MEDIA STATEMENT
22 FEBRUARY 2016
RCPA strongly condemns Grattan Institute’s report
The Royal College of Pathologists of Australasia (RCPA) strongly condemns a report from the Grattan
Institute’s health program director Stephen Duckett, which was released as an analysis of the way
the Federal Government pays for pathology tests. The RCPA, the leading organisation representing
pathologists in Australasia, says that the report is misleading and its portrayal of the pathology
sector is incorrect.
Dr Michael Harrison, President of the RCPA, says:
“There is a clear misunderstanding of the pathology sector within the Grattan Institute report which
is very concerning. This report is grossly inaccurate; it contains a series of many errors
and misinterpretations. At best, it is an opinion piece which is flawed. The data, which is used to
support the conclusions, are also inconsistent.”
“Regrettably, what is not presented is the full history of reform that has occurred in Medicare
pathology funding over the last 25 years. These changes in funding have resulted in the Australian
pathology sector providing a huge efficiency dividend to the Australian people and the Australian
government. No other sector of the healthcare system has delivered an efficiency dividend like
this.”
“There are real consequences to the types of invalid claims which are presented in the Grattan
report. We must seriously assess the ramifications of pathology cuts and the potentially negative
outcomes this would have to patient care. We specialise in training and supporting pathologists in
order to improve pathology testing and to achieve high levels of healthcare in Australia, which is
vital. This has never been more crucial than it is today, with huge improvements in the diagnosis
and monitoring of diseases and preventative screening programs, all of which would not be possible
without pathology.”
Below, the RCPA has highlighted three main issues of concern within the report.
1.
The pathology sector has delivered an efficiency dividend of >40% over the past 15 years
to the Australian public
Claims from the Duckett report: Australian pathology is certainly efficient. The industry’s pursuit of
process automation has led to ever-cheaper ways of delivering services. Thanks to market
consolidation, two publicly listed firms now control more than 75 per cent of the market. But
taxpayers have seen minimal benefit from these developments.
RCPA response: Repeated fee cuts (seven in the past 15 years) and the increase in bulk billing rates
for pathology (now over 98% for outpatients) has resulted in an efficiency dividend paid back to the
Australian population of more than 40% since 2000. Market consolidation and centralisation of
testing has been the result of a series of fee cuts - the cumulative effect of which is that now the
indexation of pathology test fees since July 1985 is -18.1% and since June 2000 is -12.3%.
Claims from the Duckett report: First, the way we pay for pathology can be improved to allow
government – and taxpayers – to share in the massive efficiency savings that the industry currently
keeps to itself.
RCPA response: As explained, an efficiency dividend of over 40% has been paid to Australians for
their Medicare pathology since 2000. In contrast, corrected for CPI/AWE, the other areas of
Medicare are costing the Australian population 6.2% more than they did in 2000.
2.
Cost comparisons are not correct
Claims from the Duckett report: In the report, figure 5 shows the prices paid for comparable
pathology tests in the United States, New Zealand and Canada compared to Australia’s Medicare
out-of-hospital rebate. Although comparing pathology costs across countries is difficult, it appears
that prices for comparable pathology tests in Australia are higher than in other countries.
RCPA response: The data used here is incorrect as the real price of pathology tests in Australia has to
take into account the episode cone and other payment rules. Considering the 70% of pathology that
is requested by general practitioners the episode cone impact for complete blood count, for
instance, would mean that the actual price to government is $8.70. This is far below any of the
other countries compared in figure 5. Similar figures for INR are $11.23, TSH is $18.30, Glycosylated
Hb is $6.45 and Ferritin is $9.64. In all cases, the Australian costs are less than at least half the other
comparators and, in two cases, complete blood count and glycosylated Hb, the Australian fee is by
far the cheapest. Using prices listed in the PST and not adjusted for payment rules such as episode
and item coning means that the attempted comparison is not valid.
3. Pathology funding agreements have delivered agreed outcomes, however successive
Governments have unilaterally abandoned 2 of the 5 PFAs
Claims from the Duckett report: Further, the targets set in the (current) Agreement have not been
achieved, with overruns of 1 to 5 per cent each year (see figure 4). The cumulative overrun in the
first four years of the current five year Agreement is $357 million.
RCPA response: The “current” five year agreement was abandoned by this government in late 2014,
less than halfway through its term. In addition, the previous five year agreement was abandoned by
the previous government in 2009. All other agreements were managed to an agreed outlay
For more information on the RCPA, visit www.rcpa.edu.au or see our updates on Facebook or
Twitter - @PathologyRCPA #RCPA #pathology #MedicineIsPathology.
ENDS
About the Royal College of Pathologists of Australasia:
The RCPA is the leading organisation representing pathologists in Australasia. Its mission is to train
and support pathologists and to improve the use of pathology testing to achieve better healthcare.
Media enquiries:
Dr Debra Graves
Chief Executive Officer
The Royal College of Pathologists of Australasia
+61 2 8356 5858
Debrag@rcpa.edu.au
Marco Navarria
Senior Account Manager
S2i Communications
+61 2 9262 4766
Marco@s2i.com.au