sick business. Business Review Weekly 3 October 2002

Primary, which operates 19 centres, mostly in NSW, recorded a 117 per cent rise in net profit on the previous corresponding half to $6million.

Revenue was up by 23 per cent to $96.5million, and earnings before interest, tax, depreciation and amortisation leapt by 34 per cent.
Companies And Markets - Primary gets clean bill of health. Australian Financial Review 5 March 2003

A medical-centre company makes a big profit leap while all around are crying poor.

- - - - - - - an outstanding - and unexpected - result was that of the New South Wales medical centre operator Primary Health Care.
What makes Primary's performance unusual is that it contrasts sharply with the losses of other general practice/medical centre operators. It is just about three years since the great rush, led mostly by West Australian entrepreneurs, to consolidate general medical practices into corporate entities and float them off; Primary is the only company making money from medical centres. That its latest results compare well with pathology and radiology companies, across various indicators including operating margins, is even more surprising.
Bulk profits. Business Review Weekly 20 March 2003

These days, about 300 general practitioners and a further 300 medical specialists work in Primary Health Care centres and it appears to be the only listed medical centre company at present that is making a profit
RICH 200 -- Under $150 million (Part 1). Business Review Weekly 22 May 2003

But for two of the biggest, Mayne and listed Independent Practitioner Network, it's not working.

Mayne is trying to find a buyer for its 50 lossmaking medical centres, while IPN just slashed its profit forecast for this year by 35 per cent after recording a loss of $461,000 in the second half of last year. The share price plummeted from highs of 70 ¢ to 8 ¢ but that takes into account an issue of new stock.
That problem may have been behind a recent decision by the Kerry Packer-backed Endeavour HealthCare , which also owns about 50 medical centres in NSW and WA, to sell its Corporate Health Group in South Australia.

Bucking the trend is Primary Health Care with 19 centres, which has focused on general practice and reported a $6.3 million profit.
Doctor, Doctor The Business Is Sick Australian Financial Review 9 August 2003

PRIMARY Health Care yesterday announced a 99 per cent increase in annual net profit to $12.6 million.
Primary profit hits $12.6m Gold Coast Bulletin 21 August 2003

Of the five large corporates that manage GPs, only one makes a profit from medical centres: Sydney-based Primary Health Care.

A presentation by Primary last year compared the two businesses: Primary was earning $16 a patient before interest, tax, depreciation and amortisation, while IPN was earning $2 a patient; Primary's rent of $4.23 a patient was almost half IPN's; and Primary's salaries paid per patient of $12.33 was more than 20 per cent cheaper than IPN's.
Primary Health Shows Its Hand In Raising IPN Stake Australian Financial Review 29 May 2004

Pathology and medical practices company Primary Health Care has posted a 30 per cent-plus increase in net profit for the second year, and forecast better times ahead as it seeks to double its number of centres over the next few years.
Primary the picture of health Australian Financial Review 4 August 2004

2. An emphasis on rapid growth and acquisitions rather than business consolidation.

Agressive takeovers require loans and these must be serviced. A large profit stream is required putting pressure on care.

Primary Health Care Ltd has acquired NSW's third largest pathology provider GCL and had also bought Northside Sports Medicine & Rehabilitation, a sports medicine and work-related medical care group. The group has also added three new specialist eye-care centres. The acquisitions and expansion will cost a total $ 8.2 million and the company will issue 2.5 million new shares at $2.40 as part of the GCL deal.
BRIEFS :::: Healthy A&E, Australian Financial Review July 7, 1999

Medical services provider Primary Health Care rose 30cents yesterday to a record $6.20 after it revealed it had stitched up a deal to take control of the privately held Sydney Diagnostic Services group for $30 million. The acquisition gives Mr Ed Bateman's group an extra $50 million in revenues and makes Primary the third-largest pathology provider in NSW, with a 14 per cent market share.
BRIEFS :: Primary's healthy deal, Australian Financial Review April 11, 2000

One strategy used in the USA to raise capital for expansion was to sell facilities to a new market listed real estate entity and then lease them back. Market share and dominance could be increased without increasing debt.

