But most of us will be sent there by our doctors for more routine tests.<\/p>\n
Awanui also operates many of the hospital labs around the country. About\u00a070 percent of medical decisions and 100 percent of cancer diagnoses rely on pathology and laboratory tests, it says.<\/p>\n
New Zealand began outsourcing its\u00a0community laboratory testing in the 1990s; more than 20 regional businesses picked up contracts. The outsourcing was extended to\u00a0regional hospital labs about 20 years ago.\u00a0<\/p>\n
Through this, a small Dunedin company called Southern Community Laboratories gradually expanded\u00a0as it bought up other lab companies. In 2023 it unified eight lab-testing businesses under the single national brand, Awanui.<\/p>\n
It\u2019s owned by the New Zealand Super Fund (48 percent) and\u00a0the Ontario Teachers\u2019 Pension Plan (48 percent) with just under 4 percent held by\u00a0Te P\u016bia T\u0101papa iwi investment fund.<\/p>\n
Its revenues (almost entirely from Health NZ contracts) have been increasing by the year. $340 million in the year to December 2025. It has a near-monopoly. It\u00a0should be a licence to print money. We should be concerned.\u00a0<\/p>\n
Yet this week, Awanui reported a pre-tax loss of $2.9m. It\u2019s the company\u2019s third loss in three years ($22.5m in 2023, $21.4m in 2024). So what\u2019s going wrong?<\/p>\n
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Health NZ is conducting a national review of pathology services, with a 10-year plan being developed for laboratory testing across public and private sectors. That review is due back later this year, and might help answer some questions about Awanui\u2019s financial sustainability.<\/p>\n
Anoop Singh, the chief executive, tells me that this year\u2019s loss has narrowed. \u201cLike many healthcare providers across New Zealand, Awanui is operating in a system under pressure from increasing demand, workforce shortages, rising costs and a constrained funding environment.\u201d<\/p>\n
Despite these challenges, he says, the company\u00a0has continued to focus on building its workforce capability, services, and the technology and infrastructure needed to underpin a modern and efficient pathology system.<\/p>\n
Awanui\u2019s leadership has been working hard to manage down costs and maintain\u00a0discipline to its investment in a challenging operating environment, he says. The losses pose\u00a0no threat to\u00a0its much-needed services.<\/p>\n
\u201cThe hospital and community laboratory services we provide remain stable, resilient and focused on meeting the needs of patients and clinicians across New Zealand,\u201d he insists. \u201cAwanui delivers more than seven million diagnostic results annually, and we remain focused on maintaining safe, reliable and high-quality services in the regions where we operate.\u201d<\/p>\n
The company has been embroiled in industrial action. About 500 Apex union staff went on strike last year over pay talks. They won a 6 percent rise, followed\u00a0by a smaller increase this year \u2013 yet employee expenses have remained fairly flat, suggesting the pay rise has been offset by at least some staff cuts. The company declines to disclose its FTE headcount to me.<\/p>\n
Since the December 31 balance date, it\u2019s also refinanced $313m\u00a0in\u00a0debt, pushing back\u00a0repayment obligations to\u00a0March 2031. These are not the actions of a company with healthy cashflow, nor a sustainable capex strategy.<\/p>\n
Health commentator Ian Powell, the former executive director of the Association of Salaried Medical Specialists, isn\u2019t so convinced that Awanui can sustain its losses.\u00a0\u201cThis situation has been predictable for many years,\u201d he tells me. \u201cAwanui is no longer able to extract profits from the public system. Its only hope is to further reduce services. Laboratories affect around 70 percent of hospital clinical decision-making. Privatisation of these labs needs to end.\u201d<\/p>\n
Institute of Medical Laboratory Science president\u00a0Tony Barnett welcomes the narrowed loss. \u201cBut it illustrates how hard it is in the lab sector at the moment,\u201d he tells NZ Doctor. \u201cFrom the profession\u2019s point of view, it\u2019s always hard to say how these things will play out.\u201d<\/p>\n
The public needs to have confidence that the ongoing problems in the lab sector are going to be \u201cfixed at some stage\u201d, Barnett adds. \u201cAwanui has a contract with the Government, and Health NZ\u00a0really needs to help find a way through this.\u201d<\/p>\n
Singh,\u00a0Powell and Barnett\u00a0are all right in one respect.\u00a0This Government has been demanding efficiencies wherever they can be found (and sometimes where they can\u2019t be found). Public funding for the company, like other healthcare providers, is increasingly constrained.<\/p>\n
But Awanui is not like other companies. It provides urgent and critical services. And it has a monopoly in many regions. The implications if it were to close its doors\u00a0are unthinkable.<\/p>\n
So the question for me is, how did we get to a point where the sustainability of one big company could have such a far-reaching impact on healthcare nationwide?\u00a0<\/p>\n
Back in 2005, the Commerce Commission rejected an attempt to merge two of the\u00a0lab testing companies. The chair, Paula Rebstock, warned of the risks to the public health system if one company became dominant. Yet that\u2019s now happened \u2013 without any further protest from competition regulators.<\/p>\n
Rebstock\u2019s concern was that a single company like Awanui would have district health boards over a barrel and be able to name its price. What she couldn\u2019t anticipate is that the country\u2019s 20 DHBs would be merged into one massive national health service, which was able to clamp down on what it pays.<\/p>\n
The net outcome is that, instead of having a singularly powerful lab service provider that can hike prices, we have a singularly exposed and co-dependent relationship between Awanui and Health NZ. Both depend on the other.\u00a0<\/p>\n
The uncomfortable conclusion is that Awanui Labs is too big to be allowed to fail.<\/p>\n