BackFY22 had a difficult start but Fortis’ biz recovered: Fortis CEO Raghuvanshi
Dr Ashutosh Raghuvanshi, managing director and chief executive officer, Fortis Healthcare, talks about revenue losses and expected business outcomes for the current and next financial years
PremiumNEW DELHI : The private healthcare sector has faced many challenges since the coronavirus outbreak, including a big fall in elective surgeries, lower footfall of both domestic and international patients, and the need to increase investment in covid diagnosis and treatment-related infrastructure. In an interview, Dr Ashutosh Raghuvanshi, managing director and chief executive officer, Fortis Healthcare, talked about revenue losses and expected business outcomes for the current and next financial years. Edited excerpts:
Did you see growth in non-covid occupancy during the last quarter? What are your expectations in the current quarter?
In the last quarter, part of non-covid-19 businesses were compensated by covid-19 businesses. So, overall blended occupancy at the network level has remained more or less same as it was in the last quarter, which was 65%. We are still levitating around that. Non-covid-19 work has recovered dramatically, but has not reached pre-covid-19 levels. This quarter, we expect the non-covid-19 segment, especially treatment of non-communicable diseases, to see significant growth.
For an organization like Fortis, the elective surgery segment is not even close to normal and is one-fourth of what it used to be. So, the surgeries segment, in my opinion, will take the longest to recover.
Month-on-month non-covid occupancy registered an increase from 30% in May to approximately 47% in June. We expect the momentum to continue, allowing business to return to near normal in the short term.
When will you be able to reach pre-covid revenue? How are revenues doing compared to last year?
We understand that covid will stay for some time. To reach normal levels of our hospital business is crucial and we expect our non-covid-19 business to touch pre-covid levels, if not immediately, then definitely in the next one or one-and-half years.
Revenues for the first quarter of FY22 were ₹1,410 crore versus ₹1,252.4 crore in Q4FY21. FY22 has seen a challenging start but business has recovered well and we expect to see progressively better quarters going forward.
Did covid dent your expansion plans? Will you add beds and strengthen infrastructure for the much-anticipated third wave?
We have considered a very minimal modification in our expansion plan because of covid, though mostly our expansion plans are on track. Our plan to add 1,300 beds in the next two-three years remains as is. We are bringing in next-gen oncology technology in the national capital region. We plan to establish our hospital in Gurugram as the best destination for oncological treatment. We are also looking at organic growth in the near future. We aim to increase our efficiency and profitability in a big way. So, covid did not really dent our expansion plans.
With the experience of the previous two waves, we are now capable of quickly repurposing areas from one side to the other. If required, we have the flexibility to reshuffle beds and increase beds for covid. Apart from beds, we started scaling up required infrastructure for the much-anticipated third wave. We had planned to put up oxygen plants in 15 of our hospitals, among which eight plants are already in place. The rest will happen over the next three-four months.
We are progressing well on our strategic initiatives and have initiated investments for advanced medical equipment such as cath labs, neuro microscopes and bone marrow transplant units in select facilities.
Did you cut down on expenses to increase revenue?
We prioritize our employees, so we have not considered cutting down on salaries even when we faced tough times. To strengthen the covid-19 infrastructure and ensure the salaries of the employees are paid on time, the senior management, including myself, voluntarily took a substantial salary cut to stay focused on maintaining the quality of our services and efficiency.
Are covid beds occupied or vacant? Do you have the flexibility to allocate beds to non-covid patients if required?
During the peak of the second wave, in April-May, close to 30% of our occupancy was coming from covid-19 admissions, but now, with a decline in daily cases compared to the last quarter, our covid occupancy has come down to approximately just 7%.
What are your growth targets for the next year?
In terms of revenue, we expect better numbers in the coming quarter as the healthcare market size and affordability of health services are expected to increase. The elective surgery segment, which is now about one-fourth of what it used to be in pre-covid times, is expected to be better in the coming days.
I believe covid has sidelined another potential pandemic of non-communicable diseases. So, the number of people resuming treatment will eventually increase. So, growth is obvious.
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