PPG was commissioned by Healius Limited to assess the economic sustainability of the Australian pathology industry and quantify any government investment needed to protect essential services and jobs.
Independent economic research & policy analysis.
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Understanding the Financial Pressures Facing Australia’s Pathology Industry
Our report finds that the cost of providing pathology services has increased dramatically due to high inflation. Pathology revenues remain depressed post-COVID and a government funding freeze means that the pathology sector is now on an unsustainable footing.
−12.5%
Cut in Medicare rebates for pathology services, 2008–2014
+52%
Rise in economy-wide consumer prices (CPI) since 2008
$13.8B
Cost to the pathology sector of the rebate indexation freeze since 1999
$9.8B
Value of free tests provided by pathology providers since 1992
$3.7B
Value of free tests providers expect to deliver over the next four years
$890M
Government investment needed over four years to protect pathology services and jobs
Rising Costs and Declining Medicare Rebates
Medicare rebates for pathology services have been cut by 12.5% since 2008, while prices in the economy have risen nearly 52%.
The government funding freeze has cost the pathology sector $13.8 billion since 1999.
Figure 1: Medicare pathology rebates vs consumer prices (index, 2008 = 100)
Since 2008, Medicare rebates for pathology have been cut by 12.5% while consumer prices have risen by nearly 52%, leaving rebates worth far less in real terms.
Medicare pathology rebates
87.5 (−12.5%)
Consumer prices (CPI)
~152 (+52%)
Note: Both series are indexed to 2008 = 100. Rebates were cut four times between July 2008 and November 2014; CPI measured since January 2008. Source: PPG, Protecting Pathology Services and Jobs (March 2024), Chart 1; Australian Pathology; ABS.
The government funding freeze has cost the pathology sector $13.8 billion since 1999, while rising costs and declining Medicare rebates have placed the industry on an unsustainable footing.