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Small step for transparency in medicine but what about pathology?

Pathology service providers should be encouraged to adopt a code of conduct similar to that of Medicines Australia. Waiting room image from

You’ve probably given little thought to the slip of paper your GP hands you when she sends you off for a blood test. After all, you’re likely to have more important things to worry about. But the next time you’re handed a referral, you might have a question or two for your clinician.

Why is she sending you to this particular company? What, if anything, is she is gaining from the relationship? And are your tests being processed by a religious health conglomerate (with clinics, hospitals, pathology labs and nursing homes) such as the St John of God Health Care Group?

After years of patient lobbying for transparency, the pharmaceutical industry’s representative body, Medicines Australia, has finally drafted a code of conduct to encourage disclosure of Big Pharma’s financial relationships with doctors. The Australian Competition and Consumer Commission last week proposed to authorise the code for three years.

The Code is a hesitant but nonetheless commendable first step in untangling the financial relationships that influence doctors’ prescribing habits. But unfortunately, the code is silent when it comes to clinicians’ relationships with pathologists and behaviour within health conglomerates.

Pathology is big business, receiving over $2 billion in payments each year from the Commonwealth and an unknown amount - perhaps 8% of that figure - from the private sector.

Unlike industries that market directly to consumers, pathology service providers seek to persuade practitioners. If we’re serious about reducing distortions within the health system, or simply understanding the way health service economics influence medical ethics, it’s important to shed light on these relationships.

A mutually beneficial relationship?

Pathology companies often struggle to secure space to temporarily store blood, tissue and other samples en route to the provider’s lab. This makes the counter-space in GP surgeries across Australia incredibly valuable. The companies will pay big dollars in order to ensure the loyalty of practitioners.

Given the government oversight of Commonwealth-funded pathology services, it’s unlikely that GPs systematically over-service patients by referring them for tests they don’t need. After all, government reports track overall pathology spending and the number of times specific tests are performed.

But there is little public information about the financial relationships between clinicians and pathologists. We can’t simply trust that over-servicing hasn’t occurred and that the doctors, service providers and regulators embody global best practice.

Pathology is big business, receiving over $2 billion a year from the Commonwealth government. Soson

Big pathology

The pathology sector is highly concentrated and becoming more so. As with telecommunications, where three large service providers hold most of the market, concentration is probably inevitable given the large, factory-style investment required for a pathology company set up.

Concentration isn’t immediately apparent to casual observers, because the dominant groups badge their operations under a range of corporate names. Couriers whizzing round your city collecting samples from the nearest clinic or ferrying a load from a hospital might all belong to a particular group.

Concentration and takeover activity is potentially bad for national health. It reduces choice and builds in costs - for example paying merger and acquisition fees rather than lab staff - that are ultimately borne by the public, private insurance systems and consumers. We should be emphasising affordable health rather than watching fund managers engage in the dance of debt.

The owners of each commercial group – typically private equity and a handful of senior executives – are desperate to keep their production lines busy. They have to pay staff. They have to pay for expensive facilities and consumables. Some have bought up market entrants that threatened to become real competition. The sector is about sweating the capital and sweating the staff.

The ACCC has been considering yet another game of musical chairs among the big pathology groups. Earlier this month it opposed the shuffling of assets that is likely to reduce competition. There has been no indication that it will seek to increase competition by splitting up the groups and by forbidding takeovers.

Increasing transparency

In the absence of positive action, we need transparency. In particular, we need mandatory reporting by pathology service providers of sweeteners given to – and required by – clinicians or the employers of those clinicians.

Let’s not hide behind dubious claims that disclosure breaches clinician privacy or corporate confidentiality. Making a profit is fine: by all means offer sweeteners (and accept or demand them if you are a practitioner) but be prepared to face questions.

Pathology service providers should be encouraged to adopt something like the Medicines Australia Code. Only a few keystrokes are required to alert regulators that each medical practice got a specific payment from a provider. Let’s share that data via the web with health analysts, peers and consumers.

Let’s also see the money flows within the religious groups, given that they benefit from Commonwealth funding.

As health costs rise in line with our ageing population, greater transparency is increasingly necessary.

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