The listed Primary Health Care has offloaded the bulk of its Sydney property portfolio into a new syndicate to fund a nationwide expansion.

The medical centre and pathology business will pocket more than $46 million from the sale and leaseback - - - .
Since listing in 1998, it has pursued an aggressive expansion plan and by the end of June it will operate 20 centres in and around Sydney including a property in Bondi Junction which will it will shortly offer for sale by auction.
Yesterday, company chief executive Edmund Bateman said the property sales would provide the capital to expand into Adelaide, Melbourne and regional NSW
Primary Sells Into A Syndicate Australian Financial Review June 12, 2002

Two new sites have been committed to in Adelaide, with plans for fit-outs due out of council.
Sydney Eye Clinic founded on the Elder Eye Clinic, is now established in the Darlinghurst Medical Centre. Four new ophthamologists have joined the Clinic.
The year has seen a 21% increase in EBITDA with a maintenance of profit after tax. This has occurred while we have been doubling the number of medical centres, almost completed a major laboratory merger, completed the physical development sale and lease-back of eight large medical centres, together with IT roll-out throughout the group. We have, I believe, put in place infrastructure and a foundation for future material benefits for shareholders.
Primary Health Care : Letter to Shareholders re Full Year Results ASX Document No: 273424 September 3, 2002

"Further centres are scheduled to open in the current year at Dapto, Gosford and Eastwood," the company said.

"In addition, further sites in regional New South Wales as well as interstate sites in Adelaide are expected to be finalised in the near future."
Primary to continue fast expansion after 02 profit of $6.3m. Australian Associated Press Financial News Wire 5 September 2002

While other players struggle, Primary Health Care appears to be the strongest performer, delivering profit growth and rolling out its expansion plans.
Primary is also surveying eight other Melbourne locations, of which at least three will house new centres, Bateman says.
Primary A Picture Of Good Health Australian Financial Review 5 March 2004

"Our current plan is to continue to expand our medical centres, with an initial aim to double the number of centres in the next few years.
Primary Health net up 43pc to $18m; final 10c (7.5c) Australian Business News 3 August 2004

3. Financial difficulties

 This is one problem Primary does not have!

4. A strong market focus on performance indicators expressed publicly or evident in corporate culture.

This is particularly so when the indicators used relate directly to the profitability of services to individual patients. It is a problem when the company pursues pofitability of services over patient needs, shifting its focus to selling services rather than servicing needs. The specialty hospital scandal by Tenet/NME, HCA and others in the USA is a good example. Typically the problems result from market models of care that disregard the nature of the clinical encounter and the health needs of individuals.

"A lot of people talk about [rationalisation] and wring their hands but we're going to do it," he (MD Dr.Bateman) said.
The Primary Vote Shaky, Australian Financial Review July 4, 1998

Announcing the acquisition of a pathology company last year, Bateman told the ASX that part of his company's plan was to enhance the "operating profit per patient''
Big Business Targets GPs In National Buying Spree, Australian Financial Review 23 May 2000

Primary Healthcare has been doing this for about 15 years and has become a sharemarket favourite because of its success in getting GPs and their patients under its banner and then selling them a huge range of services -- everything from psychiatry and dermatology to dentists and plastic surgeons. It's the ultimate one-stop-shop model.
Firms fight for $2.7bn in doctors' fees, The Weekend Australian June 16, 2001

Primary's vertically integrated model has blazed a trail for the sector. More importantly its earnings have been robust over 15 years.

Given that a group of 20 GPs generates about $50 million a year in downstream healthcare expenditure (including drugs, pathology, diagnostics, surgery and hospital care) it's proved successful for Primary.
Script for a profit; The Weekend Australian June 23, 2001, Saturday

The statement "you get what you pay for" illustrates the change from the traditional Samaritan community and medical model of providing care according to need but charging according to means. Columbia/HCA adopted the same approach and resented having to care for the poor.

Director Michael Teys yesterday dismissed recent criticisms of the syndicate sector, saying the group's track record spoke for itself.

