A new study shows four for-profit giants now control more than half of Australia’s MRI clinics, raising big questions about competition and costs.
With over half of Australia’s diagnostic imaging clinics now owned by large for-profit corporations, how does that impact patient access and affordability in the sector?
A research paper published in the Australian Health Review raises questions about how high levels of private ownership could leave patients with limited choice and rising out-of-pocket costs.
The authors identified 1235 diagnostic imaging clinics in Australia and found ownership data for 99.3%. They found most clinics are owned by for-profit corporations, which include 33.6% public limited and 22.6% institutional investor backed.
This was particularly apparent in South Australia, Tasmania, the Northern Territory, and the Australian Capital Territory where a single company controls 30% or more of non-government imaging services.
Compared to other areas in the health sector, this is relatively high with only 33% of nursing homes, 29% of hospitals and 15% of general practices owned by for-profit corporations. Other areas with high levels of private ownership include pathology (88% owned by two for-profit corporations) and assisted reproductive technology providers (80%).
According to paper author Dr Sean Docking, the imaging ownership figures confirmed what they already suspected.
“It was still a surprise to actually see the number based on empirical evidence, because we haven’t had that before,” he said.
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The paper highlighted the advantages of corporate ownership in radiology services.
“It has been argued that corporate ownership may benefit the system by tackling inefficiencies, fostering innovation (e.g. imaging technology or artificial intelligence) and economies of scale,” the authors wrote.
“Negative consequences can occur when corporations’ goals (i.e. maximising profits) diverge significantly from the healthcare systems’ (i.e. maximising society’s health),” the authors continued.
What the study doesn’t examine is what these figures mean. How is corporatisation shaping the delivery and value of healthcare in Australia?
Dr Docking told Rheumatology Republic we don’t have a lot of evidence of the impact of private ownership in Australia.
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“There is evidence from the United States’ experience that private equity ownership tends to be more aggressive and might be associated with more of the negative consequences,” he said.
“ypically, these private equity firms buy a group of clinics. They look to increase the value by buying up more clinics or stripping out inefficiencies within that organisation, and then they sell that final product within three to seven years.
“So it’s a pretty rapid, aggressive time horizon for that,” he said.
It means profit is generated not from delivering healthcare but from boosting the organisation’s value.
Dr Docking also highlighted that when there is reduced competition, it means potential price increases.
“The potential consequences that we could see are falling bulk billing rates and also increases to out-of-pocket expenses which are significant in the radiology sector,” he said.
“The other thing is where we see an increasing role of corporations in the radiology sector, there’s a concern that we get a switch from clinician led care to profit driven care. We might see incentives to overuse more costly and advanced imaging modalities such as MRI and CT when the simpler imaging modalities might be just as effective and provide similar useful information,” he warned.
In particular, the ownership of MRI machines is dominated by four large corporations. The research found that 41% of clinics provide MRI services and 65% of those are corporates.
The government has introduced several policies to improve access to MRIs. Its latest attempt is to remove the need for an MRI license to receive a Medicare rebate, which will begin in 2027.
“It has been championed as a mechanism to improve patient affordability by increasing provider competition,” the authors wrote.
“This policy change could stimulate investment in MRI machines from smaller independent companies, however, it is likely to also stimulate investment by large corporations who have greater access to the capital necessary to purchase MRI machines.
“What we found in our analysis was that it actually doesn’t change the number of corporations or the number of providers or the percentage of ownership concentration that there is by removing that MRI licence. So I’m unsure if it’s going to have that effect,” said Dr Docking.
“What it will do, though, is give referring clinicians and patients more options to go to or more locations to receive an MRI… I suspect we will see a considerable increase in Medicare expenditure on MRI, simply because we know that the more MRI machines that are available, we do see an increase in MRI utilisation,” Dr Docking said.
The US government has been showing increased concern over the role of private equity in the healthcare sector. In Oregon, a bill was recently passed to restrict non-physician investors from controlling medical practices.
However, Dr Docking said in Australia, we don’t yet know what impact private ownership is having.
“Which is a bit concerning in itself, because this is a sector that is primarily funded through Medicare,” he said.
“We want to understand how this changing corporate involvement and market concentration has actually affected access and affordability to diagnostic imaging.
“Medicare isn’t there to guarantee revenue for corporations. It’s there to guarantee affordable access to high quality care. So we need to make sure that that’s actually what Medicare is doing,” he concluded.
