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24 May 2016

The Federal Government has intensified its assault on medical practice incomes, promising to clamp down on rents charged for pathology collection centres in exchange for an end to the pathology sector’s damaging campaign over cuts to bulk billing incentives.

Just two weeks after it announced a two-year extension of the Medicare rebate freeze to 2020, ripping $925 million out of primary and specialist care, the Government has sliced further into practice earnings by stitching up a peace deal with Pathology Australia that analysts predict will force collection centre rents down by 30 per cent and leave major players like Sonic Healthcare and Primary Healthcare up to $100 million a year better off.

Prime Minister Malcom Turnbull announced the agreement during his first televised debate with Opposition leader Bill Shorten, declaring that it meant that “the concern that has been expressed about patients who go to have their blood tests done and so forth being charged extra, not being bulk billed, is… that concern is gone; the pathologists have agreed to continue bulk billing”.

But the Prime Minister’s boast could be premature.

Primary Healthcare, which holds 34 per cent of the market and is not a member of Pathology Australia, has written to doctors to distance itself from the deal, and smaller pathology providers complain it does little for them and they will have to begin charging patients a co-payment of up to $50.

AMA President Professor Brian Owler said the deal “doesn’t guarantee anything”.

“The cut to bulk billing incentives for pathology has merely been deferred. The cuts are still there, they’re still taking $650 million out of health over the next four years,” Professor Owler said.

Professor Owler said he had been in contact with Pathology Australia about the deal, and they had admitted there was no guarantee the pathologists would continue to bulk bill.

“They don’t have the ability to make that guarantee, and it will be up to the individual pathology companies to actually make that decision over time,” he said.

Under the deal, the Government has committed that, if it is re-elected, it will delay bulk billing incentive cuts by around three months while it introduces provisions to the Health Insurance Act to clarify what is meant by ‘market value’ and link it with local commercial market rents.

This will be backed by “appropriate compliance mechanisms”, and those seeking to register collection centres will need to provide more information.

Pathology Australia said the reduced rents would enable its members to absorb the bulk billing incentive cuts and sustain current rates of bulk billing. As a result, the organisation has agreed to drop its national “Don’t Kill Bulk Bill” campaign.

The announcement amounts to a backflip by Health Minister Sussan Ley.

In a review of Approved Pathology Collection centre arrangements last year, Ms Ley rejected pathology sector calls for a change in the definition of ‘market value’ and determined that existing regulations regarding prohibited practices and market rent were appropriate.

Macquarie Securities analyst Craig Collie told Guardian Australia that Sonic Healthcare could be up to $70 million a year better off under the Government deal.

Mr Collie estimated the company would save about $116 million a year on rent at its 2000 collection centres, which more than offset the $50 million cost of losing the bulk billing incentive.

Guardian Australia reported that both Sonic and Pathology Australia have been major Coalition donors in recent years.

There are around 4000 collection centres across the country, and medical practitioners have warned the Government will need to consult closely with general practice to ensure that the new regulations are not simply a form of price control that puts many existing leases into jeopardy.

The Government has declared there will be a moratorium on any new collection centre approvals until the new regulations are in place, and “the measure to remove bulk billing incentives will commence at the date that the changes to the regulatory framework take effect”.

But Professor Owler said that, even with the deal, there was no getting away from the fact that the Government was ripping hundreds of millions of dollars out of pathology services.

“To suggest that somehow the concern is now gone I think overstates the results of the agreement that was reached between the Government and Pathology Australia,” he said. “There will be some easing of costs pressures through this change to rents, but at the end of the day they are still experiencing a very significant cut.”

St Vincent’s Health Australia Chief Executive Toby Hall told the Adelaide Advertiser the axing of the bulk billing incentive would rip $3 million from his organisation’s bottom line, forcing them to consider “some form of patient co-payment. I think we’d have to look at between $20 and $50”.

And the deal has done nothing to address the cut to bulk billing incentives for diagnostic imaging services.

The Australian Diagnostic Imaging Association warned patients still faced cuts to their rebates for x-rays, CT scans, MRIs and ultrasounds, and smaller pathology companies cautioned they would be forced to charge out-of-pocket expenses despite the Government’s deal.

Adrian Rollins


Published: 24 May 2016