"It's all a matter of value at the end of the day ... what's the net benefit to the investor," he said.

"You get what you pay for. You have to look at it holistically."
Primary Sells Into A Syndicate Australian Financial Review June 12, 2002

5. Contracts and financial arrangements with doctors. Doctors bound to the corporate mission especially when there are other red flags.

One of the most successful and legal ways to bind doctors to the corporate mission is to give them an interest in the company using part ownerships, shares and options. Most of the Australian companies have purchased GP practices using shares as part payment. Contracts in the marketplace typically align the doctors financial interests with the company and so challenge his duty of care.

A contract offered by one of Bateman's companies to GPs, while affirming clinical autonomy, explicitly requires doctors to promote the interests of the company a contract described by one GP leader as "coercive''. The contract also specified that patient records belonged to the company, rather than the doctor.
Indeed, further clauses of the contracts supplied by Bateman state "the doctor must use his best endeavours to promote the interests and welfare of the company's business and must, subject to the preceding clause, diligently observe all the lawful directions of the company given at any time ... '', and further, ``the doctor must support on appropriate occasions, by word of mouth and appropriate referrals, the medial and paramedical services available at the premises''.
Big Business Targets GPs In National Buying Spree, Australian Financial Review 23 May 2000

In December 2002 Primary applied to the ASX for 240,000 fully paid 20 cent shares at $4 each for the "Acquisition of medical practice" A similar application was made in May 2003
Acquisition of Medical Practice (APPLICATION FOR QUOTATION OF ADDITIONAL SECURITIES AND AGREEMENT) ASX Document No: 284140, 20 Dec 2002

PHC, through a wholly owned subsidiary, provides medical centre management services. PHC is to offer to grant options to individual medical practitioners who, as independent operators, provide medical services to patients at medical centres operated by the PHC group.
The proposal aims to give such medical practitioners a sense of ownership and allow them participation in the Groups future. The plan rewards long-term commitment.

PRIMARY HEALTH CARE LIMITED : Issue of Options to Medical Practitioners/Employee Optn Plan ASX Document No: 287282 February 11, 2003

Primary Health Care Ltd issued 1,435,500 options to reward the long-term commitment of medical practitioners and employees on March 8, 2004. There are 102,228,948 quoted shares and 7,312,500 unquoted options.

Primary said that it is providing an efficient and effective form of health care delivery with GPs achieving a 30 per cent increase in gross annual income in first year of practice in a Primary centre.
Primary Health Care to expand medical centres in FY05 Australian Associated Press Financial News Wire 3 August 2004

Primary Health care said its model gives medical practitioners a higher gross annual income and gives patients accessibility and affordability.

The need for efficient and effective health care should unsure the company's long-term growth, it said.
Primary Health Care reports 43 pct rise in full yr net profit Australian Associated Press Financial News Wire 3 August 2004

6. Strong Profit Pressures within the company including incentives, bonuses, share options and economic report cards.

PHC is to introduce an option plan for employees.

It is initially proposed to issue a total of 765,000 options. Each option entitles the holder to subscribe for one ordinary, fully paid share in the capital of the Company.
The Directors see the introduction of an Employee Option Plan as an important part of allowing long term key employees to participate in the future growth of the company.

PRIMARY HEALTH CARE LIMITED : Issue of Options to Medical Practitioners/Employee Optn Plan ASX Document No: 287282 February 11, 2003

7. Criticism by the health profession, whistle blowers, or by patient or health groups.

The Australian Financial Review has discovered that: In 1997, in secret hearings in front of their peers, three GPs practising at centres run by Bateman were found to have practised "inappropriately''. One of the three doctors was Michael Christie, currently executive director of Primary Health Care, who was at times seeing more than 100 patients per day. Confidential reports, prepared by a panel of doctors nominated by the profession and appointed by the Federal Health Minister, indentified a range of problems including inadequate medical records and poor clinical input.
A doctor who spent six years working at one of Primary Health Care's key medical centres and recently left after a dispute over money, told The Australian Financial Review that in his view "ever since corporatisation has taken place, what has happened is the objective of any medical centre is the bottom line''. Speaking generally about medical centres, Dr Deepak Malhotra said it was his view that ``increased turnover, increased pathology, increased radiology, these are the things that make money ... ''.
Big Business Targets GPs In National Buying Spree, Australian Financial Review 23 May 2000

Primary Health did not sign the corporatisation code of practice which the AMA and other general practice corporate chains signed. One can only wonder whether this has anything to do wth their different performance in the marketplace.

