Pathology industry cries foul over rents
The number of pathology collection centres - where specimens are taken from patients, picked up and delivered to laboratories - soared to the thousands when the former government deregulated them.
Most of these centres are in general practitioner clinics, making them a good money-spinner for doctors.
Katherine McGrath, chief executive of the Australian Association of Pathology Practices, said rents had skyrocketed beyond commercial rates, challenging many operators, particularly small ones.
"The magnitude of these rents is clearly excessive," she said. "We have been lobbying the [health] department, and various ministers. It's a serious threat to the viability of pathology providers."
The Australian Medical Association said it was aware of the concerns of pathology companies. But AMA president Steve Hambleton said the Health Department should enforce existing regulations, and local collection centres were good for patients.
Large pathology company Primary Health Care supports the existing system, arguing that freeing up licensed collection centres had been of public benefit and rents had dropped from their initial heights.
Wilson HTM healthcare analyst Shane Storey said the deregulation by Labor had been driven by a desire to curb pathology's generous margins, but after a land grab by majors Sonic Healthcare, Primary and Healthscope, healthy margins were back.
Margins for pathology operators are estimated to be in the mid to high teens. Government spending on pathology has for years exceeded agreements with industry, due to strong numbers of referrals.
A spokesman for Health Minister Peter Dutton did not respond to requests for comment.
Frequently Asked Questions about this Article…
The pathology industry is worried about high rents because they claim that excessive payments to blood collection centres could threaten the viability of small pathology operators. The industry is urging the government to cap these rents to prevent small businesses from going out of business.
Deregulation led to a significant increase in the number of pathology collection centres, which are often located in general practitioner clinics. This change was initially intended to curb generous margins in the pathology sector, but it also resulted in a land grab by major companies.
The Australian Medical Association acknowledges the concerns of pathology companies but believes that the Health Department should enforce existing regulations. They also emphasize that local collection centres are beneficial for patients.
Primary Health Care supports the existing system, arguing that deregulation has been beneficial to the public and that rents have decreased from their initial highs.
Profit margins for pathology operators are estimated to be in the mid to high teens, indicating a healthy financial state for these businesses despite concerns over rent costs.
Government spending on pathology has consistently exceeded agreements with the industry due to a strong number of referrals, highlighting the high demand for pathology services.
The land grab by major companies like Sonic Healthcare, Primary, and Healthscope led to the restoration of healthy margins in the pathology industry, despite initial intentions to curb these margins through deregulation.
As of the article's publication, a spokesman for Health Minister Peter Dutton did not respond to requests for comment on the concerns about pathology rents.
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