Pathology sector cries foul over rents

The multibillion-dollar pathology sector is urging the government to cap the rents it pays to blood collection centres, claiming that hefty payments could put small pathology operators out of business.

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.