A pathology industry insider who wishes to remain anonymous has sent in the following post:
“Every year I have a chuckle at the annual reports of whoever is left standing in corporate pathology…..and this year is just the same…..it never seems to add up. All the info below is derived from the annual reports on the ASX web site and the stats released on Friday here.
The big three Australian labs have just finished reporting their annual results with all the usual fanfare of a listed company. The figures for their (Australian) pathology practices for 08/09 are:
Sonic: $ 881m (up 9%)
Healthscope: $272.5m (up 8%)
Primary: $737.5m (up 1%)
I think the big three are claiming an increase in revenue of about $100m for 08/09 against 4.8% in market growth
This is against a back drop of the government statistics of approx $1 972m medicare benefits paid for pathology (up $97m) or $2 133m in medicare fees charged (up $110m) in 2008/09.
But what about the rest? Public pathology claims about 11% of the MBS fees. And then there are the other smaller operators, notably SJOG pathology (about $90m) and least another 20 providers including ARL (only just recently acquired and presumably not included in the Healthscope figures for 08/09), Medlab, Medtest, Moaven and Partners Pathology and Austech in NSW, Adelaide Pathology Partners, Perth Medical Laboratories etcetera – and at least a dozen more boutique labs (histology and fertility) which all account for a relatively small but significant proportion of the pathology MBS fees.
Public pathology: $217-235m
SJOG pathology: $90m
The rest: $130m
This is where we start running into problems…..that makes at least another $420m of pathology…..and now a total of $2 330m (versus the government’s view of $2133).
And then because we know that MBS funded pathology has only grown by 4.8% then, at the most, there is only an additional $10m that this non-corporate group could have grown by…..i.e. only 2.4%. But at least anecdotally that would not seem to be the case. For example, in Perth during the last couple of years, a new pathology provider has secured at least 5% of the Perth metro market. In NSW all have benefited from the recent merge of two very large laboratories (and one would expect that the smaller operators would have had a disproportionate gain).
All the current hubris between corporate pathology and Roxon probably means that the reality lays somewhere in the middle…..but as the paymasters only Roxon and the government know the state of play…..what’s really happening Nicola?”