NEW PATHOLOGY LEGISLATION
The deal arranged between the Government and Pathology Australia is designed to substantially reduce the rent a GP practice owner can charge a pathology provider for co-located pathology collection centres. The principle acknowledged by the former Australian Valuation Office that the market rate is the amount agreed between a willing buyer and willing seller is to be overturned.
The Government deal with Pathology Australia during the May election campaign plans a radical change to the regulations to define ‘market rent’ as being the value of a medical suite. This has completely reversed the long held position of the Health Department supported by the Australian Valuers Office that market rate is based on the “willing buyer, willing seller” principle.
IMPACT ON SMALL BUSINESS
It is extraordinary that any government wouldseek to define an open market and control rents rewriting existing leases in favour of big business. Pathology business is big business and Sonic controls 43% and Primary HealthCare (through Dorevitch) controls 34% this demand for assistance is oligopoly behaviour.
Pathology Australia has argued to the Government and the media that “price gouging” by GPs is a great moral hazard to the health sector. The Government has until now had the view that the rent was a commercial decision entered willingly by pathology companies. They also acknowledged there was no increased use of pathology services in co-located practice rebutting the claim by pathology that it was an inducement.
GP CLINIC VIABILITY
This plan not only undermines the financial viability of the backbone of Australia’s GP clinics doctor owned clinics and if these close or become non viable we can expect to see widespread clinical failures & corporates (the two largest Corporate GP clinic owners are also IPN and PHC which are part of the same entities with two largest pathology companies) filling this space as they are not hamstrung by the same restrictions…
It seems unbelievable that any new regulations to artificially lower rents and transfer that income to big corporate pathology would apply to medical owners and NO OTHER TYPE OF OWNER but that is exactly what is being proposed. This is not based in any sense of what we know to be fair and reasonable.