Challenges and Opportunities in Australia’s Radiology Industry

Australia’s aging population creates a changing environment for health service businesses in the nation and, in particular, radiology service providers. Specifically, radiology is the diagnostic approach to detect illnesses using radiation. Ultrasound, X-rays, MRIs, PET/CT (positron emission tomography and computer-aided tomography) scans, and nuclear medicine. For an informed view of what likely lies ahead, GLG’s Alisha Chatterjee hosted a teleconference with an experienced GLG Network Member who wishes to remain anonymous for this article. Their comments, edited for space and clarity, are below.

Can you begin by giving us a brief industry overview?

The Australian radiology services market comprises those who use it and those who support it. Users include medical providers, doctors, radiologists, and other specialists, as well as consumers. Those who support it are those who build the equipment and do the research and development to create new products. The Australian radiology services market is growing rapidly, approximately in the 4%-5% range annually, and because Australia is an aging nation, there is a strong pipeline for radiology growth over the next five to 10 years. The industry’s main players are I-MED, Sonic Healthcare, Healius, and Capital Radiology. Oncology, or cancer treatment, accounts for the lion’s share of the radiology market. Future trends support the increased use of MRI equipment, despite its expense, to reduce patient exposure to radiation.

What are the industry’s key growth drivers?

The drivers are primarily due to the increase in chronic disease, cardiac disease, and cancer that comes with an aging population. Also driving growth is the adoption of new technology, such as MRI equipment, which is expensive to buy and maintain. We cannot underemphasize cancer as a driver. In 2020, more than 200,000 new cancer cases were diagnosed, and 48,000 resulted in death. There also has been a rise in the incidence of Alzheimer’s, arthritis, Parkinson’s, and dementia. Overall, the volume of studies performed in radiology is growing by as much as 4%-5% per year.

Give us a quick look at the economics of healthcare in Australia and how that affects radiology.

All Australians pay a Medicare levy to fund the healthcare system. For 18 years, until 2020, when it reintroduced indexation, Medicare did not adjust its reimbursement rates for inflation. As a result, reimbursements still lag. For example, an X-ray billed at about (AUS) $30 in 2013 now might be billed at about $40, which still doesn’t fully compensate for the service. Essentially, indexation is not keeping up with the cost of equipment, the increase in volume, and everything else. Also, approximately 70% of the market is bulk billed to Medicare, while the remainder is paid for on what we call a gap, or a private fee, basis. As a result, from the perspective of doctors, funding for radiology and radiology research has arguably stagnated. The big issue over the next several years will be paying for the higher-quality equipment and services that everyone is demanding.

Will artificial intelligence (AI) play a role in helping to address these issues?

Most definitely, yes. AI won’t be replacing doctors, but it will improve productivity. With the volume of radiology increasing as the number of doctors coming into the market remains constant, the adoption of AI is essential because there aren’t enough doctors to keep pace with demand. AI should help in four key areas.

The first is triage, where AI algorithms can sift through a large number of patients to discover the ones who need urgent attention. The second is AI’s ability to process natural language, which can be used to automate report creation. The third is the ability to prioritize workflow so doctors can handle pressing issues first and get to less pressing issues later. Finally, there is augmented intelligence. When it focuses on cancer, for instance, the AI algorithm would be able to segment and automate target lesion measurements, gather follow-up findings, and generate a report — doing that faster than a radiologist could do manually. All these advances will save radiologists lots of time.

Where do you see the Australian radiology market in five years?

There certainly are many positives: The market is growing, technology is getting better, and efficiency will reduce costs. On the other hand, we probably will continue to see a shortage of doctors, particularly in rural areas, and government attempts to control costs, which includes compensation. We expect there will be increased funding for R&D because that’s where the efficiencies will come from.

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This healthcare industry article is adapted from the GLG Teleconference “Radiology Industry in Australia: Industry Overview, Future Challenges, and Opportunities.” If you would like access to this event or would like to speak with healthcare industry experts or any of our approximately 1 million industry experts, contact us.

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Questions Asked during the Teleconference:

• Can you provide an overview of the radiology service market in Australia? What does it consist of, and what is its current size?
• What is the industry’s competitive landscape? Who are the key market players?
• What was the impact of the COVID-19 pandemic?
• How is the radiology services market in Australia segmented by types, applications, and end users?
• What are the industry’s key growth drivers?
• Which market segments are most in demand, and what are the potential revenue drivers?
• What is the current and potential demand for noninvasive procedures and medical device R&D, for example?
• What improvements in Australia’s healthcare infrastructure have fostered the radiology industry?
• How has radiology adopted AI? Can it revolutionize the industry? How?
• What about market expansion trends? Will mergers and acquisitions or organic growth by big market players prevail?
• What are the current challenges, risks, and opportunities in the radiology industry in Australia?
• Where do you see the Australian radiology market five years from now? Any trends to note?