Pathology and radiology take a hit

by Stephen Duckett

Published as a part of “MYEFO 2015 – government adopts ‘more realistic’ economic outlook: experts react
at The Conversation, Tuesday 15 December

There are swings and roundabouts in the health portfolio in MYEFO.

Spending on the rollout of the National Disability Insurance Scheme and new listings on the Pharmaceutical Benefits Scheme are the big winners, pathology and diagnostic imaging providers – mostly big corporates – are losers.

Workforce programs, which help to position the health and aged care industries, including rural providers, have also been sliced.

Both changes are important.

Pathology and radiology:

The changes to pathology and diagnostic imaging will reduce government spending by more than $200 million per year from July 1, 2016. This will either reduce the revenue of the big corporate providers by a similar amount, or increase the cost to patients of those diagnostic services, or a mix of both.

The government spending reduction is achieved by:

  • removing the current bulk-billing incentive of A$6 (A$9.10 in Tasmania and rural areas) for each pathology service;
  • reducing the bulk-billing incentive for diagnostic imaging (including magnetic resonance imaging) services.
  • There is no word in the MYEFO papers about what the government plans to do to protect consumers from being adversely impacted by these changes. Consumers generally have no knowledge of whether a pathology test or an x-ray is necessary and so follow the advice of their general practitioner or specialist on what is needed. Consumers have little power to bargain or price-shop for these tests.

    Given the corporatisation of pathology and diagnostic imaging services, it may now be time to move away from an open-ended fee-for-service reimbursement system that was developed for the old era of professional, rather than corporate, practice. A tender arrangement might generate more savings for government at the same time as protecting consumers.

    Workforce changes:

    Net savings of more than A$175 million this year, with smaller amounts in later years (declining to around A$130 million per year in 2017-18) are to be achieved by cutting some workforce programs and expanding others.

    The MYEFO statement does not provide details but it appears aged care workforce programs may be particularly hit. This would be unfortunate, as the number of older people who need care (at home or in an aged care facility) is increasing.

    The relatively low wages paid in this sector compared to those in acute hospitals means there are chronic workforce shortages in this area, which may be exacerbated by these cuts.

    The Conversation