The pathology industry is seeking an urgent meeting with the federal health minister, Sussan Ley, over planned changes to bulk billing, warning that the reduced rebates could kill off small service providers.



Service providers say they will have no choice except to charge patients a co-payment for services such as blood tests after the federal government announced in its budget update that it would scrap incentives for pathology services, and reduce bulk billing incentives from 15% of the Medicare benefits schedule fee to 10% for diagnostics.

The body representing pathologists has raised alarm bells, saying the changes will have dire consequences.

“There’s no capacity to absorb it [costs], is what we’re being told,” the chief executive of the Royal College of Pathologists Australasia, Debra Graves, told Guardian Australia.

She disputed Ley’s assertions that pathology service providers were using the rebate to boost profits, saying the industry was now at a “critical point” following massive consolidation over the last few years.

“There really isn’t much fat left in the system any more,” Graves said.

“We’ve asked for an urgent meeting with the minister,” she said. “We’d be delighted to work with her to show her how the system works.”

The chief executive officer of Sonic Healthcare, Colin Goldschmidt, said the changes would signal the end of smaller-scale service providers, who would be “going out of business” as a result of a reduced rebate.

He told Guardian Australia the only option for recouping the losses was to ask patients to pay more.



“The only way we can handle a cut like this is to introduce a co-payment,” Goldschmidt said, adding that the concern was shared by all in the industry. “There wouldn’t be any pathology company that isn’t greatly alarmed by this [announcement].”

The changes are “aimed directly at those patients who are currently bulk-billed,” he said.

Neither Goldschmidt nor Graves were consulted before the changes were announced in Tuesday’s Mid-Year Economic and Fiscal Outlook (Myefo) document.

Sonic Healthcare, one of the world’s largest diagnostic companies, is vowing to flex its muscle to stop the changes from going through. Consultations with the Senate crossbench and Labor are forthcoming, Goldschmidt said.

“Sonic Healthcare will work with opposition parties, consumer groups and patients to oppose these measures, as we believe they are unreasonable for the profession and patients, and will jeopardise service levels and good patient care,” a statement released by the company said.

The Australian Medical Association, which strongly opposed earlier moves by the Coalition to introduce a GP co-payment, also opposes the cut in rebates for pathology and diagnostic services, potentially opening up another bruising battle for the government.

Ley, who conceded on Thursday that a rebate cut would mean some patients would pay more for services, defended the decision on the grounds the rebate had not helped raise bulk-billing rates for pathology and diagnostic services.

“This was a policy introduced to increase bulk billing and it didn’t,” she told ABC Radio on Thursday. “So my question to providers is: if the government has given you $500m to increase your bulk-billing rates and you haven’t, where has that money gone?”

Labor denied that the rebate, which was introduced by the Rudd government in 2009, was intended to boost bulk-billing rates, insisting it was supposed to maintain the historically high rates that pathology and diagnostic services enjoyed.

A media release on the introduction of the rebate, issued by then health minister, Nicola Roxon, in 2009, spelled out the purpose of the policy.

“This measure will provide a strong incentive for providers to maintain or increase bulk-billing rates,” it said.

The shadow health minister, Catherine King, said: “Given, by the minister’s [Ley] own admission, that this measure not only maintained existing bulk-billing rates, but saw them increase, Labor’s incentive has done exactly what it was designed to do.”

The rebate reduction is expected to net the government $650m, most of which will be redirected to enhancing the Pharmaceutical Benefits Scheme (PBS).