The Un-Economics Behind Bulk Billing
Why "Free" Physiotherapy Isn't Really Free: The Economics Behind Bulk Billing
We've all heard the saying:
"You get what you pay for."
But does that apply to physiotherapy?
Many Australians assume that if their physiotherapy appointment is bulk billed through Medicare, they're receiving exactly the same level of care as someone paying privately.
After all, the physiotherapist is the same person.
So why would anything be different?
The answer lies in something most patients never think about:
The economics of running a physiotherapy clinic.
Let's Follow the Money
A Medicare Chronic Condition Management (GP Care Plan) appointment currently pays approximately $63.40 (for FY 26/27)
That sounds reasonable.
Until you realise that $63.40 isn't the physiotherapist's wage.
It has to pay for the entire business.
That includes:
Reception staff
Appointment booking
Phone calls
Rent
Electricity
Internet
Professional indemnity insurance
Treatment beds
Computers
Practice software
Clinical equipment
Cleaning
Accounting
Marketing
Continuing professional development
AHPRA registration
Superannuation
Business risk
Every dollar comes out of that same $63.40.
A Realistic Example
Imagine a solo physiotherapy clinic.
The physiotherapist works hard.
They see 16 Medicare patients every day in a fully booked eight-hour day.
That's approximately $243,000 in annual revenue.
Sounds fantastic...
Until we look at the costs.
Expense
Annual Cost
Reception & administration
$80,000
Rent & outgoings
$30,000
Management & leadership
$20,000
Senior mentoring & clinical supervision
$15,000
Continuing education
$5,000
Insurance
$3,000
Software & IT
$6,000
Equipment & maintenance
$5,000
Utilities, cleaning & consumables
$8,500
Accounting, marketing & compliance
$16,500
At first glance, some of these expenses may seem surprisingly high.
Let's break them down.
Reception & Administration – $80,000
Many people assume the physiotherapist answers the phone between patients. In reality, a professional clinic relies on dedicated administration staff to answer calls, respond to emails, process Medicare claims, manage bookings, follow up cancellations, handle recalls, collect payments, prepare referrals and create a smooth patient experience.
A full-time receptionist in Australia typically costs the business around $70,000–$85,000 per year. That figure usually starts with a base salary of about $60,000–$72,000 and then increases once superannuation, annual leave, payroll tax (where applicable) and employee entitlements are included.
Without administration support, the physiotherapist either spends valuable clinical time on reception duties or patients experience longer wait times and poorer service.
Rent & Outgoings – $30,000
The clinic needs treatment rooms, a reception area, waiting room, disabled access, utilities, internet, cleaning, waste removal and ongoing maintenance.
For many suburban clinics, these occupancy costs easily exceed $2,500 per month, and can be substantially higher in premium locations.
If a physiotherapist works from a room in a medical centre, which is very common, the arrangement can still be expensive. In many cases, the medical practice takes around 30% of the physiotherapist's billings in exchange for the room, reception support, utilities and access to the centre's patient flow. In this example, it is roughly $72,900.
Management & Leadership – $20,000
Every successful clinic requires someone to manage the business.
This includes recruiting staff, developing systems, maintaining accreditation, responding to complaints, reviewing clinical quality, overseeing compliance, managing finances and ensuring the clinic continues to improve.
Even in a small practice, these responsibilities consume many hours every week. If the owner performs this role themselves, their management time still has a real economic cost.
Mentoring & Clinical Supervision – $15,000
Great clinicians are developed—not simply graduated.
Many private clinics invest in regular mentoring, case discussions, clinical audits and one-on-one supervision from senior physiotherapists.
That time has to be paid for.
When an experienced physiotherapist spends an hour mentoring a junior clinician instead of treating patients, the clinic absorbs that cost as an investment in better patient care.
Continuing Professional Development – $5,000
Physiotherapy doesn't stop after university.
In Australia, AHPRA requires physiotherapists to complete at least 20 hours of continuing professional development each year.
Courses in dry needling, shockwave therapy, spinal manipulation, sports rehabilitation, pain science and advanced assessment often cost thousands of dollars each year.
On top of course fees are travel expenses, accommodation, lost clinical time and registration fees.
Clinics that prioritise ongoing education make a significant financial investment in their clinicians.
