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Pathology testing should be a level playing field – for patients and providers

Australians value access to affordable, high quality health care and, although it’s not always the first health service that springs to mind, access to pathology testing is an important aspect of this.

In the post below, CEO of Public Pathology Australia, Jenny Sikorski, says there are currently some threats to the viability of  smaller pathology services in under-served areas. She explains how this has come about, and outlines what needs to be done ensure that everyone in Australia has equitable access to diagnostic testing.


Jenny Sikorski writes:

Pathology is a medical specialty that focuses on determining the cause and nature of diseases. By examining and testing body tissues (e.g. biopsies, pap smears) and fluids (e.g. blood, urine) pathology helps doctors diagnose, manage and treat patients correctly.

Pathology in Australia

Over 70 per cent of all health care decisions affecting diagnosis or treatment involve a pathology investigation, and all cancer diagnoses involve pathology. Pathology is ordered in one in every two visits to the General Practitioner.

Most people take pathology for granted.  There are 5,804 pathology collection centres in Australia and pathology has the highest bulk billing rate of any medical service at 87.8%.  However, with the corporatisation of pathology, there is no guarantee that there will be a collection centre within easy commute, nor that the centre will bulk bill you for your pathology test.

The past decade has seen a significant change in the ownership of pathology practices.  Instead of being owned by individual groups of specialist pathologists servicing a local community, pathology practices are generally owned by large national corporations with centralised laboratories.

In an environment where Medicare Benefit Schedule (MBS) fees do not cover the full cost of all pathology tests, pathology providers have been on a quest to secure greater numbers of specimens to improve their economies of scale. To achieve greater volumes of testing, corporate pathology providers have been offering to pay above market rent to secure collection centre space, particularly within general practice settings.

Having pathology samples taken after visiting the GP in the same building is a fantastic convenience.  However, what most patients don’t know is that often there is underlying financial transaction between the landlord general practice owner and the tenant pathology provider which the GP may refer patients to.  There is nothing to mitigate any perception of financial inducement.  Doctors can choose which pathology provider to refer the patient to, and patients are also able to choose their own pathology provider.

However, most patients don’t realise this and take their pathology request forms to whichever branding is on the front of their request form.  The mandatory advisory statement that patients can take their pathology request to any provider is often in a barely visible font on the reverse side of the pathology request form (Mandatory statements are required under section 18A Health Insurance Regulations 1975 Commonwealth).

Threats to choice and access

Pathology has become a matter of who has the deepest pockets to pay for collection centre rent, rather than being based on service quality and timeliness.  As a result, pathology providers who cannot afford to pay huge rents have been outbid for collection space, sometimes after having been in the same centre for years with strong clinical relationships between requesters and pathologists.

With a decreasing volume of tests, these pathology providers become unviable and are bought up by one of the three largest private pathology providers.  One of the most recent was the acquisition of St John of God Pathology by Australian Clinical Laboratories for the bargain price of around $100 million. This loss of diversity in the market means there is more power wielded by the three largest pathology providers to determine where collection centres should be located and whether they should bulk bill for all or part of the tests they conduct.

To make the situation worse, the Federal Government pays private pathology providers more for the same test than it pays the government owned and operated (public) pathology services under Medicare.  For every specimen collected, private providers receive between $5.95 to $17.60 (the Patient Episode Initiation fee) , but the public pathology providers only receive $2.40 under the MBS.

The public pathology providers generally operate under a bulk bill mandate and service areas which are unprofitable for the private pathology providers.  The funding inequity limits the ability of the public pathology providers to have collection centres in areas where they are needed.

Access to pathology is also compromised by what tests are covered by the MBS.  For instance, there are over 1700 different genetic tests performed in Australia, and yet only 35 are funded through the MBS.  That means patients have to pay for the vast majority of genetic tests as they are not on the MBS.  This causes what the Consumers Health Forum has described as ‘out of pocket pain’.

Shoring up the future

While the $500 million, ten year Genomics Health Futures Mission announced in the Federal Budget, is highly commendable, it fails to appreciate that genetic testing and genomics are here and now; it is not merely a pursuit in the realm of research laboratories.  The Federal Government needs to make an investment and fast track contemporary pathology practice such as genetic testing onto the MBS.

What should the Federal Government do to ensure bulk billed pathology services are accessible for all patients across Australia? They should:

  1. Have an agreement with the pathology sector as to how MBS funding for pathology should be managed.
  2. Pay the same amount to all pathology providers for the same tests.
  3. Ensure that MBS fees cover the full costs of pathology tests.
  4. Fast track best practice tests such as genetic tests onto the MBS.
  5. Change the regulations to clamp down above market rent for collection centre space**

Public Pathology Australia’s submissions including its pre-budget submission can be found at http://publicpathology.org.au/news/submissions/ .

**This would require a change to PtIIBA Health Insurance Act 1975 Commonwealth.

Jenny Sikorski is the CEO of Public Pathology Australia. On Twitter @PublicPathology 

Comments 2

  1. Rob says:

    It is true that private pathology get more in PEI than public, but that’s about it. Public pathology is funded at state government level far above the MBS pays to private. The wages in WA SA are 40% more in public vs private so the cost of pathology is far more in public vs private. Yes the market rents are causing distortion but could be sorted if collection centres were not allowed to be co located in clinics. Then you’d get a good distribution of centres.

  2. Jenny says:

    Hi Rob,

    The cost of pathology is reflective of a range of factors, yes, award rates but also testing profile – highly complex tests cost more and are more common in tertiary hospitals for instance.

    Rental data has been analysed by the Commonwealth Government and patterns are the same whether the collection centre is colocated with a clinic or not.

    Wouldn’t it be great if all government funding for pathology covered the cost of all tests performed regardless of the type of provider!

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