"Scannergate" rocks the Liberals

by Peter Mac

The Federal Liberal Party establishment has been rocked by investigations 
concerning the highly profitable orders for magnetic resonance imaging 
(MRI) machines by a number of private radiology practices.

The investigation by the Health Insurance Commission followed an 
extraordinary rush of orders for 52 of these $3 million machines in the 
weeks immediately before the release of the Federal Budget.

The Budget papers included a new provision for special tax rebates for 
patients tested with the machines.

The new provisions encourage overservicing. Those who had MRI machines 
(especially the latest technology) would be ideally placed to meet the 
increased demand for service. The machines have the potential to generate 
$1.5 million in revenue per year.

The catch was that the rebate would only apply to machines currently in 
use, and those ordered before Budget night. The 54 radiologists who placed 
orders for machines in this period appear to have acted in unseemly haste.

Contrary to statutory declarations signed earlier by some of the 
radiologists, the recent investigations have revealed that their orders for 
the new machines included "escape" clauses which would have allowed them to 
cancel the deal in the event that things were not as profitable as 
expected.

For example, if it was true that certain firms had prior access to 
information concerning the new rebate provisions, the escape clauses would 
have protected them in the event of the provisions being cancelled by the 
Government at the last minute.

And some of the contracts for supply of the machines were backdated to 
before budget night!

In the centre of the controversy is Federal Health Minister Dr Michael 
Wooldridge.

He has emphatically denied that he leaked the information about the budget 
provisions to the radiologists or that he had anything to do with any such 
activity.

With great dignity, and with a distinct break in the voice, he described 
any such accusation as "cowardly".

The Royal Australian and New Zealand College of Radiologists has also 
distanced itself from the controversy.

The College's President, Professor John Earwaker focused on the standing of 
the profession, noting that: "there is the potential for considerable harm 
to be caused to the standing of our speciality and to the well-deserved 
high reputation of our members."

Although acknowledging the eager anticipation of his fellow radiologists, 
and despite the potential for huge income generation of the new MRI 
machines, Professor Earwaker stressed the cooperation of the College 
members as a whole with the Federal Government's health objectives.

The investigations into the "scan scam" are continuing. And despite the 
denials of involvement in the affair by the Minister personally and the 
College of Radiologists collectively, it would appear that something is 
definitely amiss.

Of the 54 firms concerned, 29 have so far been investigated, and 16 of 
these are now to be referred to the Director of Public Prosecutions.

The "scan scam" is a classic example of private medical entrepreneurs in 
operation which only leads to overservicing and higher costs.

The MRI machines should be in public hospitals under the control of the 
public health system, where their prime function is medical, not profit-
generation.

Back to index page