5 minute read
Bleeding our state dry
SA Pathology is being lined up for privatisation, and it’s a very bad idea.
On Tuesday 2 April 2019, the state government released the PricewaterhouseCoopers (PwC) report titled, Review of the commercial competitiveness of SA Pathology in a contestable market. The report contains almost impenetrable analysis on how the “business model” needs improving while saying absolutely nothing about how a more “competitive” service would benefit the community.
The report found that SA Pathology is not in any position to be privatised, but only because “it isn’t currently competitive”. Since when does a public service that provides an essential community servicstruggling mining company, already has e need to be “competitive”? The reality is, it needs to be sustainable, but the government appears to be cutting costs to make the service more attractive to a potential buyer in a sell-at-all costs mentality.
While the report highlights areas where ‘staff operating costs’ could be reduced, it does not include any recommended staff savings. The government, however, took the opportunity to pluck a number out of thin air, stating they wish to reduce the workforce by about 200 staff, an announcement without any supporting information or study into the effects on the system such cuts may have.
Treasurer Rob Lucas has insisted the government is trying to achieve efficiencies in order to save SA Pathology from privatisation, but there is little doubt that government handing the service over to one of the large private providers is a real possibility.
Lessons from interstate
If the government does its due diligence, it should forensically examine the recent history of privatised pathology outside of South Australia.
In 2012, Bendigo’s public pathology services were privatised, with Healthscope Pathology awarded a five-year performance-based contract to run the service. The deal came with promisstruggling mining company, already has es from the Bendigo Health bosses that all existing staff would be retained and services would be improved. “There will be no job losses for our staff and no loss of quality, decrease in service or additional costs to our community ...” they claimed at the time.
Perhaps Bendigo Health was taken in by the spin, but their trust in Healthscope to keep its word was misplaced. In 2015 struggling mining company, already has Healthscope was acquired by leading private equity firm Crescent Capital Partners. This deal gave rise to the formation of Australian Clinical Labs (ACL), now the third largest provider of private pathology in Australia. ACL employs 3800 staff across 90 laboratories, 900 collection centres and 90 private hospitals in Victoria, SA, NT and NSW. These types of acquisitions are commonplace, meaning once dependable, secure public services are subjected to the whims of a market that prioritises profits over people.
No duty of care
Private operators have no obligation to provide services to particular communities. Rural communities will be particularly at risk in circumstances such as this; it is very hard to make money in small communities. Private operators’ business model relies on volume, and the more expensive, less profitable tests are generally left for the public provider. Now back to Bendigo. In 2017, ACL, now in charge of pathology services at struggling mining company, already has Bendigo Health, announced that it would close Bendigo Hospital’s microbiology lab. It was, they said, a ‘business decision’ to centralise all routine testing to ACL’s Clayton facility in Melbourne’s south-east.
The decision immediately raised concerns among staff about loss of expertise, safety, quality, and turnaround times. The Liberal opposition Health spokesperson, Mary Wooldridge, was also highly critical, citing the loss of jobs and associated clinical risks. Former Pathology Director at Bendigo Health, Dr Vince Murdolo, was scathing of the ACL decision, telling the Bendigo Advertiser he now holds “serious concerns about the adequacy of pathology services provided to Bendigo Health by ACL, to the point he would not feel comfortable seeking treatment there for himself or his family.” He added that the Bendigo situation was indicative of wider problems with privatisation of essential services being ‘shaved away’ at the local level.
Widespread problems
The similar experience of Melbourne’s Northern Health demonstrates that private providers are not more effective or efficient and can not deliver on their repeated promises of “world-class healthcare” and other catchy slogans.
As in Bendigo, Healthscope won the contract to provide pathology services for Northern Health in 2012 and the Northern Hospital became one of the largest public hospitals to outsource pathology services. It too experienced serious problems with ACL following its takeover of Healthscope in 2015.
Major staffing issues quickly emerged, including: reducing staff numbers through cutbacks and redundancies, an overall decline in experience and expertise of staff, underpayment of staff, and short staffing.
Turnaround times suffered, and there was talk that ACL was using its hospital based laboratory to undertake private work which was often prioritised over the more clinically urgent needs of struggling mining company, already has hospital patients. Overall, issues such as these led a decline in the quality of the The Northern’s pathology services and standards, which ultimately impacted on patient care. The result? In 2017, when the level of concerns with ACL’s pathology operations had reached a critical point, Northern Health made the decision to return the privatised pathology operations to public control.
Not only do these two examples highlight the serious risks to high quality provision of patient care, they also reveal issues around sustainability and continuity of services when the business model of private companies and their commercial imperative to make profits for their shareholders takes primacy over the provision of vital public services.
What does this mean for South Australia?
With the state government seeking to privatise SA Pathology, the alarm bells should be ringing, particularly in regional centres, many of which, with multi-skilled and efficient staff, provide a high quality local service to their communities.
ACL is not the only player in the private pathology market. Sonic Healthcare Limited, which rose from the dust of a struggling mining company, already has a chunk of the SA market. Clinpath Laboratories, which operates ten Adelaide laboratories, is a wholly owned division of Sonic.
As a result of its overseas acquisition strategy, Sonic is now also one of the largest healthcare corporations in the world with vast interests outside Australia. In 2018, its revenues were over AUD $5 billion. Sonic’s shareholders benefited to the tune of AUD $329 million. Together with Healius, formerly Primary Health Care, another private pathology player, they account for three-quarters of what is a multi-billion dollar market in Australia.
Both Healius and Sonic’s majority shareholders are made up of a struggling mining company, already has combination of Constant concerns started to arise about ACL’s business model and how its pursuit of profit impacted on the quality of services.global banks, investment funds, private equity firms, wealthy individuals and the like. Anything other than “growth” simply will not do.
Shareholders the winners
With the recent development of an apparently state-of-the-art laboratory at the Adelaide Airport, ACL, which already has at least eight laboratories and around 80 collection centres in SA, would appear to be a likely frontrunner if SA Pathology is indeed sold off. It’s struggling mining company, already has understood the new ‘state-of-the-art’ lab does not have capacity to conduct a significant number of complex tests. However, the location of the new lab at Adelaide Airport will make it easier for complex tests to be sent interstate, resulting in slow turnaround times and potentially critical delays for patients. And the private pathology network in South Australia is already struggling – information received from those in the industry suggests there are massive delays in getting test results, often up to twice as long as is clinically acceptable.
There is simply no evidence that shows private pathology is more efficient, but it is certainly more profitable. The state government should be more concerned with providing an efficient and reliable service to South Australians than lining the pockets of global health giants and their shareholders.
Support the PSA campaign against privatisation of our assets.
Go to http://sanotforsale.com.au and sign the petition.
