Third lab offering doctors kickbacks

May 08 2000

By Lynne Altenroxel

The Star has obtained documentation showing that a third pathology group, Pathnet, is offering doctors kickbacks in return for test referrals.

This latest development follows an investigation by The Star which revealed that two of South Africa's largest pathology groups, Ampath and Lancet, were doing so.

Marlon Young, chief executive officer of the black empowerment company, said Pathnet had run at a substantial loss for two-and-a-half years before adopting a new agreement at the start of this year.

But even this agreement - which offers doctors 7,5 percent of turnover, a computer and paid staff - has not been very effective in the kickback-riddled pathology market, Young said.

The Pathnet agreement, Young argued, was not perverse.

Yet it offered doctors:

"A processing administration and registration fee of 7,5 percent of the gross turnover excluding VAT per month, irrespective of volumes processed."

A computer system, including modem, printer, CD-ROM and magnetic strip reader (including maintenance costs) "if volumes exceed 25 patients a month".

"A trained Pathnet nurse to draw blood for samples (at our expense) at any site or practice that collects blood from more than 400 patients a month."

The agreement also contains exclusion clauses stipulating that for three years the doctor may not "use any other pathology practice, unless Pathnet has not met the required service levels, or should the patient request another pathology entity".

It also bars doctors from entering into "similar" agreements with other pathology laboratories for six months after terminating the contract, and stipulates that the agreement will remain confidential "and in particular must not be discussed with any of Pathnet's competitors".

Another clause states that: "The PC is the property of Dr (X); Pathnet, however, reserves the right to discontinue the sponsorship of the hardware if the monthly value of the work consistently drops below R5 000 (25-30 patients a month) but will continue to pay the 7,5 percent registration fee."

Young also produced a lawyer's letter which stated that the payments were not illegal or undesirable because: "The 7,5 percent payable on gross turnover is purely an administration and registration fee."

Acknowledgement to