Richard Di Natale (Victoria, Australian Greens) Share this | Hansard source

I rise to speak to the Health Insurance (Approved Pathology Specimen Collection Centres) Tax Amendment Bill 2018. The Greens support this bill, which makes an administrative change to allow for the tax payable on the grant of an approved pathology collection centre to be $2,000 for a two-year period rather than annually at $1,000.

Pathology is essential to health care in Australia. Over 70 per cent of all healthcare 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 GP. It's a vital service. It's an essential public service. There are now 5,804 pathology collection centres in Australia, and pathology actually has the highest bulk-billing rate of any medical service, at over 87 per cent. It's clearly something that Australians value. It's important. It's critical to providing access to good health care.

However, we Greens are concerned about the loss of diversity within the pathology sector. One of the consequences of that is the rise of corporatisation over public pathology. Since we've had the deregulation of collection centres—under the previous Labor government, it must be said, in 2010—there's been 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 now generally owned by very large corporations with a centralised laboratory structure. Pathology corporations are looking for more and more ways to dominate the market so that they can get economies of scale. That often means that they locate themselves inside GP clinics to try to capture patients.

The way corporates embed themselves in general practice within those clinics—and, let's remember, one of the concerns here is that you get this vertical integration, where you go and see a GP and they are associated very directly with one of the large companies—is by paying sometimes exorbitant rents for collection centre space. They often pay well over market rent to get a space in a GP surgery, knowing that they will get a significant return on the business they get from that practice. The reason they can do it is that, under the Health Insurance Act 1973, the rents are defined as 20 per cent of the market rate. That's the permissible rent—20 per cent of the market rate. But, when the market's defined as what a party is willing to pay, the limit's actually meaningless, and it's led to drastic increases. If it was redefined under the act as the rent for a comparable medical suite in the same geographic area then rents would come down. They would have to come down.

So, currently, public pathology providers, many of whom simply can't afford to pay huge rents, are now being outbid for collection centre space, sometimes having been in the same centre for years. There are strong clinical relationships between the GPs and other requesters of services, and the pathologists. They've got a long history in the centre, but they just can't afford to pay the rent anymore. Public pathology providers are being squeezed out. And of course that's made worse by the fact that, for some inexplicable reason, the government pays private pathology providers more for the same test than it pays the public pathology services under Medicare. For every specimen that's collected, private providers receive between $5.95 and $17.60, while public pathology providers receive only $2.40 under the MBS. There's a huge differential. It's no wonder that those minority players, those small groups of public pathology providers, can't compete. They're not being remunerated to the same degree, under the MBS item numbers, and they are being squeezed out by these huge rents that are being charged by GPs.

I don't blame GPs in this, by the way. When you've got general practices struggling because of the freeze on Medicare indexation—something begun by Labor but really taken somewhere very bleak under the Liberal coalition government, and it has hit so many practices so hard—they are looking for ways to supplement their revenue. One of the ways they see of doing that is by increasing the rents they charge to pathology providers. Of course, that leaves the providers between a rock and a hard place. If they want to find themselves located within a GP clinic then they have to pay those rents. What happens then is that the public providers, who simply can't compete with the private providers, are squeezed out. They are at a significant disadvantage.

A couple of things need to happen here. One is that we need to redefine what charging market rent is. As I said, if we had a simple change that meant it was the rent charged for a comparable medical suite in the same area, you would find that they couldn't charge well above market rent. Of course, that means more transparency in the system. It would hurt some general practices, but you don't fund general practices by having a business model that forces them to charge over the odds to try and get a pathology provider within their clinic; you do it by having a transparent model that funds Medicare appropriately and that ensures that Medicare item numbers keep up with indexation.

The second thing that needs to happen, quite clearly, is that we need to make sure that there's a level playing field in the pathology sector. The Greens are very strong supporters of ensuring that we have a well-funded, universal public health system. That means we're strong supporters of public pathology providers, and we do want to see a level playing field, including addressing out-of-control rents through amendments to the act and making sure that there's MBS parity between public and private pathology. We think that's only fair. These steps would lead to better outcomes for patients and a reduction in overservicing and would mean that we would put the interests of patients ahead of the interests of some of these very large corporate providers.