Pathology deal may backfire

3 minute read

New rules to restrict the rents GPs can charge pathology collection centres have been slammed as anti-competitive


New rules to restrict the rents GPs can charge pathology collection centres have been slammed as anti-competitive

The government’s backflip on pathology bulk billing cuts shows signs of backfiring after a major group of providers repudiated the deal struck on GP rent control.

GPs reacted angrily to the Coalition’s agreement with Pathology Australia, announced by Prime Minister Malcolm Turnbull in the first week of the election campaign, to chop the rents GPs can charge for pathology collection centres.

“The proposed changes effectively create an anti-competitive environment, where multinational corporations who make hundreds of millions of profit each year are propped up, while GPs running small businesses lose funding,” RACGP President Dr
Frank Jones said.

The deal neutralised Pathology Australia’s Don’t Kill Bulk Bill campaign against the slashing of pathology bulk billing incentives. Pathology Australia agreed to absorb the cuts and junked a petition signed by 600,000 patients.

For its part, the government pledged to legislate to ensure “fair market value” for collection centre rents and delay axing the incentives until that time. Discussions have been held on using independent valuers to determine the premium a landlord can charge.

The deal could save Sonic Healthcare, the giant in Pathology Australia’s camp, $116 million a year on rents for its 2000 centres, according to a Macquarie Securities estimate.

But practice management consultant David Dahm said he believed the attack on free-market rents would fizzle out, just as an earlier attempt did in 2009.

GPs who relied on rents to keep bulk-billing patients were worried, but others were coming to see the threat as “politically endorsed bullying to spook the market”, he said.

“Corporates are not being forced to pay big rents. Some are asking for special protection and trying to restrict competition, and they don’t have general support from all pathology labs.”

Providers under the wing of Primary Health Care – not Pathology Australia members but with more than 2100 of the total 5400 collection centres – have rejected rent regulation outright, supporting Dr Jones in denouncing the “backroom deal” as a blow to general practice.

“We believe that any reduction in investment in frontline care as envisaged under this is a false economy and will lead to greater healthcare costs in the future,” the group’s CEOs said in letters addressed to doctors, dated May 19.

The deal is also opposed by diagnostic imaging providers and not-for-profit pathology labs, both set to lose millions in bulk billing incentives and gain nothing.

St Vincent’s Health Australia warned it would have to charge co-payments of $20 to $50 or close its pathology services if the cuts went ahead.

“We don’t have the scale and efficiencies that come with high volumes of largely automated tests,” chief executive Toby Hall said.

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