New EY report: Australian private pathology saved tax payers $2.4bn in 2014-15

CANBERRA: The Australian private Pathology sector delivered cost savings to Government of $2.4bn last financial year including a $2bn efficiency dividend from productivity improvements plus $450m worth of unpaid tests according to a new report released today.

Costs to Government would have been $4.9 billion without the Pathology industry delivering productivity gains and unpaid services.

The Estimating the Pathology Productivity Dividend report by EY examined the costs and productivity of the Australian pathology sector and the dividend efficiencies delivered. The review of 17 years of pathology figures includes extensive primary source data provided by the Pathology industry detailing for the first time the level of services provided free of charge and reveals the true cost of pathology services.


Key findings

  • $450m worth of testing was provided free of charge during 2014-2015 due to buy 3 tests get the rest free coning payment arrangement.
  • Tests provided free of charge by the Pathology industry have increased from 5% of pathology tests in 1999-00 to 17% of tests performed today.
  • Productivity improvements delivered $2bn in cost savings to Government.
  • The Pathology industry delivered an average annual growth in productivity of 4.3% compared with the Australian industry average of 1.5%
  • Australian pathology is cheaper than comparable countries including USA and Canada. The Grattan Institute’s February report failed to account for the impact of coning.


Pathology testing requested by GPs and specialists is the mainstay of preventive health and early detection of disease. Over the last 19 years the number of pathology services has risen from less than 48.7million per year to more than 128.8 million.


“This is the first time that the Pathology industry’s complex funding system has been closely examined using commercial data from within the industry itself. Our analysis includes details of the coning system, which has a significant impact that has not been accounted for in previous reports” said report author Dr Tony Sherbon.


Links to the full media release and EY report are below:

260422 MR New EY report Australian private pathology saved tax payers $2bn in 201415

EY Pathology Australia 20160426 – Final Report