Welcome to our first newsletter for 2018

Member Communication and Practice Support

As we mentioned in our December newsletter we have been working to try to improve communication and support our members who are spread across the country.

In February we trialled an online interactive seminar (read Webinar you can hold a discussion in) for the Queensland members and some other Queensland practice owners. The topic was Changes to the Cybersecurity Legislation and the Requirements for Reporting Security Breaches. We had a very good presentation from Redfish and a great discussion.

Part of the reason for the limited distribution of such an important topic was a request from Redfish that we keep it small and Queensland based. We are now working out how to repeat it for a national member audience.

The outcome of our trial is that we are going to buy a Zoom licence and use it to hold a series of seminars which we will open to all members. We also intend that this will be the platform for holding our AGM and any other national meetings that we need to hold.

We have a few ideas about possible topics, but we would like to hear from you if there are any topics / discussions that you think we should be covering.

Pathology Rents Revisited

This issue seems to be quietly bubbling away in the background still, and remains a significant economic issue for many practices.

Despite some rumours and speculation we are not aware of any changes to the requirements for establishing agreements with pathology services providers. The key compliance issues that must be satisfied are that rents are negotiated willingly, be within market value and payment must not be dependent on the volume of business. So apparently no change to the present position.

However, there has been some recent activity and commentary. These have been separately posted. A summary of each and links to the full articles appear below.

Meanwhile, here is a summary of recent events.

On 2 March 2016 the Sydney Morning Herald reported: “Sonic and Primary have increased their combined market share by 12 per cent since the collection centre restrictions were lifted. These two companies now control 77 per cent of the pathology market, and that number is still rising”.

If Sonic and Primary play nice, they should be able to prevent further rent escalation now that the land grab is cooling down. Better still, they may be able to push for lower rents with their increased negotiating power”.

In October 2016 the Australian GP Alliance was founded in the face of threats that appeared to intend to regulate the rents paid by pathology companies.

Subsequent to that Primary withdrew from Pathology Australia, while Sonic remained a member. The reason for this withdrawal is not known but might have simply been a cost cutting measure due to a $1.1bn net debt.

In May 2017 Primary Health Care appointed Dr Malcolm Parmenter as their CEO – he was previously the head of clinical services with Sonic Health Care. We understand that Primary has since re-joined Pathology Australia.

In January 2018 the Department of Health updated their website on the subject of Pathology rents as follows:

“In the 2017 – 18 Budget, the Government announced its commitment to strengthening compliance for Pathology Approved Collection Centre (ACC) rents under the prohibited practices provisions of the Health Insurance Act 1973.”

This was accompanied by the release of a new version of the “Red Book” which discusses the role of Pathology rents as inducements (and therefore illegal) under the act.

The Prohibited Practices Provisions

2.1 Our role and prohibited practices

The Prohibited Practices Provisions were inserted at Part IIBA of the Health Insurance Act 1973 (Cth) (the Act) in 2007, following concerns about the potential for inducements for referrals between requesters and providers of pathology (and also diagnostic imaging) services……

Rent for premises leased or sub-leased by a provider from a requester and used for an ACC (for example, premises co-located with a healthcare facility) may, in some circumstances, be a “prohibited benefit” under the Act. Under the Health Insurance Regulations 1975 (Cth), rent may be a prohibited benefit where it is “substantially different” from market value. That is, where the difference between the market value and the Rent is more than 20 per cent of the market value.(our emphasis). Page 18 ‘The Red Book”.

’Market value’ does not have a special meaning under these laws, but instead has its ordinary common law meaning:

• The definition of Market Value is set out in Regulation 20CB of the Health Insurance Regulations and relates to all property, goods or services.

• In a leasing context, this means the rent that a willing tenant would (at the relevant time) have had to have paid a willing, but not anxious, landlord to secure the lease (or sub-lease) over the premises.

• The market value of property, goods or services correspondingly means the price that a willing buyer would (at the relevant time) have had to have paid a willing, but not anxious, seller to acquire the property, goods or services.

• In determining market value, it may be that some value could be attributed to the convenience of the location.