Deciding not to join (the AMA's code for ethical corporate practice), the managing director of Primary Health Care, Dr Edmund Bateman, said the AMA should not have had the right of veto over the code, because it did not represent the vast majority of GPs.

He also attacked those who developed the code: "These people were more into a public relations exercise than improving general practice.''
In a rare interview, Dr Bateman told The Australian Financial Review the companies signing the code have "an agenda which is not about general practice''.
Health-care Conduct Code `a PR Exercise', Australian Financial Review 2 November 2001

In an emerging scandal, "five-minute medicine" dispensed by the infamous Dr Geoffrey Edelsten in the 1980s has become common practice in Sydney.

Anti-hero Dr Edelsten is the role model as big business takes over Sydney's medical practices and our GPs become contractors dispensing scripts up against the clock.
Yet while NSW AMA president Dr Michael Ridley bemoans the death of the individual doctor-patient relationship as "desperately sad", public companies like Primary Health Care swallow up more private practices into their $100 million-plus group.

In their wake, they leave the closed sign at small, neighbourhood practices favoured for years by Australians.
Doctors contracted to the big groups claim that under their conditions of employment, it is impossible to give patients the time needed.

It is clear from a contract I was shown that the GP who is paying the company 55 per cent of his fees as overhead would need a turnover of up to nine patients every hour to earn the industry average of about $90.
AMA president Dr Kerryn Phelps says the average consultation the AMA recommends is 15 minutes.

She (AMA president Dr Kerryn Phelps) says she is deeply concerned about the ethical questions inherent in corporatisation of medicine.

"The ownership of private health records by a company leads to all sorts of ethical questions," she says.
Doctors racing the clock in business of medicine. Sunday Telegraph 2 July 2000 NOTE THIS ARTICLE RESULTED IN DENIALS AND A DEFAMATION ACTION (see below under 10). The outcome of this action is not known.

The speed with which health entrepreneurs and large companies have come to dominate the health-care sector has not occurred without soul-searching by many in the profession and the broader community.
Health is wealth. Business Review Weekly 23 May 2002

IPN is capped at $50 million, Primary at $578 million. There have been whispers that Primary's doctors are not as happy as those at IPN despite being paid well, and a model (and management) need to be found that embraces the doctors.
Primary Health Care Offers $39m For IPN The Age 8 June 2004

Sonic is keen to protect its pathology referral revenue stream but Primary is seen as desperate to bring more doctors on board to secure its growth, having had difficulties attracting doctors to its model. Primary also owns a pathology operation, SDS Pathology.
IPN Bid Lacking, Says Primary The Sydney Morning Herald 23 June 2004

8. A more than average number of litigation cases

I have no information about court actons against Primary or its doctors

9. Repeated interest by regulators.

In general regulators are ineffective but the blockage may be at a higher level. Records of attempts to investigate may be there.

While Primary Health Care is enthusiastically endorsed by market analysts, there are questions about some aspects of the way medicine has been practised within Bateman's empire which has been built over more than a decade. In fact, several of the company's top earning doctors have been involved in a long running legal battle with the health authorities over the way they practise medicine. The battle has been fought out through both internal watchdog hearings involving the Canberra-based Professional Services Review, and Federal Court cases.
In the mid-1990s, the Health Insurance Commission "counselled'' a large group of doctors at Bateman's medical centres over concern they were seeing high numbers of patients.
Big Business Targets GPs In National Buying Spree, Australian Financial Review 23 May 2000

Despite legal attempts to quash investigations, three doctors working for Bateman's centres were found by health authorities to have practised a form of high-turnover medicine in the mid-1990s, described as "inappropriate''.
The Rise And Rise Of Medicare Millionaires, Australian Financial Review 20 November 2001

10. Aggressiveness in response to criticism.

Legal action against critics and regulators may reflect genuine anger to unjust criticism. Equally and more commonly in the USA it has reflected a total blindness as business executives pursued a market mission. Some are unable to accept that the criticisms have validity and respond by denial and legal action. In Australia Mayne Nickless was unable to accept that its colusive practices were illegal or wrong and only conceded very reluctantly, probably at the insistance of their lawyers. There seems little doubt that Primary is genuinely angry at the criticisms and rejects them.

