The Australian pathology industry is dominated by four large companies. When measured using the number of Approved Collection Centres (ACCs) as a measure of market share three companies dominate the industry: Healius, Sonic and ACL have approximately 80% of the ACCs.
When the smaller share held by 4Cyte is added, the proportion of the market held by these four companies rises to over 90%.
On 23 March 2023 Australian Clinical Labs Ltd (ACL) made an off-market takeover offer for Healius Ltd offering 0.74 ACL shares for every Healius share. The offer period expires 29 September 2023.
For those General Practices with ACCs the maintenance of a competitive market for lease space in Practices is critical. Without a competitive market rents could be expected to decline over time, and the use of tenders processes or other arms-length negotiations to establish a market rent would become very difficult.
With the exception of Tasmania, the acquisition of Healius by ACL would make ACL the dominant provider in every state and territory with an overall market share in the order of 50% of the total number of ACCs in Australia.
The Australian GP Alliance has made a submission to the Australian Competition and Consumer Commission (ACCC) who are currently inquiring into the proposed acquisition. This week AGPA Directors met with representatives of the Commission to discuss the Statement of Issues developed by the ACCC. It is our intention to make further submissions to the Commission.
The key points made in the AGPA submission to the ACCC s were:
The Australian GP Alliance submits that the acquisition of Healius by Australian Clinical Labs would significantly reduce competition for ACC sites and is likely to:
- Negatively impact the ability of Practices to be compliant with the “Red Book” and regulations by reducing the ability to tender ACC locations to establish market value.
- Reduce market rents for ACC sites by reducing competition, thereby impacting on the profitability/viability of Practices. This is likely to reduce access to primary health care by reducing the number of practices or by increasing the cost of patient access (increased GP fees).
- Reduce competition for sites, leading to patients having to travel to pathology services as pathology providers seek to increase the scale of collection centres to reduce overheads. This will in turn lead to patients not having tests done and ultimately poorer primary health outcomes.
- Reduce patient choice for testing and competition for the timeliness and quality of pathology services.
The Australian GP Alliance contends that the proposed acquisition is very likely to have a detrimental impact on primary health care in Australian and lead to increased costs for patients.
Estimated ACC Share
|ACL||Healius||ACL & Healius Combined||Sonic||4Cyte||Pathwest / SA Pathology||Others||State|
|ACT & NSW||#ACCs||447||732||1179||739||178||0||228||2324|
Source: Tasmania – AGPA estimate, Other Jurisdictions, ACCC