• In essence, market value assumes an arms-length transaction with each party acting knowledgably, prudently and without compulsion.

“Not substantially different” from the market value means not more than 20 per cent variance from the market value. As well as being within 20 per cent of the market value, the rent or other benefit must not be related to the number, kind or value of pathology or diagnostic imaging requests made by the relevant requester (Regulation 20CA of the Health Insurance Regulations).

If you have concerns about whether rent is within 20 per cent of market value, you may find it helpful to get an independent assessment of this. While the Act and the Regulations do not require requesters or providers to obtain a valuation to establish the market value of the rent for premises, or the market value of property, goods or services, obtaining an independent valuation from a qualified valuer can be helpful in ensuring that both parties understand whether a proposed arrangement complies with the prohibited practices provisions.

“The Red Book” Page 5


None of this is substantially different from previous versions of the Red Book, and the concepts that must be satisfied for compliance are:

• rents are negotiated willingly,
• be within market value, and,
• payment must not be dependent on the volume of business.

February 2018 Sonic Health Care announces a 5% increase in 6 monthly revenue from its Australian laboratory business and CEO Dr Colin Goldschmidt said the issue of pathology collection centre rents, which had dogged the industry, appeared to have stabilised.

“We are experiencing a plateauing of that particular expense,” he said. “It’s not just rents, it’s the labour to service those collection centres as well.” The Financial Review

February 2018 Health department announces they are reviewing pathology rents – Australian article
AGPA Secretariat
February 2018

Department to look at pathology blow-out and GP conduct

The rising number of tests and scans at major clinics and medical centres is under investigation by the Federal Department of Health, according to a report in The Australian. It will focus on whether the cause is inappropriate financial arrangements. The department will look at compliance and whether GPs are getting unlawful kick-backs to request pathology services, especially where the services are co-located. Continue reading “Department to look at pathology blow-out and GP conduct”

Concern over charges to private health funds

The Federal Government is very concerned about the growing practice of private health insurance being charged by public hospitals for treatments that should be free, according to the Minister for Health, Greg Hunt. Figures released (Dec 2017) by the Australian Institute of Health and Welfare (AIHW) show that state governments and hospitals are continuing to actively encourage patients to use their private health insurance to boost hospital revenue. Continue reading “Concern over charges to private health funds”

New cervical cancer screening test

From 1 December, Australian women will benefit from a new and more effective screening test for cervical cancer — it’s more accurate and requires testing less often. The new human papillomavirus (HPV) test will prevent up to 30 per cent more women from developing cervical cancer because it detects HPV, an early risk indicator for cervical cancer. The current Pap test detects cervical abnormalities after they occur. Continue reading “New cervical cancer screening test”

Primary care: pitfalls for GPs and practices

By Dr Bill Coote* , a former federal health minister advisor and former AMA secretary general, breaks down the forces reshaping general practice.

Last week, economist and serial health policy commentator Stephen Duckett told a Senate committee: “Every galah in every pet shop is talking about primary care payment redesign to reduce the emphasis on fee-for-service payment.” Continue reading “Primary care: pitfalls for GPs and practices”

W(h)ither general practice? Be careful what you wish for

Dr Ian Kamerman*

Let’s be quite clear. The move by the Department of Health to return general practice training to the colleges is a good thing. This is in fulfilment of their obligation to the Australian Medical Council.

This is, after all, what colleges are supposed to do, and now the general practice colleges will join their fellow specialty colleges.
However, my concern is that this may also signal a reduction in government engagement and its resourcing of general practice training.
What message is government sending?

There is no more money. The primary care bucket is now essentially capped and we will not see shifting of dollars into primary care from other buckets. Despite all the evidence in the public health arena, we will not see dollars move from the hospital system to the community sector.
Well, some may say, the patients can pay more.

Yes, they can. However, the world economy is now stagnating with almost universally low wage growth. The silver lining is that there is minimal wage growth for our staff, but one can predict that patients will be holding onto their money more tightly.
But wait! There’s more! And more!

