News & Events Archive

Sonic Healthcare boss Colin Gold¬schmidt has lashed out at the federal government's decision to deregulate the pathology collection centres sec¬tor, saying the policy will lead to a cost blow-out.
Less than two weeks into the new regime, 514 new collection centres have sprung up, according to Medicare, a 20 per cent increase, and smaller operators are already com¬plaining of reduced profitability.
Dr Goldschmidt said deregulation, which came into affect on July 1, would just lead to a "waste of money".
"I think the consequences of this legislation are very unfortunate," he told The Australian Financial Re¬view yesterday.

"It will lead to a blow-out in costs for the industry and will likely lead to increased demand for pathology services, which in turn will put pres¬sure on the pathology reimbursement budget," he said.
The government decided to change collection centre licensing rules in its budget last year. Previously, new licences were allocated each year to operators based on their patient vol¬ume growth, with new entrants to the market restricted to three collection centres.
But this month, the licensing sys¬tem, which was designed to ensure collection centre growth was kept in line with patient volume growth, was thrown out the window in a bid to in¬crease competition in the collection centre sector.
But Dr Goldschmidt said deregula¬tion would do little more than in¬crease costs for an industry already under pressure from government funding cuts.

"It's been shown that the more collection centres there are, the more pa¬thology tests there is that is ordered," he said."Right now, following the fee cuts of last year, the industry can't afford the additional cost impost that's been applied as a result of this legislation."
In the 2009 budget, the government announced cuts to pathology fund¬ing by a net total of $415 million over four years.

Deutsche Bank analyst David Low said collection centres cost between $70,000 and $100,000 each. The total cost of the 514 centres opened so far is estimated at $41 million, with a number of the centres being lower¬cost models.
Australia's second-largest hospital operator, Healthscope, for example, has been opening lower-cost collec¬tion centre housed within pharma¬cies. Healthscope, which is fielding takeover offers from private equity groups, has said it aims to increase its 12 per cent share of Australia's pa¬thology market by building up a port¬folio of up to 200 collection centres.

"There will be few if any real win¬ners from this policy given the in¬crease in operating costs as a result of opening new centres and rising rent on existing centres," Mr Low said yesterday.
Analysts estimate industry earn¬ings could be lowered by about 10 per cent because of the increased costs.
Sonic has so far increased its port¬folio of collection centres by 7 per cent, while Primary has boosted its by 16 per cent. Healthscope, which is a smaller pathology player, has been most aggressive, adding 166 new cen¬tres to increase its portfolio by 53 per cent.
UBS analyst Dan Hurren said a material number of the new centres were defensive and unnecessary.
But Michael Stanford, head of smaller operator St John of God, said deregulation provided his group with greater growth opportunities. "We support it even though it's going to re¬duce our profitability," Dr Stanford said. St John of God has so far added 10 new centres. Healthscope and Pri¬mary declined to comment.

A NEW investigation into kickbacks and collusion between pathology providers and healthcare professionals has sparked fresh concerns among doctors.

Last Thursday, Human Services Minister Chris Bowen announced that a Medicare Australia taskforce had been established to look at inducements offered to healthcare professionals in exchange for pathology referrals.

“Medicare Australia intelligence indicates a small minority of providers may be offering health professionals benefits such as free or discounted rent, shares or cash payments to encourage requests for their services,” Mr Bowen said.

“The Government will not tolerate this prohibited practice, which may result in patients undergoing unnecessary tests.”

The new taskforce will examine allegations received, map request trends within claiming data and analyse rental information to identify irregular relationships.

It is unclear what has prompted the fresh investigations; however, it coincides with a case in the Victorian Supreme Court in which Primary Health Care has alleged that Healthscope’s Gribbles Pathology has been offering inducements to staff at a Melbourne hospital in return for business.

However, GPs are worried the taskforce is “out for blood” and that they will be caught up in the investigations. 

“People like me who have a lot of elderly sick patients [could] be targeted because we do a lot of pathology and radiology requests,” said NSW GP Dr Catherine Brassill.

RACGP pathology spokesperson Dr Nick Demediuk said the creation of the taskforce was “political posturing” as the Government struggled to keep health on the agenda.

“It seems like it’s kite flying, and I’m not sure why it has come up now... when these types of allegations have been around for such a long time,” he said.

Dr Demediuk added that he was concerned the remit of the taskforce included mapping request trends, noting doctors might refer to the same pathology provider for any number of reasons, including convenience, quality and collection services. 

Practice management consultant David Dahm called for calm among GPs.

“I would urge GPs not to overreact to this,” he said. 

“They should double-check the terms of their pathology tenders and make sure all their arrangements are above board. 

“If they have done everything correctly, then they have nothing to worry about.”

Meanwhile, the investigation has won the support of the Royal College of Pathologists of Australasia. The investigation would “play a vital role in ensuring the integrity of the Medicare program”, the college said. 

Extract Taken from 'Medical Observer' Website - Click here to view original Article

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May 27 2010
Probe into Pathology Kickbacks

PATHOLOGY and diagnostic testing providers are set to face tougher levels of scrutiny after the establishment of a taskforce to investigate claims of bribery and kickbacks in the industry.

The probe, expected to be announced soon by Human Services Minister Chris Bowen, is understood to have been sparked by concerns that some operators have been offering doctors and specialists discounted rent on their premises, cash, gifts and other inducements in return for patient referrals.

Such conduct is illegal under the Health Insurances Act and penalties include fines of up to $660,000 for companies and imprisonment for individuals.

The taskforce will be run by Medicare Australia and will examine tip-off data, claims data trends and rental information in a bid to identify any irregular relationships.

According to industry sources, the government has become increasingly concerned that inducements could lead to some doctors ordering tests for patients that are not medically required.

According to data presented to a recent Senate inquiry into proposed changes to pathology laws, the federal government spent $1.09 billion on pathology services in 1999-2000, rising to $1.5bn in 2007. General practitioners ordered nearly 18 million more pathology tests in 2008 than they did in 2000.

The crackdown has coincided with a civil case in the Victorian Supreme Court, in which Healthscope's Gribbles Pathology business has been accused of effectively bribing staff of a Melbourne hospital to use its pathology services.

The claim, which has been brought by a competitor, Primary Health Care, alleges that Healthscope paid for medical specialists' offices to be refurbished, made donations to their preferred charities and provided funds for staff education in return for business.

Healthscope has denied the allegations and is defending the case, which is continuing. There has been no suggestion the government's actions are in any way linked to the case or that Healthscope is subject to any broader investigation.

Pathology providers have also been coming to terms with the Health Insurance Amendment (Pathology Requests) Bill 2010, which would allow patients to take test requests to a pathology practitioner of their choice.

Carol Bennett, head of the Consumer Health Forum of Australia, told the Senate hearing that consumers had raised concerns about the possibility that doctors were receiving kickbacks for referrals.

The lobby group is also concerned that proposed changes to funding arrangements for pathology could result in distorted incentives for providers and poor outcomes for consumers, such as over-testing.

A spokesman for Mr Bowen did not return The Australian's calls yesterday.

Taken from 'The Australian' Website - Click here to View original Article

February 2010
Monthly Newsletter

IMPORTANT NOTICE
December 17 2009
Changes to Laws relating to Pathology and Diagnostic Imaging
DMC Advice (KUNC Advice in relation to law changes)

Australian Financial Review
April 7 2009 (Front Page and following article on page 8)