Coronavirus pandemic pushes private healthcare industry into financial stress

NARAYANAN V Chennai | Updated on May 21, 2020

India’s private healthcare industry is not in the pink of health since the Covid-19 pandemic broke out. The highly capital-intensive sector is staring at deep financial stress as two of its major revenue streams ― outpatient department (OPD) services and elective surgeries ― are hit by a drastic decline in patient footfalls and occupancy levels.

“Our in-patient occupancy is hovering around 30-35 per cent. International patient inflow has stopped completely and OPD foot-falls dropped by 70-80 per cent in different cities,” Ashutosh Raghuvanshi, CEO & MD, Fortis Healthcare, said, adding, “with just 30 per cent of our patients coming in, and elective surgeries postponed, revenue is also going to proportionally come down to less than half of usual.”

According to a FICCI-EY study, patient visits and testing volumes at private hospitals and labs fell by 80 per cent in the last 10 days of March alone, while revenues dropped by 50-70 per cent. The study also estimated an operating loss of ₹14,000-24,000 crore to the sector during the quarter.

While the pandemic-led lockdown is one of the major reasons for the drop in patient footfalls, fear and panic over the spread of coronavirus are also keeping patients away from hospitals.

“Elective (surgery) components such as hip or knee replacement are the most impacted because people are willing to live with the pain than go inside a hospital,” Viren Shetty, Executive Director and Group COO of Narayana Health, said, adding, “people are very scared to visit hospitals; so if it is avoidable then they will avoid.”

The Bengaluru-based multi-specialty hospital also said it witnessed a 30-70 per cent drop in patient footfalls in different locations while surgeries dropped from 50 per cent to 30 per cent.

India’s largest healthcare chain Apollo Hospitals also said it has witnessed a drop in elective surgeries.

“While we have seen a drop in elective surgeries, we have seen that the numbers have started picking up in the areas where lockdown has been relaxed,” Suneeta Reddy, Managing Director, Apollo Hospitals Group, said, adding, “even during the lockdown, there was no drop in emergency admissions, which forms 30 per cent of our business.”

She also added that the private healthcare sector is facing headwinds in the form of additional investment in manpower and equipment, drop in outpatient footfalls, stoppage of international patient revenues and postponement of elective surgeries.

In a recent report on the healthcare sector, rating agency ICRA, said, “The travel and visa restrictions impacted the flow of international patients. International patients accounted for 12-14 per cent of the aggregate revenues of the companies in ICRA’s sample set, going as high as 25 per cent of the revenues of certain facilities.”

“Due to travel restrictions, international patient arrivals have stopped completely. About 12-15 per cent of our total patient inflow is normally from outside India,” Fortis Healthcare’s Raghuvanshi said.

Even specialty hospitals have been affected by the pandemic and resultant lockdown. For instance, Dr. Agarwal’s Eye Hospital, which treats around 15,000 patients daily across India and abroad, is currently running at 30-40 per cent capacity. However, the hospital is witnessing increase in footfalls since the lockdown restrictions have been relaxed in many parts of the country.

“One main issue currently is transportation. Some of our hospitals are already full, but in some places people are unable to come to the hospital because of transportation issue,” Amar Agarwal, Chairman, Dr. Agarwal’s Group of Eye Hospitals, said.

“So, the moment you open transport, people will be moving comfortably and things will open up,” he added.

Dr V Shanta, Chairperson of Adyar Cancer Institute also said occupancy levels at the centre fell drastically post lockdown since majority of the patients visiting the institute were poor and dependent on bus or train services.

She also added that while revenue has come down, expenses have gone up as hospitals are required to comply with various preventive and sanitation guidelines of the government, purchase PPE and PPV protection kits, conduct coronavirus tests on patients and visitors, meet sanitation expenses and increasing cost of anti-cancer drugs.

“We lived on hospital income: what we earned, we spent. We treat 30 per cent of our patients for free, and another 30 per cent at highly nominal charges. Only 40 per cent pay for their treatment,” Shanta added.

Published on May 21, 2020

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