What has the government done over the last few decades? Increased medical school output, while maintaining medical migration. We have spent significant resources training large numbers of doctors. What have we got for that investment?

Well, to start with, we have flooded the specialist market. Look at the surgical specialties. More and more doctors are spending longer and longer doing unaccredited surgical terms waiting to get onto a training scheme.

Many have masters qualifications. When they finally get through, if they get through, each will expect theatre time and patients.
We can run through the specialties and see the numbers flowing through to fellowship. The problem being that a number of them fall by the wayside. The personal dismay, the individual financial toll, and the cost to the taxpayer is significant.

Each specialty training pathway is filling up. With more interns, residents and registrars, and new models of patient care, there is less clinical exposure at all levels of training. New fellows are no longer ready for independent practice and all that entails. General practice is also filling up and the problem is that our appointment books frequently don’t.

As the numbers swell, and the economy tightens, and property prices increase, we have downwards pressure on general practice billings.
With lack of growth we will also have fewer GPs being able to afford retirement. The Medicare slow thaw is setting a low floor price for an average consultation and my feeling is that this will also lead to a reduction in the floor price of general practitioners.
Where does everyone go?

We are in the midst of the tsunami of graduates. Where are they all going? Many are still in the hospital, especially in emergency medicine. Even the less-popular specialties, such as psychiatry and paediatrics, are now filling.

Here are my workforce planning questions that many are too afraid to answer.
• Does every medical graduate have the right to enter the specialist training of their choice?
• Does every medical graduate have the right to specialist training?
I would suggest no. So where does that leave us?

General registered doctors with varying levels of experience. Traditionally these doctors have worked as CMOs and locums, but surely these jobs will dry up as well. I think these doctors will all find a new home in general practice. It just won’t be general practice as we know it.
And what do we have entering the scene, just as we are reaching a capacity constraint? The Health Care Home. A great idea, reasonable evidence, but woefully underfunded.

The model used for funding works most efficiently with employed doctors. It just might be that we will see Health Care Homes set up, with fellows as consultants and employed general registrants as community-based CMOs.

The pay will not be great because the funding is just not there, but one can see that a tipping point will arise, in the not too distant future, where this role takes off in much the same way as the after-hours doctor model did.
What has this got to do with GP training changes?

I am concerned that government may, at a time with large number of doctors in the marketplace and with significant economic restraints, push registrars and practices into a larger degree of self-funding. While I feel that registrars will begrudgingly pay more for their training, I doubt many general practices will pay to participate in GP training.

If we get to a situation where registrars are competing with CMOs for positions in the general practices of the future, they will have to do it on price as well as skills.

This is just one risk of the department of health handing over responsibility for GP training to our colleges. It allows deniability. The minister will be able to say: “This is not my concern.”

I just hope that I am wrong.
* Dr Ian Kamerman is long time GP supervisor, past president of RDAA and GPSA, and a current director of GP Synergy

Republished with permission of http://medicalrepublic.com.au/

Record 85.9 per cent bulk-billing rate

More Australian patients are visiting their GP without having to pay, with the bulk billing rate for the September quarter increasing to a record 85.9 per cent.

This is the highest bulk billing rate ever achieved for a September quarter – and significantly higher than Labor’s 82.2% when they were last in Government, according to Health Minister Greg Hunt.

“We’re spending more than ever before on Medicare – with record funding increasing each and every year from $23 billion in 2017-18, to $24 billion, to $26 billion to $28 billion in 2020-21,” he said. “Spending under Labor was $19.5 billion in 2012-13.

“Last financial year, Australian patients received an additional 21 million bulk billed GP visits compared with Labor’s last year in Government in 2012-13 – an increase of more than 20 per cent.”

Diagnosis creep: people made patients unnecessarily

Australians are increasingly facing ‘diagnosis creep’, where disease definitions are widened and people are unnecessarily turned into patients, experts say.

Dr Ray Moynihan (PhD), senior research fellow at Bond University, said expanded disease definitions were often decided upon by panels muddied by conflicts of interest, and had the potential to be harmful. Continue reading “Diagnosis creep: people made patients unnecessarily”