Rhythm model sees major hospital savings from ColoSTAT

Model estimates 36% reduction in public colonoscopies

Rhythm Biosciences Ltd (ASX:RHY) has put a sizeable number around the potential health-system value of ColoSTAT: 29,427 public-hospital colonoscopies avoided each year. The estimate comes from an independent health economic model covering 82,662 people who present to GPs with possible bowel-cancer symptoms, have not completed the national stool-screening test and would otherwise be referred directly for a public-hospital colonoscopy.

Under the model, a $250 ColoSTAT blood test would be used first. Patients with a positive result would proceed to colonoscopy, while those with a negative result would avoid the procedure if their symptoms settled, or still be referred if symptoms continued. Against an assumed public-hospital colonoscopy cost of $3,163, the study estimates $93.1 million in avoided hospital costs, less $20.7 million for testing, leaving a net saving of $72.4 million a year.

Reimbursement is the commercial gatekeeper

The economic case arrives as Rhythm moves from initial sales towards broader access. The company recently reported first ColoSTAT sales, but Medicare does not currently fund the test. Rhythm plans to use the study, alongside other evidence and future work, in an application to the Medical Services Advisory Committee for Medicare reimbursement.

That makes the filing more than a savings calculation. MSAC reimbursement would determine whether GPs and patients can access ColoSTAT through the public funding system, although Rhythm has not said when an application will be lodged or suggested approval is assured. The company plans to share the study with GPs, specialists, hospitals and health insurers while it develops the reimbursement case.

Private hospital opportunity remains unmodelled

The study covers public hospitals only, even though Rhythm says about two-thirds of Australian colonoscopies take place in private hospitals. The company believes this leaves scope for a larger benefit, but that proposition has not yet been tested in the disclosed analysis. Rhythm intends to assess the private-hospital setting separately.

Clinical evidence and model assumptions still matter

The headline figures are not measured outcomes. They depend on a $250 test price, the assumed colonoscopy cost, Medicare funding being available and the model’s treatment pathway operating as intended. The accuracy inputs also come from a study still undergoing independent peer review: Rhythm says ColoSTAT detects 90.3% of bowel cancers and returns a negative result for 54.3% of people without cancer.

Rhythm acknowledges that some cancers could initially be missed, with continuing symptoms intended to trigger a safety-net colonoscopy. The next tests for the investment case are therefore practical as much as financial: peer review of the accuracy data, the evidence assembled for MSAC, the eventual reimbursement decision and whether doctors adopt the workflow outside a modelled population.