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APPENDIX H - The business side of pathology
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28/10/1985 The Sydney Morning Herald (Page 4)

By JOHN SAMPSON

Macquarie Pathology Services Pty Ltd. Reputedly the largest pathology service in NSW is but a part in financial empire of a Sydney-based medical practitioner, Dr Thomas Richard Wenkart.

Over the past 10 to 15 years; Dr Wenkart says, he has expanded his relatively-meagre business operations to embrace about 70 companies, with property the most substantial of his diverse interests.

It was property which started the empire when Dr Wenkart as a medical student invested in a Paddington terrace houses and carried out his own renovations.

But it is pathology services which have placed him reluctantly in the public light. Dr Wenkart and his pathology services are embroiled in controversy following Federal Parliament Public Accounts Committee.

Aside from the broader tangle of medical ethics, the law, and medicine as a business, one of the more controversial issue is free splitting between doctors. This is an illegal financial arrangements in pathology where, for example, Dr X(usually a general practitioner) refers a patient to Dr Y(a pathologist). Dr Y bills the patient and then split the fees with Dr X.

Under this arrangement, the financial incentive can easily lead to money overriding the health interests of the patient.

A Penrith pathology specialist, Dr Dermer Smith. Told the committee that complex corporate structure could be set up by pathology companies which allowed fee splitting arrangement to remain within the letter of the law. Dr Smith also accused pathology companies of “cutting corners”.

He cited Macquarie Pathology Services in Leichhardt as an example.

The allegations against Macquarie pathology are vigorously denied by both Dr Wenkart and Dr Ross Sutton, general manager of operations of Macquarie Professional Services, a company closely associated with Macquarie Pathology.

They also denied that any companies associated with Dr Wenkart had offered financial inducements to doctors to refer patients’ test to them, as alleged at the committee hearing.

Dr Wenkart has challenged any doctor to come forward with a claim that inducements or fee splitting has occurred or been offered by any of his medical companies.

With technological advances in the late 1960s, pathology has become big business. Dr Wenkart’s pathology group is but one of many which have ridden on the back of the technological advances.

For administrative and financial reasons, many of the pathology groups separate their technical side, where pathologist interprets the results, into two or more individual companies.

According to Macquarie’s Dr Sutton, who is former Senior Health Department adviser on the Government’s Pathology Review Committee, Macquarie Professional Services provides the computerized pathology service where the results are interpreted by pathologist.

Macquarie Professional Service Pty ltd. Employed 500 to 600 people ranging from couriers and accountants to laboratory staff, Dr Sutton said.

The company did not have any pathologist on staff but performed technical, analysis of pathology samples. It was a similar company structure to that operated by Dr Smith or any number of pathologists.

A spokesman for Dr Smith’s practice, Barratt, Smith, Harrison and Clarke – about the seventh largest pathology service in NSW – said it sent test to related organization, the Tadula Trust(formerly Bartimaeuf Pathology Services), for computer analysis. The analyses were then returned to the pathologists’ company for interpretation.

The spokesman claimed that all the pathology work was done within the group of companies.

In contrast, Macquarie Professional Service is contracted by outside organizations, for example Dr Geoffrey Edelsten’s pathology service, Omniman Pty Ltd. To carry out tests.

Macquarie Professional Service performs the test and sends the technical results back to Dr Edeisten’s company, Omniman is charged fee by Macquarie Professionals Services based on the work performed.

The parliamentary Accounts Committee Report on Medical Fraud and Overservicing Pathology (Report No 236) has identified a form of “legalized fee-splitting”.

The report says that under the Health Insurance Act, Pathology services may be rendered by the approved pathology provider(APP)� “or on behalf of” the APP.

This has led to two major problems, according to the report.
1.�Legalised fee-splitting where by an APP effectively “subcontracts” test to another APP, a laboratory or some other establishment in return for splitting the Medical Benefits Schedule(MBS) fee.
2.�Major questions surround the appropriateness of paying specialists’ fee for test done by a pathology group which has one or few specialist pathologists on staff, and/or operates a chain of laboratories where testing is done by technicians.

The Public Accounts Committee recommended (Recommendation NO 15) that the Health Insurance Act be amended to prohibit fee-splitting.

Dr Sutton said work contracted to Macquarie Professional Services from outside accounted for only 10 per cent if its pathology tests, with the rest coming from Macquarie Pathology.

He also said Macquarie Professional did contract work for government departments and large private companies, particularly in occupational health.

Macquarie Pathology Services employs five pathologist and three PhD scientists.

At the top of the Wenkart corporate tree sit Wenkart Holdings Trust and Dr Wenkart with his wife Christine.

Directly beneath and controlled by them, lies Traknew Holdings Pty Ltd (Traknew is Wenkart spelt in reverse), and beneath Traknew lies a wealth of companies of which the accompanying table concentrates on the Macquarie companies.

All the companies in the table have their registered business office at 4 Help street. Chaiswood. The Wenkart Foundation, a registered charity, is also listed in the telephone directory as being at that address.

Macquarie Professional Service us the successor to Preventicare Pty Ltd� Dr Wenkart’s venture with Dr Edelsten into the world of technological pathology.

Preventicare Pty Ltd began as a financial disaster, but was returned around with the aid of a liquidator and the introduction of Medicare, By 1975 (under the new name of Morlea Pathology Services) its annual profit was reported $2.5 million to $3 million.

Morlea Pathology Services Pty Ltd changed its name to Totledge in 1978, and is now inoperative.

No balance sheet has yet been lodged by Macquarie Professional Services Pty Ltd as it was only incorporated last year, and it is this impossible to establish if the company is running at a profit or a loss. However , a search does show the directors are Dr Wenkart and Mr. Geoffrey Holden.

On the board of majority of Traknew subsidiaries are Dr Wenkart (in the earlier company reports listed as medical practitioner but more recently listed as medical administrator) Mrs. Christine Wenkart(listed as housewife), Mr. Geoffrey Holden(listed as the group’s financial controller) and Mr. Gary Weiss(listed as a business executive and as residing in Los Angeles).

The companies have made substantial loans amongst each other, although the latest balance sheets available indicate fairly modest performances.

According to the latest balance sheet lodges with the Corporate Affairs Commission, Traknew Holdings recorded a $19,031 loss for 1983.

Of other Wenkart companies Hapday Holdings turned in a meager $2,917 profit for 1984, Macquarie Pathology Services registered a $202,018 profit for 1983. Ultera has never carried on as a business and Totledge gas registered a $6 loss and was also untraded.

Profit and loss statements were not available for Richard Walter Pty Ltd but the auditors have lodged accounts showing substantial loans.

Dr Wenkart describes Richard Walter as the group’s banker.
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