Bateman says the potential for in-house doctors to overservice is less than for those outside and that more than 30 per cent of in-house specialist services come from doctors with no association to the group
A questionable practice, The Weekend Australian June 3, 2000

An entrepreneurial doctor who saw up to 100 patients a day withdrew from a tribunal hearing at the 11th hour yesterday. Dr Michael Christie, executive director of Primary Health Care, was found in 1997 to have practised inappropriately''. His appeal against the penalty was to be heard today, but it was unclear whether it would proceed.
Briefs ::: Doctor withdraws from hearing,
Australian Financial Review February 8, 2001

In Sydney, the family interests of Dr Edmund Bateman amount to more than $110 million through his share of the medical centre and pathology business Primary Health Care.

With all three, personal fortune has come through a major holding in a listed health-care company that relies on Medicare for the bulk of its revenue.
While personally shunning publicity, Bateman and Cameron
(Gribbles Health) have both been aggressive in their dealings with the health authorities. Both have been involved in extended legal tussles with government medical bodies often in cases initiated by the entrepreneurs themselves.
The Rise And Rise Of Medicare Millionaires, Australian Financial Review 20 November 2001

I was particularly interested in the following article in which the courts protected Primary Health by not making it disclose documents. I had exactly the same problem in one of my court actions against a Tenet Healthcare hospital in Singapore. I had good information about the contracts between the hospital and doctors. I required them for my action. The hospital refused to produce them and the court then ordered them to do so. The appeal court in Singapore reversed the decision and decided in favour of the hospital. I could no longer pursue the matter. I could not find the outcome of the Primary Health case but suspect a confidential settlement or agreement of some sort was reached.

A NEWSPAPER'S ability to defend defamation proceedings had been severely curtailed by a judicial ruling last year, the ACT Court of Appeal has been told. Ahead of a full hearing, lawyers for Nationwide News Pty Ltd, publishers of the Sunday Telegraph, are challenging a ruling by Justice Malcolm Gray which limits the issues they can raise with the plaintiffs.

Sydney doctor Edmund Bateman and a company he controls, Primary Health Care Ltd, are suing Nationwide News over an article published in July 2000 which referred to the 'emerging scandal of five-minute medicine'.
If he (a doctor under a contract) followed government advice and spent 25 minutes with a patient, he would be on half the hourly rate of a plumber. The lawyers are arguing that the newspaper's ability to establish that the article was fair comment had been jeopardised because it could not obtain copies of the doctors' contracts.
Lawyers fight newspaper ruling. Canberra Times 23 February 2003

11. Close association with others who have indulged in unsavoury practices.

UBS Warburg bankers have had a close link with HealthSouth in the USA. Shareholders accuse it of complicity in a US $4 billion fraud.

But while the watchdogs may have concerns, the market has nothing but adulation. The company's share price has almost quadrupled from $1.50 to $5.50 in just two years. Market analysts have written enthusiastic reports, most notably by UBS Warburg, the stockbroker with strong links to its United States sister organisation. Warburg helped float Primary in mid-1998, and last year a former executive, Stephen Higgs, joined the Primary board.
Big Business Targets GPs In National Buying Spree, Australian Financial Review 23 May 2000

UBS Warburg views the sale of the centres to one single buyer as very positive, and believes this is a further step on the continued road to growth for Primary.
Brokers' tips : PRIMARY HEALTHCARE (PRY) Herald Sun June 14, 2002

12. A large divide in perceptions

See also several of the extracts from report in the sections above.

Listed two years ago, Primary is now considered something of a model, and its stock has skyrocketed, taking market capitalisation to about $400 million.
Confidential reports, prepared by a panel of doctors nominated by the profession and appointed by the Federal Health Minister, identified a range of problems including inadequate medical records and poor clinical input. In the mid-1990s, the Health Insurance Commission "counselled'' a large group of doctors at Bateman's medical centres over concern they were seeing high numbers of patients
Big Business Targets GPs In National Buying Spree, Australian Financial Review 23 May 2000

Primary's managing director, Edmund Bateman, a general practitioner, says Primary has had good results - and he forecasts even better for this half - because it has an efficient health-care services model. Bateman says Primary, which started as a service company for his practice, has been developed to suit doctors and patients.

Also interesting about Primary's results is that they have been achieved at a time when the Federal Government, encouraged by the Australian Medical Association, is considering changes to bulk-billing rules. The AMA believes the bulk-billing rate of $25.05 for a standard consultation is only half what it should be, and that the income of bulk-billing GPs is unacceptably low.
Bulk billing has underpinned Primary's business. Bateman says the company provides higher-margin health services, including corporate occupational health programs, but most people attending a Primary Health Care centre are bulk billed. Winding back bulk billing would lift revenue for Primary, but Bateman is not keen to see it happen.

He will win no friends among medical lobby groups for his criticisms of the mooted changes. "The real motivation of the current debate," he says, "is to get rid of bulk billing and let doctors charge what they like." He says GPs already have the capacity to make large incomes and "they do not have legitimate complaints".
Bulk profits. Business Review Weekly 20 March 2003

A salary survey by the Campbelltown Medical and Dental Centre's service company Primary Health Care, based on a 50-hour week, found doctors were generating an average of $448,000 a year each from their bulk-billed patients.
The figures challenge some doctors' arguments that they cannot maintain bulk-billing and make an adequate living. Primary Health Care managing director Edmund Bateman, a passionate supporter of bulk-billing, said the doctors at his 19 NSW medical centres were not practising "five-minute medicine" to earn those amounts.

"I looked at the frequency of patients being seen by doctors for 250,000 sequential visits, and the average was 4.25 patients per hour," he told Medical Observer last week. "The range was two to six."

Primary Health Care is bucking a general trend for GPs across the state to abandon bulk-billing. GPs blame rising insurance costs and an inadequate Medicare rebate for forcing them to charge patients $40-50 per consultation.
GPs who earn $448,000 a year. Sun Herald 23 March 2003

"The Primary Health Care Ltd model is one that is efficient and will generally benefit from any increase in funding for general practitioners," Mr Bateman said.

"Our centres continue to bulk bill most medical services to ensure affordability and accessibility for all. This combination of affordability and access is an important part of good health care outcomes for patients," the company says.
Around the Traps ... with THE FERRET Australian Business News 6 May 2003

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Explanatory note

On 6 February 2004 I was informed that lawyers representing Primary Health had requested the University of Wollongong (UOW) which hosts this web site to remove the General Practice Corporatisation Page and the Primary Health Care Page from the web site. These pages were written in early 2002 and put on to the web site in June 2002. The following was written as my response to this action and was put on the web site in May 2004.

I have been unable to see anything to which Primary could object on the GP corporatisation page. On both pages I omitted to state clearly in the Disclaimer at the top of the page that the comments I made were all based on the assumption that there was substance to the press reports. I did this elsewhere and this was an omission on my part here. In this instance the reports are so emphatic and the critics so credible that I feel it is splitting hairs and I was entitled to comment.

CLARIFICATION:- On reading this page after 18 months I think that it is possible readers might think that I personally claimed that Primary Health was focussed on profits and nothing else. This was an unintended overstatement made during writing and was not picked up during review.

The reader should certainly have inferred from my comments and from the press reports that there were plausible allegations of a very strong focus on profit and management practices focussed on profit - a focus which many would consider excessive and dangerous. It could be concluded from the credible reports, from the amount of regulatory activity, from the statements of whistle blowers, from the displeasure of the main body of the medical profession, and from the multitude of other pointers, that this impacted on the care which patients received - particularly the provision of careful and meticulous clinical consultations, and accurate record keeping.

I grew up in a general practitioner family and trained at a time when the Hippocratic tradition was unchallenged. The wording undoubtedly reflects my gut reaction and total revulsion at this sort of medicine, a revulsion shared and eloquently expressed by Dr. Deepak Malhotra, who has experience with Primary Health. That this distrust of market forces is well founded is revealed by what has happened in the USA. A management focus on measures which generated profit has been associated with fraud and adverse outcomes for care. The Australian press reports reveal a strong trend. It is particularly worrying when the focus on profits is centred on the individual patient. Primary Health's statement in this regard is worrying.

This practice focuses pressure directly on a doctors' responsibility to her individual patients and challenges the Hippocratic tradition. This is of particular concern when doctors are locked into support of the corporation through contracts, financial arrangements or career opportunities. One US doctor described the contracts which doctors were enticed to sign, to me, as golden handshakes which became golden handcuffs. To anyone attuned to what has happened in the USA the press reports set alarm bells ringing and the web page about Primary Health reflects that. The AMA were well informed on all these issues and this is reflected in the response of a panel of doctors representing the profession to Primary Health's practices.

In my opinion the semantic distinction between this and my statement is not great and I believe that what I said is defensible. Nevertheless it is not the way I like to put things and I apologise that this was so poorly stated.

I do not believe that this is sufficient grounds for a university to remove the two pages. I feel that this section should certainly be rewritten and worded more appropriately linking the comments to the material provided as I have done on this page. The error was mine and I try to avoid oversights like this. In a site of over 300 pages some things unintentionally slip through. I appreciate it when readers bring inaccuracies to my attention as a number have kindly done.

In June 2002 I was rushing to complete the pages before a lengthy absence. I think an email pointing out the problem and putting the company's point of view might have been more appropriate and less costly.

The web pages in dispute had been unchanged for over 18 months and the reason for sudden action is not clear.

To accommodate Primary Health's unstated concerns I temporarily removed the material relating to the company from the web site in February 2004. This temporary removal gave Primary Health an opportunity to indicate what its concerns were and for the university and its lawyers to indicate whether they too had concerns so that I could address them. In May 2004 (three months later) there has been no activity from either and the Primary Health page was therefore replaced with a more appropriate version which also explains what happened and my reasons for concern.

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Dealing with Primary Health's concerns

I am at all times prepared to examine and address the concerns which anyone has about what I have said or quoted, and to open debate on the issues. That is why the web pages are there. If anyone can reasonably persuade me that I am wrong I will retract and apologise. It is not in my interests or any one else's to be inaccurate and I am always grateful when this is pointed out to me.

I did not specify my position clearly and I am sorry if this has caused offence. The wording gave the wrong impression. Primary are entitled to point out my mistakes, put their position and express their objection but I do not believe that any academic institution can credibly remove web pages without getting opinion from both sides, allowing errors to be corrected and then examining it. I expected to hear what Primary Health's concerns are, and to be given an opportunity to address them.

This page explains in different words what my views are, indicates the reasons for them, and quotes the same press extracts. I hope this resolves any confusion. Comments from Primary Health are welcomed, and I will place them on the web site.

Any similarity in business practices does not necessarily indicate that the same consequences have occurred in Australia, in Primary Health, or are inevitable. Similarities highlight the risk. Australian companies may well benefit by recognising this risk and avoiding the pitfalls.

Primary Health will understandably hold different views to mine, but difference of opinion is part of a democracy. In my view public debate about these crucial issues is badly needed. A critical part of the process of public debate is open discussion of the differences and the misstatements that occur during public discourse. This is the accepted way to deal with such matters. I have in the past offered to include a link to any rebuttal and argument, or to include responses or comments within the site. Primary Health has this opportunity.

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CLICK HERE to go to the 2nd web page coverung the period 2005 to 2009.

Web Page History
Original page written in June 2002 by
Michael Wynne
This page rewritten and put on the web in May 2004
Rewritten again and updated September 2004