Our aim was to develop a tool to identify specific features of the business and financial management of practices that facilitate better quality care for chronic illness in primary care. Domains of management were identified, resulting in the development of a structured interview tool that was administered in 97 primary care practices in Australia. Interview items were screened and subjected to factor analysis, subscales identified and the overall model fit determined. The instrument's validity was assessed against another measure of quality of care. Analysis provided a four-factor solution containing 21 items, which explained 42.5% of the variance in the total scores. The factors related to administrative processes, human resources, marketing analysis and business development. All scores increased significantly with practice size. The business development subscale and total score were higher for rural practices. There was a significant correlation between the business development subscale and quality of care. The indicators of business and financial management in the final tool appear to be useful predictors of the quality of care. The instrument may help inform policy regarding the structure of general practice and implementation of a systems approach to chronic illness care. It can provide information to practices about areas for further development.