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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

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Older, sicker patients require more medical laboratory tests to monitor chronic conditions

Like much of the developed world, Australia faces a rising demand for health services, including pathology and clinical laboratory testing. Pressure on the government to reduce health costs is intense, and that nation’s health officials are wrestling with how to rein in the soaring cost of pathology tests.

Pathologists, health policy wonks, and government health officials all recognize that, in Australia, an aging and increasingly obese population is raising the incidence of chronic conditions. This is particularly true for heart disease and diabetes.

Like much of the developed world, Australia faces a rising demand for health services, including pathology and clinical laboratory testing.

Like much of the developed world, Australia faces a rising demand for health services, including pathology and clinical laboratory testing.

Treatment of these diseases requires regular monitoring by way of blood tests. This is one factor in the increased demand for pathology testing. According to a study by the Australian Centre for Health Research (ACHR—an organization funded by the private health industry), the number of pathology tests has risen 128% in the past seven years, or about 18% per year.

Another, more conservative, estimate comes from a paper by the Australian Association of Pathology Practices Inc, using data from a program called Bettering the Evaluation And Care of Health (BEACH). The BEACH program is run by the University of Sydney Family Medicine Research Centre.  The BEACH data showed an increase of about 7% in pathology testing activity each of the last four years. That compares to a 5% annual increase in physician visits over the same period.

The BEACH data also show that primary care physicians are seeing an older and sicker patient population. This is one reason that general practice physicians have been urged by the Australian government to improve early detection and management of chronic conditions, including diabetes and hypertension. The Australian Better Health Initiative (ABHI) NT Integration Project, launched in February 2006, poured $A500 million into that effort. More than 60% of growth in primary care requests for pathology testing is linked to preventive health and chronic disease management.

This strong growth in clinical laboratory testing has consequences in the private health sector. Private insurers point to an increase in pathology testing as one of several cost pressures that forced a recent 5.78% increase in premiums. Because the Australian government provides a 30% to 40% premium rebate to citizens who buy private insurance, this increase also puts pressure on Medicare funding. Some groups expressed outrage at the growing amount of tax dollars that are funneled into the private insurance industry, which tends to serve the younger, healthier segment of the Australian population.

Doctors Reform Society of Australia president Tim Woodruff said the increase in premiums was well above inflation and would add another A$200 million of taxpayer money to the private health sector. “It is grossly unfair and it continues giving to a sector that does not need the most care,” he said. “It is time the government said ‘We will start putting a cap on how much we support private health’.” Woodruff was quoted in a story published by the Adelaide Advertiser.

Australian families will see an increase in health insurance premiums this year of about A$150 to A$200. In addition, Australians who use health services often face “gap” payments to cover the difference between what private insurance will reimburse and the actual cost of services.

In January, the Australian Department of Health and Ageing initiated a review of pathology funding with the goal of moving away from price/volume agreements for the management of pathology expenditures.” Among the actions under discussion are tendering (competitive bidding) and correcting inequities in the test fee schedule. (See Dark Daily “Australia’s Government Launches Review of Clinical Laboratory Testing Fees.”) 

The Australian Association of Pathology Practices (AAPP) responded to the government’s discussion about pathology funding with its own recommendations on future payment for pathology and medical laboratory testing. These recommendations were submitted to the committee in charge of the pathology funding review.

“Pathology underpins most Australians’ health care with testing used to predict, pre-empt, diagnose and monitor disease, and to determine and monitor appropriate therapies. Around 70% of diagnoses are reached through pathology,” the group stated. “there were approximately 30 million pathology episodes during 2007 and 50% of Australians have at least one pathology test(s) each year.”

The AAPP recommends three actions. First, the Fee for Service arrangement should be retained as the primary source of reimbursement for pathology testing. Second, the “coning” rule—which caps payment at a certain number of tests performed per primary care visit—should be eliminated. Third, pathology and clinical laboratories should partner with the government to increase the use of technology to reduce costs associated with pathology testing.

The AAPP’s position paper is the first salvo in Australian pathologists’ battle to sustain funding for laboratory testing at adequate levels. Over the past year, government health officials have already discarded a long-standing pathology reimbursement contract arrangement that had been in place since the late 1980s. In response, the clinical laboratory industry in Australia is ready to make the case for the value of pathology services as they relate to overall patient care.

For its part, Australia’s government health system, like the government health systems in most other countries, tends to treat pathology and clinical laboratory testing like it was a commodity. That attitude often translates into ever-deeper cuts in reimbursement which eventually can compromise the integrity and quality of the laboratory test results produced by pathology laboratories in their respective nations.

As chronicled in stories published by Dark Daily and The Dark Report in recent years, it is patients who eventually suffer the consequences of their government’s under-reimbursement for the true cost of pathology testing. Multiple examples of medical laboratories producing unreliable or inaccurate lab tests results have been reported in the press. And, in cases where the government commissioned an independent inquiry into why systemic and on-going errors in laboratory test accuracy occurred, the finding has often been that the deficient laboratories were under-staffed and inadequately funded. —K. Branz

Related Information

Private health fund get green light to raise premiums by up to $200 

Battle to limit rises in health premiums 

Diabetes prevalence 

Summary of AAPP’s Submission to the Strategic Review of Future Arrangements for Pathology and Diagnostic Imaging Services

Australia’s Government Launches Review of Clinical Laboratory Testing Fees