BRUCE ARNOLD. Testing the body politic? Lobbying by the pathology industry.

Nov 3, 2016


Pathology testing in Australia is big business, getting bigger as the population ages and we rely on high-tech medicine for intractable ailments. Advocacy by commercial interests and government pathology service providers shapes public policy. It potentially affects elections rather than just the national budget. It matters. It is inadequately recognised and less understood.

What we know about lobbying by the pathology industry in the 2016 election is how little we know. Our ignorance matters, because it tells us something about the realities of a liberal democracy in 2016. It also matters because we need an informed public discourse about health policy and health costs.

Pathology in Australia is big business. It is capital intensive, with a consequent emphasis on economies of scale and rigorous control of costs, through for example continuous operation of very expensive high-tech equipment used by professionals with multiple qualifications. The industry features a handful of very large corporations that typically use multiple brands (giving a misleading sense of competition) and are driven by private equity. The industry features large groups that operate on a commercial basis but have a religious and thus notionally not-for-profit orientation. There are a shrinking number of smaller independent operators, trying to occupy market niches or leverage personal relationships. Importantly, and under-recognised, it also involves public sector entities, typically centred on public hospitals. Expansion into the public sector is perceived by investment analysts to offer the best prospects for growth (alongside acquisitions offshore) for the dominant private sector businesses.

Lobbying is an effort to shape rules and opportunities by persuading policymakers (officials and politicians) at the Commonwealth and state/territory levels to ‘see it my way’. That seeing might relate to pricing, something that gained public attention over the past year as private sector operators sought to use patients to influence the Commonwealth minister to maintain bulk billing for some services. If you visited a clinic to get a blood test or other service late last year you probably encountered ‘Don’t Kill Bulk Bill’ posters and pamphlets encouraging you to contact your local MP or the Minister … a traditional fear campaign.

Other lobbying has gained less attention. It might relate to persuasion of the Commonwealth department and the Australian Competition & Consumer Commission that ongoing consolidation across the sector – what might otherwise be construed as impermissible anti-competitive activity – is acceptable because bigness results in provision of high-quality services across Australia. That is the same argument we see in other industries, for example telecommunications.

Such lobbying typically doesn’t take place in the public arena. It is instead a matter of meetings with ministerial advisors, unsolicited visits to backbench MPs and briefings of officials. It appears to have been effective in persuading the department to turn a blind eye over several years to incentives tying general practices and clinics to particular service providers. Pathologists have cried poor over rents charged for a desktop collection point, calling on the Commonwealth to restrict those charges to normal commercial rates rather than the equivalent of ultra-prime real estate in Tokyo or Manhattan.

In some instances lobbying relies on presentations that are rich in statistics unlikely to be understood by non-specialists, particularly an MP who was formerly a suburban solicitor or operator of a fish & chip shop. The presentations are of course not publicly accessible and open to independent critique.

In parts of Australia the lobbying has centred on shifting the balance between public and private sector service provision, with calls for outright privatisation of public sector pathology labs or ‘competitive tendering’. Privatisation for example will supposedly benefit a state treasury, remove the need for new investment and improve service delivery. Advocacy might involve dollars rather than Powerpoint slides. In Tasmania for example investigator Bob Burton has documented donations by service providers to the local Liberal party. Such donations at the state or national level do not determine decisions but do, presumably, allow the donor to get the decision-maker’s ear. The $400,000 reportedly donated by the Sonic pathology group to the Liberal Party’s federal office over several years will mean people pick up the phone.

If we are testing the pathology industry’s effect on the body politic we should recognise that it doesn’t speak with one voice. Different providers have competing interests.

The key private sector industry body is Pathology Australia. It does not represent Primary Health Care (one of the pathology giants) and religious entities such as the St John of God group. Pathology Australia, Sonic and Primary made political donations in Tasmania. The Pathology Australia website offers little information about its war-chest or its spending to persuade decision-makers. Reports by the leading businesses, whose representatives are busy in Canberra each year, do not provide much useful data. Unless you are an industry insider you are reliant on anecdotes about chat at industry dinners or sightings in the foyer at the department or ACCC.

Public Pathology Australia (initially the National Coalition of Public Pathology) represents the public service providers. Its site is more informative than that of Pathology Australia. It is precluded from donations to political parties. Its awareness campaigns are understated.

Sitting alongside those bodies are professional organisations that in essence represent invaluable human capital – the clinicians and technicians who work in the industry. Those organisations include the Royal College of Pathologists of Australia (enough authority to gain a meeting with the minister) and entities such as the Australia & New Zealand Society of Blood Transfusion, Australian Institute of Medical Scientists and Australian Society of Cytology. They do not have a major public profile, instead staying out of the spotlight on the basis that soft power is exercised through participation in departmental committees that are very opaque but in practice determine government policy.

A healthier body politic – and national health policy – requires greater transparency about advocacy and deeper understanding of how policy is shaped.

Bruce Baer Arnold teaches law at the University of Canberra. His research interests centre on privacy, consumer protection and regulation of the life sciences.


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