Insurance – $3,000
Every clinic requires professional indemnity insurance, public liability insurance and business insurance to protect both patients and the practice.
Software & IT – $6,000
Modern physiotherapy clinics rely on practice management software, Medicare claiming systems, appointment reminders, clinical note systems, cloud storage, cybersecurity, Microsoft 365 subscriptions and computer hardware.
For example, a clinic might spend around $2,000 a year on practice management software, $800 on SMS appointment reminders, $600 on Microsoft 365 and email, $400 on cloud storage and backups, $500 on cybersecurity and antivirus protection, and about $1,700 a year when computer hardware is depreciated and replaced over time. Added together, those costs come to roughly $6,000 before any extra IT support or software upgrades.
These subscriptions and systems are essential to delivering efficient and secure healthcare.
Equipment & Maintenance – $5,000
Treatment beds wear out and need servicing, reupholstering or minor repairs.
Shockwave machines require regular servicing and calibration.
Exercise equipment needs ongoing maintenance, such as replacing worn bands, cables, straps and small parts.
Computers and printers need software updates, antivirus protection, repairs and occasional hardware fixes.
Clinical tools require cleaning, sterilisation, calibration and replacement of worn components.
Here is a simple example of how those maintenance costs can add up each year:
Treatment beds and furniture repairs: $500–$1,000
Shockwave machine servicing and calibration: $1,000–$2,000
Exercise equipment repairs and replacement parts: $500–$1,000
Computers, printers and IT maintenance: $500–$1,000
Clinical tools and device maintenance: $300–$800
Even without buying anything new, routine maintenance alone can easily cost a clinic several thousand dollars per year.
A clinic that keeps its equipment in good working order delivers a very different experience from one that simply tries to delay maintenance for as long as possible.
Utilities, Cleaning & Consumables – $8,500
Every appointment uses consumables, and the costs add up quickly.
Here is a rough breakdown of where that $8,500 goes each year:
Paper towel and treatment paper: $600
Disinfectant and cleaning products: $500
Gloves and other PPE: $500
Ultrasound gel, tape and similar clinical supplies: $1,000
Needles and sharps disposal: $600
Laundry and linen services: $700
Electricity: $1,700
Water: $250
Internet and phone: $1,200
Professional cleaning: $1,450
None of these costs are visible to patients, but every appointment contributes towards them.
Accounting, Marketing & Compliance – $16,500
Running a healthcare business involves much more than treating patients.
Accounting – $6,000
Accountants prepare financial statements and tax returns.
Bookkeepers reconcile transactions.
They also help with payroll, BAS lodgements and keeping the business financially organised.
For a small clinic, these services often cost around $4,000–$6,000 per year, depending on how complex the business is.
Marketing – $8,000
This is a very modest estimate.
If a physiotherapist sees 16 patients a day, five days a week, for 48 weeks a year, that adds up to about 3,840 patient appointments annually. On that basis, an $8,000 marketing budget works out to only about $2.08 per appointment.
Of course, not every appointment is a new patient. In Australia, a reasonable benchmark for acquiring a new physiotherapy client is around $150 once advertising costs, conversion rates and admin time are included. By comparison, $8.33 per new patient would be extraordinarily low—more than 18 times cheaper than a typical paid-acquisition cost—and would usually only be possible if most new clients came from word of mouth, GP referrals or other low-cost channels rather than paid advertising.
For the purpose of this example, we assume this physio works extremely effective with local GPs with their referral process.
Compliance – $2,500
Compliance with healthcare regulations also carries ongoing administrative costs.
Legal advice may be required.
Clinics must also keep up with privacy requirements, record keeping standards and other regulatory obligations.
Even a small clinic may spend $1,500–$3,000 per year on compliance support, with larger clinics spending more.
When added together, these "behind-the-scenes" expenses represent a substantial portion of the cost of operating a professional physiotherapy clinic.
Once those unavoidable costs are covered, the amount remaining to compensate the physiotherapist—and to reinvest in improving patient care—is far smaller than most people imagine.
After covering the infrastructure required to run a professional clinic, the picture changes quickly.
This calculation also assumes the physiotherapist is fully booked for every hour they are working, with no cancellations and no gaps between appointments.
Medicare-funded appointments also require a report back to the referring doctor after the first appointment and again after the final appointment. Those reports are unpaid and can take around 30 minutes in total.
