PM strikes deal with pathologists over GP rents

4 minute read

Independent valuers could end up deciding how much rent GPs can charge for pathology collection


Independent valuers may step in to decide how much rent GPs can charge for pathology collection centres after the government struck a pre-election deal with the sector

Bowing to the pathologists’ demands one week into the election campaign, Prime Minister Malcolm Turnbull announced a crackdown on rents for co-located collection centres along with a moratorium on leases for new centres.

In return, Pathology Australia agreed to drop its noisy opposition to the removal of bulk-billing incentives and withdrew a petition targeting patients that had attracted 600,000 signatures in about six weeks.

The RACGP denounced what it called a “backroom deal to cap rents”, saying it would add to the strain on GPs to keep their doors open on top of the extended Medicare rebate freeze.

“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.

A system of appointing independent valuers to determine the premium a landlord can charge for a collection centre was one of several suggestions discussed recently at an industry-government roundtable held by Health Minister Sussan Ley, TMR has confirmed.

Dr Brian Morton, chair of the AMA Council of General Practice, said the doctors’ body considered it would be acceptable for a certified valuer to play a role in setting a premium, on top of the cost of floorspace, for the advantage of being located in a GP clinic.

“It is not unreasonable that pathology companies would pay a premium for being being co-located with a general practice, but to ensure it is not an inappropriate amount,” Dr Morton said.

“What the AMA said to the department is, you would need a certified valuer recognised as having the wherewithal and expertise, it needs to be kept confidential, and there would need to be a checklist of requirements.”

Dr Morton said the issue had dragged on for years, despite the existence of legislation adopted in 2009 to restrain pathology rents to a fair market value.

“The pathology companies shouldn’t be complaining because they are the ones that are willing to pay the exorbitant rents they claim,” he said.

Pathology Australia President Dr Nick Musgrave said a number of models had been put forward.

“One of them is the use of a certified practicing valuer at the time of application (for an approved collection centre),” Dr Musgrave said.

“Another possible option is the use of a database for comparison.”

Dr Musgrave said it was hard to quantify the amount of money pathology labs had wasted on exorbitant rents, but he said relief from gouging would give providers the best chance of being able to continue bulk-billing.

Some landlords are said to demand as much as $13,000 a square metre per year.

Dr Musgrave said sky-high rents had become “not infrequent”, but he noted that landlords were not always GPs.

Under the deal, Pathology Australia dropped its campaign against the planned slashing of pathology bulk-billing incentives worth hundreds of millions of dollars per year to the labs.

The incentives will remain only until new regulations on rent controls are in place.

In his announcement, Mr Turnbull said the pathology sector had named rents as the greatest cost pressure threatening the sustainability of bulk-billing for medical tests.

If re-elected, the government would “legislate to address ambiguities and improve compliance” regarding fair market-value rents, the PM said.

Specifically, it would amend regulations to clarify the meaning of the term “market value” and link it with relative commercial rents.

There would also be a moratorium on approvals for new collection centres until the new regulatory framework was introduced.

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