New rules, which stop doctors getting bonus commission from lab tests, could lead to a 20-25% reduction in tests, according to Hendrik Borucki, marketing director at laboratory Synlab. The impact will be particularly bad in South Germany.

The new system, known as 'Direct', means that doctors are no longer paid cash themselves for the lab tests they commission. This abolishes a system which enabled some labs to provide year-end bonuses to doctors who hit specified volume levels of €3,000 or more, paid for by the insurers.

This practice has now been stopped and, from October 1, 2008, if a lab wants to reward volume customers, it has to pay for the incentives out of marketing budgets. Borucki says the government hopes to save €300m out of a total lab test budget of just over €2bn.

The next step in the reform process is a squeeze on lab prices.

Detlef Loppow at Detlef Kramer laboratory said that the bonus culture was particularly strong in Bavaria and southern Germany.

One observer, told about the changes, said: "I was shocked by the incentives. Essentially, the doctors could only reach the volume levels by ordering loads of tests, maybe three times as many as they would do normally. So it is slightly shocking to find that so many German doctors were prepared to do this! The patient is, of course, impressed but it can be very wasteful."

Borucki conceded that the former system did tend to encourage unnecessary tests, but added: "60% of diagnoses in Germany are backed by tests, so they are important."

The German medical association is up in arms about the changes, and Borucki says the government has issued a press release indicating it might move back to a variation of the old system in the middle of 2009.

Borucki said the new measure could indeed lead to a fall of 20-25%, but said that it was too early to say, as the reform was accompanied by a change in paperwork, which has left a backlog of orders and much confusion: "We are working into the night, and the doctors are unhappy because tests are late."

Australian multinational Sonic Healthcare is the largest laboratory player, followed by Limbach Laboratory Heidelberg and Synlab, just ahead of Detlef Kramer. Borucki estimates that, together, the top four have 60-70% marketshare. The total test market in Germany is estimated at €10bn out of a total healthcare market of €240bn.

Schottdorf, one of Sonic's acquisitions, is said to have been particularly involved in bonus payments.