Once those costs and assumptions are accounted for, the physio/business is left with around $60,000 before tax.
That still is not the physiotherapist's true take-home pay. After superannuation and annual leave are included, the equivalent salary is closer to $50,000 before tax.
In other words, the clinic is left with roughly $12–$13 from each Medicare appointment after overheads, or about $25 per hour before super and leave are included.
What if the physiotherapist is an employee?
The numbers become even tighter if the practice owner is not the physiotherapist.
In many private clinics, employed physiotherapists are paid around 50% of billings.
Using the same example, that means the physiotherapist would be paid about $121,700 from the $243,000 in annual Medicare revenue.
That leaves the practice owner with the other $121,700 to cover all of the overheads listed above.
But those overheads total around $189,000.
So before the owner pays themselves anything, the practice is already around $67,000 in the red.
In other words, if a clinic relies only on Medicare-funded appointments and pays the physiotherapist 50% of billings, the business does not just become unprofitable — it loses money on every appointment once overheads are included.
So the real question is...
How can a physio practice still bulk bill?
Something Has To Give
Healthcare isn't magic.
Businesses can't spend more money than they earn.
If the income is fixed at $63.40, then a clinic that bulk bills every patient has only a few ways to survive.
It can:
See more patients in less time.
Cut back on mentoring and supervision.
Reduce management and leadership time.
Delay or avoid buying equipment.
Limit continuing professional development.
Operate with fewer support staff.
Rely on the owner doing unpaid work after hours.
Cross-subsidise bulk-billed patients with private patients.
These are not signs of a thriving clinic.
They are signs that something important has been sacrificed.
If a practice gives up mentoring and continuous improvement, clinicians have fewer opportunities to learn, refine their skills and stay current with best practice.
If it gives up management and leadership, there is less time spent improving systems, reviewing outcomes, supporting staff and making sure the clinic is run well.
If it gives up equipment, the clinic may not be able to offer therapies that require investment, such as shockwave therapy, ultrasound or other modern treatment tools. Many bulk-billing practices simply cannot afford these machines.
The result is predictable.
The physio may have poorer skills because there has been less mentoring and less ongoing development.
The clinic may have little or no equipment because there has been no money to buy it.
That means poorer services for the patient.
And in the long run, the patient is worse off.
Case Study 2 – The Transition Nobody Talks About
This is where the economics of physiotherapy become very real.
Imagine Sarah.
Sarah starts with a bulk-billing physiotherapist.
For the first five Medicare-funded visits, she pays nothing out of pocket.
Then the care plan continues, but the Medicare-funded visits run out.
The clinic now says:
"Your Medicare visits have finished."
The next appointment is $125.
Same room.
Same therapist.
Same clinic.
Sarah is now paying private fees for what feels, on the surface, like the same service.
Here's the important question.
What actually changed?
Did the clinic suddenly buy new equipment?
Did the therapist suddenly gain years of extra experience overnight?
Did the clinic suddenly employ more senior mentors, better software or a larger support team?
Usually not.
What changed is the funding model.
The physiotherapist who was previously delivering care inside a business surviving on Medicare funding is now charging a private fee.
In other words, the service may look almost identical to the patient, but the business is now making its money directly from Sarah instead of through the Medicare rebate.
As a patient, it's worth asking:
If I'm now paying private prices, what additional value am I receiving?
If those things aren't changing, it's reasonable to ask what your private fee is actually paying for.
The Cheapest Treatment Can Become The Most Expensive
Imagine two patients.
One chooses the option that looks cheapest on paper.
The other chooses the clinic most likely to solve the problem efficiently.
In everyday life, people do not usually look for the cheapest heart surgeon, the cheapest lawyer, or the free legal aid option when the stakes are high. If they needed major surgery, they would want the best chance of a good outcome. If they got into serious legal trouble, they would want the right legal help, not simply the lowest fee.
When you are in pain, it should be no different.
Many patients will happily choose a bulk-billed physiotherapist because it feels like they are paying nothing at all.
That doesn't mean the cheapest option is the best option.
If the first patient spends months in pain, misses work, delays recovery and eventually needs additional treatment...
Was it really cheaper?
Sometimes the most expensive physiotherapy isn't the one with the highest fee.
It's the one that doesn't help you recover.
