Despite Government at various levels in Australia attempting to force restraint by limiting financial resources, modern medicine and community expectations will continue to place demands on health services. The principal illnesses confronting society are unlikely to change, with conditions such as cancer, cardiovascular disease and diabetes remaining at their current prevalence. Early and more sophisticated detection and monitoring of these diseases will be required, with concomitant increases in costs. Overriding this in Australia is the increase in the age of the population, which will also have a major impact on health costs. This article examines the effect, on pathology services, of changes occurring within the health system in Australia, especially the impact on public hospital pathology.