Private hospitals stare at losses amid covid outbreak3 min read . Updated: 15 Apr 2020, 12:10 AM IST
- Several private hospitals in India have sustained revenue losses of up to 90% since March
- The loss of business for private hospitals is expected to continue for at least three-six months
Fewer foreign patients and unrealised costs of buying expensive medical equipment have left private hospitals foundering, putting a cloud over the government’s plans to expand their numbers in the fight against the new coronavirus.
Questions loom over India’s private healthcare system as increasing previous investments along with disappearing foreign patients on account of travel curbs mean that several leading private hospitals have sustained revenue losses of up to 90% since March.
“With the current covid-19 crisis, the private healthcare sector is faced with a twin predicament—while the sector is investing additional manpower, equipment, consumables and other resources to ensure 100% preparedness for safety in the hospital(s)... eventual treatment of patients, when needed... is also experiencing a 90% drop in its revenue with sharp drops in out-patient footfalls, elective surgeries and international patients," said Dr Naresh Trehan, chairman, CII Healthcare Council and managing director, Medanta hospitals
The loss of business for hospitals is expected to continue for at least 3-6 months, which could severely impact their cash flows as 80% of the sector’s costs are fixed. In India, 72% hospitals and 60% of hospital beds are in the private health sector, the fourth-largest employer in the country.
Max Healthcare, a chain of hospitals, received around 5,000 international patients per month and close to 1,000 domestic patients per month in the last financial year (2019-20).
According to Anas Abdul Wajid, senior director, sales and marketing, Max Healthcare, the hospital chain had been growing at a CAGR of 15% for the past five years, before the covid-19 outbreak. “After the government decided to stop visas for all foreigners visiting India, the number of patients has steadily declined to zero. In the light of the pandemic the restrictions are of course justifies. However, the international medical travel business has come to a grinding halt. The average revenue loss is estimated to be ₹25 crore per month," said Wajid.
Similarly, Fortis Healthcare is also facing significant revenue loss due to the pandemic. “The number of new admissions daily has dropped by 90%, while new registrations have come down to zero. The average inpatient numbers are reported to have dropped by 64%, thus impacting the revenue in March by 35% with regards to international business," said a spokesperson from Fortis, adding April will see a further revenue drop by 80%.
“This is based on the fact, that we are treating or managing only those patients who have remained in India. There is bleak chance of patients arriving into India in May," he added.
Apollo Hospitals too confirmed that OPD walk-ins have come down due to the lockdown.
Gurugram-based Medanta Medicity, catering to a significant number of patients from Delhi and nearby areas is in the same situation. “Due to the lockdown, the bed occupancy in almost all hospitals including ours is less than 25%. I don’t see the international medical business improving before six months. From August or September, it may settle a bit but will take time to pick up pace," said Dr Neelam Mohan, director, department of paediatric gastroenterology Medanta, The Medicity.
The private sector has joined the government’s efforts to contain the spread of covid-19 through support in testing facilities, preparing isolation beds and deploying equipment and staff in identified nodal hospitals. While grappling with the surge in coronavirus cases, the government is also working on a proposal to convert private hospitals into dedicated covid-19 hospitals with mass ICUs.
“Private hospitals have started ramping down their elective case load while still maintaining a full workforce and stocking up on extra inventory. This is squeezing them financially," said Dr Girdhar J. Gyani, director general of Associated Healthcare Providers of India (AHPI) who has floated the proposal.
According to the Confederation of Indian Industry, there is a huge shortage of specialists, leading to a massive wage inflation to attract a limited pool of doctors. Margins on implants, drugs and consumables are being reduced, which means hospitals are unable to offset the high cost of performing surgical procedures. The private sector has been asking for remedial measures from the government for sustenance.
“We request the government to help hospitals be financially viable to pay salaries and vendors. This can be in the form of an emergency assistance loan for 10 years at 0% interest, tax waivers, clearing pending dues from government schemes like ESI, CGHS, etc," said Gyani.