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Pathology rent cap will cost patients, doctors

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The AMA has warned that Federal Government proposals to cap pathology collection centre rents will likely drive up patient out-of-pocket costs and could force some medical practices out of business.

In a strongly worded letter, AMA President Dr Michael Gannon has appealed to the Small Business and Family Enterprise Ombudsman, Kate Carnell, to intervene and help try to convince the Government to drop its plan.

Dr Gannon said the proposal, announced during the Federal election, to change provisions in the Health Insurance Act would allow the two major pathology companies that dominate the market to unilaterally cut the rents they paid to medical practices for co-located collection centres (ACCs), delivering a big financial blow to small business already reeling under the effects of the Medicare rebate freeze.

“The proposed changes fundamentally alter the intent of the existing law…by imposing a blunt cap on the commercial rents that GPs and other specialists can receive for co-located ACCs,” the AMA President said. “It delivers two major listed companies with an unwarranted and unfair advantage…estimated to save [them] between $100 million and $150 million per annum.”

Under the deal, which was sprung on the medical profession without warning, the Government has promised to bring down rents in exchange for a promise from pathology companies that they will sustain bulk billing rates despite the loss of the bulk billing incentive.

Dr Gannon warned that the Government’s proposed changes would have “a big impact” on medical practices.

“Medical practices are [already] feeling the impact of the current MBS indexation freeze, and policy changes like this will simply have a further negative impact on their cash flow and on practice viability,” he said. “For those practices that have used this source of rental income to help keep them viable during the current extended freeze, it may it may mean higher costs to patients or simply selling their business.”

Many, the AMA President said, had made decisions about hiring staff and purchasing equipment based on anticipated revenue streams from ACC rents, and the policy would put their finances under strain.

Dr Gannon said it was unlikely the Government comprehended the full impact of the “poorly targeted” policy when announcing it, including the massive windfall it would deliver to the big pathology providers and the hefty financial blow it would deliver to many medical practices.

Adrian Rollins