"The groundwork of all happiness is health." - Leigh Hunt

Why a pathology bulk billing campaign is more about increasing industry profits than saving you money

For many individuals, the term “bulk bill” refers to GP visits that they don't should pay out of pocket for. But one other type of bulk billing is within the news ahead of May's federal budget – bulk billing of pathology testing, reminiscent of blood tests.

This is expounded to the fees pathology firms charge Medicare for doing laboratory tests outside the hospital, the sort your GP might order to assist diagnose or monitor disease.

These pathology fees have been frozen for Almost a quarter of a century. Is it fair? Obviously not, he argues. Australian Pathologywhich represents private pathology laboratories.

He recently released his “Keep pathology bulk bill“Campaign. is largely a request for an add-on. A$160 million A 12 months for pathology firms. He argues that this is required to maintain most pathology tests outside the hospital free to the general public.

But easy solutions offered by vested interests with more public funds are rarely in the general public interest. Here's how we will design a pathology system fit for the twenty first century, one which keeps tests free for the general public.

Pathology is big business.

Collecting and analyzing samples is big business. Pathology providers received approx. $3.25 billion Medicare rebates for out-of-hospital tests in 2022-23. Pathology testing can also be carried out in private and non-private hospitals, but these are funded under a mix of various arrangements.

Almost all (over 99%) outpatient pathology services are bulk billed. This is far higher than GP visits, which were around 80% over the identical period.

The use of pathology is increasing. Faster By which the population is increasing. This is partly due to more chronic disease within the population, and partly because recent tests have gotten available.

Pathology provision is concentrated in just a few hands, with many registered providers. Australian Stock Exchange. An increase in pathology rebates, as Australian Pathology is looking for, will go straight to firms' bottom lines, increasing shareholder value.

Remember the drive-through testing? In the early days of the pandemic, private pathology firms conducted thousands and thousands of Covid PCR tests.
Christy Cooper/Shutterstock

So why are pathology firms getting more funding now? Profits for pathology firms soared through the first years of the Covid pandemic, with widespread PCR testing and accompanying government funding.

But the industry was accused of “The COVID-19 crisis”, and at last Gravy Train finished. So pathology firms at the moment are trying to exchange that revenue, using the most recent campaign to extend discounts.

Is there any profit to the pathology industry?

Given this, the 24-year stalemate on pathology regime exemptions could seem unfair. But a take a look at the world of pathology reveals an industry that has stood out. Productivity development.

An increased volume of standardized tests, as we have now seen lately, can result in improved productivity. For example, firms could make their testing equipment work harder – running them longer, loading them with more samples – to lower the fee per test. Improvements in equipment also allow tests to be performed faster, increasing economies of scale.

But a fee freeze is a lazy policy, an example of “set and forget.” While this achieves some advantages for taxpayers, it is just not optimal. This is because all of the productivity savings (from automation, digitization and increased economies of scale) exactly offset any increased costs from inflation. This is unlikely to ever be true. Given the present extent of automation and consolidation, that is potentially leaving excess profits within the pockets of providers, and costing governments greater than they should pay.

More changes Pathology is yet to be delivered. I advance Artificial intelligence Faster and automatic reading of some pathology tests can further reduce pathology costs, resulting in greater profitability for providers.

Future policies must reflect changes in how much it costs to supply pathology services, the main points of that are thin on the bottom.

What must occur?

The government must step back and ask whether the fee-for-service pathology service payment system, designed a century ago when the supply of pathology was literally a cottage industry, will proceed in an era of widespread automation and concentration of ownership. That's correct. The answer is clearly no.

Reforms must first eliminate the present unrestricted, fee-for-service payment system. Pathology is a giant business and needs to be paid as such. Using tenders and contracts.

Two people looking at a document, one about to sign it.
Pathology providers needs to be invited to tender for contracts, to scale back costs.

Pathology firms needs to be invited to tender to supply out-of-hospital pathology services in designated geographical areas. Two or more tenders could also be awarded to keep up competition amongst suppliers and to maintain options open until the top of the tender period. Pathology contracts mustn't include out-of-pocket payments by consumers.

Pathology within the hospital mustn't be included in the identical arrangement. Instead, private hospitals should make arrangements on their contracts to supply pathology, as they do now.

Public pathology services – run by state governments or their agencies eg Pathology Queensland – are also changing.

Consolidation of public pathology services in New South Wales resulted. A significant improvement in productivity. Victoria has launched into a less ambitious reform process, strengthening Three public providers Rather than the one public provider model seen in NSW, Queensland and South Australia. This will likely lead to savings as well.

Public providers needs to be invited into the tender process alongside private providers to extend competition.

What is the take home message?

The world of pathology provision is moving fast, with more changes on the horizon, whether related to technology or sustainability. In this environment, it is just not good policy to overpay private providers under a payment system that has passed its use-by date. This is despite his simplistic appeal and advocacy of non-public interests.

So the following time you walk right into a pathology collection center and see posters encouraging you to email your MP to “keep a pathology bulk bill”, beware. The campaign is more concerning the company's profits than saving you money.