Pathology: how to avoid running a video store*

5th National Pathology Conference 1.10pm 8th September 2014

Len Moaven

*Disclaimer: these are my own personal views

• Funding

• Outsourcing

• Centralisation

Video stores: the luddite’s parable

Blockbuster:

1985: Founded by David Cook, a computer programmer

1994: Sold to Viacom for $8 billion

2004: 9000 retail stores and 60 000 employees

2010: Bankruptcy

2014: Closed down

Customer expertise, clever inventory management & strong brand

On line rentals, kiosks, streaming, iTunes, Netflix

Stuck in an old paradigm

• Intellectually / emotionally

+ Pathology• Medical baggage / etiquette / tradition

Funding: more for less

At the mercy of the crown - Co-payment: poorly thought out - Re-regulation of collection centres - Coning….we will pay for diagnostic HbA1c….save MBS $5m pa - Incentives eg state based for POC testing - Processes are too slow: MSAC, MBS - TGA…..does it represent value for money?

Funding: increasingly patient centric

Patients will pay for tests:- Anti mullerian hormone (AMH) or the 'egg timer' test

- 100 000 AMH tests performed in Australia per annum.

- $60 for each test this reflects around $6m pa and no cone

- Useful test

- No one can be bothered to go through the tortuous MSAC path The federal process has saved us from bulk billing

- The price is right....people are willing to pay $60 for an informative assay.

- Patients have been educated from a variety of sources

- There are other useful analytes that could take the AMH path

Funding: increasingly patient centric II• Advertising to patients

- We all have www sites

- Everyone else directly advertises…..

IVF clinics (Virtus / Monash IVF / Genea)

= 5% diagnostic market share

• STI screening (public / private HSP & SHL)

- Paying or free anonymous testing

www.smarthealth.me

• Patient gets a copy of results (PCEHR)

• Apps to monitor health including pathology

- Diabetics HbA1c, urine microalbumin

Funding: non-pathology - outside NPAAC / NATA / RCPA

• General practice

- 5000 INR tests per day = 1.3m pa (30%)

- Funded through MBS consults ($25m pa)

- Total pathology outlays = $42m pa!

• HIV POC testing

- Pop up shops using non-NRL tests

MBS 1m HIV vs POC 0.1m HIV tests for $20m

• Specialists

-HbA1c testing

• Chemists, overseas…..?supermarkets…..

Why not pathology practices through ACCs?…..wrapped ourselves in legislation / convention

2000/2001

2001/2002

2002/2003

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

2012/2013

2013/2014

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000INR (65120) billed pa

⇩⇩POC

Outsourcing

• Wages

• IT

Outsourcing the pathology test request cycle I• Data entry• Billing• EnquiriesPhone / email / www / live chat / forumsInstant / multitask / record of event

Outsourcing the pathology test request cycle IIAll labs refer out tests- Immunohistochemistry- Hepatitis markers- Reference labs - malaria films, Salmonella cultures, HIV serology- Uncommon genetic tests

What else? Can we outsource parts of the test?

Send DNA / serum to China / India / Vietnam / PhilipinesAnalysis / Interpretation

IT: Will continue to drive efficiency

• Home visits – online appointments…..google maps

• Data entry from medical software

• Digitised high resolution whole slide images (www.ventana.com)

- Central point for cut up then distribute slides….intersate….overseas

• Automated microbiology lab

- Drives centralisation

I have ignored scientific advances

• PAPs: HPV testing

• HCV treatment: HCV genotyping / viral load will become redundant

Centralisation: volume IWe already have a hub and spoke model in the states in private and public pathology…..why not Australia based?:

- The mega lab: close to an Airport (Sydney / Melbourne / Brisbane)

e.g. Badgery’s creek – cheap land / access / no curfew

- Maybe the only solution for PAP smears

Centralisation: volume II

Genetic service

Two Australian sites using Hiseq X Ten platform @$10m each

- 40 000 genomes per year @ $1600 per genome

- Compare to charging $2000 for BRCA gene testing

- MBS group P7 in 2013/14 there were 250 000 services with $42m outlays

Summary: anyone remember Ilford?

• Identified the threat in early 1980s

• Were nonchalant by the 1990s

• Receivership in 2004……the end was relatively sudden

Our turn next?