Bonjour, new guests from small-town India
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
The current procedure costs prescribed by the government’s cashless health insurance scheme — Pradhan Mantri Jan Arogya Yojana (PM-JAY) or Ayushman Bharat — are at times just half that private hospitals incur, according to a report by the Federation of Indian Chambers of Commerce and Industry and EY .
According to the report, a comparison of the cost of select procedures and the reimbursement tariffs offered under Ayushman Bharat shows that only 40-80 per cent of the total cost is covered by the tariff and this is lower than the variable cost (which includes cost of materials - drugs, consumables, implants, patient food, linen and clinician payout).
While a coronary artery bypass surgery costs between ₹1.8 and ₹2 lakh, the package rate quoted in PM-JAY is ₹1.04 lakh. Similarly, for an angioplasty, PM-JAY offers a rate of ₹75,000, while the report states that private hospitals charge anything between ₹90,000 and ₹1.1 lakh. For knee replacement, PM-JAY quotes ₹92,000, while it costs anything between ₹1.85 lakh and ₹1.95 lakh for private players.
“Existing private tertiary care hospitals looking at improving capacity utilisation through empanelment with the Ayushman Bharat scheme are likely to witness a significant drop in profit margins and return on capital employed even beyond the current dismal levels if their current operating model remains unchanged,” said the report.
While private players mull optimisation of costs, the Centre is considering revising the package rates. Official sources indicate that the government will announce the rate revision only after September.
The report also said that while an additional 3.5 lakh beds will have to be added to meet the demands of PM-JAY at a total capital investment of ₹1-lakh crore, current hospital operators, even after optimisation of costs, will not be in a position to increase bed allocation by more than 25 per cent for PM-JAY patients.
Any further increase in the allocation of beds towards Ayushman Bharat, while maintaining the performance levels will be possible through investment support such as viability gap funding, it said .
It is expected that with the allocation of only 25 per cent of capacity to PM-JAY patients, multi-speciality accredited hospitals are likely to witness a 15-25 per cent decline in average revenue per occupied bed per day, a 25-50 per cent fall in EBITDA and a 35-60 per cent drop in the Return on Capital Employed if no change is undertaken by them in their operating model.
The private healthcare sector is currently witnessing worsening performance in terms of both profitability and ROCE, the report said. In order to set that right, the report recommended that private hospitals will have to focus on driving 30 per cent plus efficiency improvement across major cost heads by redefining their business models and cost structures.
For example, hospitals have to consider supplier consolidation, look for generics drugs, practice direct buying and so on. Instead of using imported drapes and gowns, hospitals can procure local disposable or reusable gowns.
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
Citroen’s first vehicle sports a novel design and European interiors. It is also meant to be as comfortable as ...
The pandemic is only the tip of the iceberg that the country’s cash-poor airlines — both regional and national ...
The government is yet to specify the framework of its recently announced old vehicle scrappage policy
Here is a checklist that equips you to discern the market nuances
Sensex, Nifty 50 have witnessed sharp decline
The fund has consistently outperformed S&P BSE 100 TRI over one, three and five years
Returns are superior to immediate annuity plans, but SCSS can secure better rates for new investors sooner if ...
With the public looking beyond mainstream media for reports from the ground, independent digital platforms are ...
The country hasn’t had a quiet moment since the military seized power on February 1
The Tatmadaw sees itself as an embodiment of the nationalist soul of Myanmar. But their brand of nationalism ...
While Supreme Court has cleared the way for women seeking longer tenures and senior roles in the Indian Army, ...
Its name is the starting point of a brand’s journey and can make a big difference in the success sweepstakes
Sober spirits are the in thing
A peek into where ad spends went last year and where they are headed tomorrow
Can Swiggy Instamart disrupt the ecommerce groceries space, currently ruled by the Amazons and Big Baskets? ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor