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Private hospitals in trouble: Footfall crashes due to coronavirus fear; occupancy level falls 40%

Private hospitals account for more than 60 percent of beds, 80 per cent of doctors in the country

twitter-logoJoe C Mathew | April 16, 2020 | Updated 14:08 IST
Private hospitals in trouble: Footfall crashes due to coronavirus fear; occupancy level falls 40%
Coronavirus update: Private hospitals have seen occupancy levels fall to 40%

KEY HIGHLIGHTS

  • Private hospitals have seen occupancy levels fall to 40 percent
  • Operating losses of healthcare providers to be about Rs 4,500 crore a month
  • Private hospitals account for more than 60 percent of beds, 80 per cent of doctors in the country
  • Many nursing homes have told nurses to work without protective gear or quit
As governments-central and states-are on a war footing to augment India's healthcare facilities to fight coronavirus pandemic, the key healthcare providers of the country are reeling under immense financial stress. Lower patient footfall, infection threat to staff and additional investment for coronavirus facilities are creating multiple challenges for private healthcare providers.

"With elective surgeries getting postponed only emergency cases like cancer patients or dialysis cases are reaching us. The occupancy rate across Max network hospitals is between 35 to 40 percent", Abhay Soi, chairman of Max Healthcare Institute and Radiant Life Care says. The dip in patient footfall comes at a time when the hospitals under the Max and Radiant brand are in the process of introducing a new protocol to protect their 14,000 strong staff across India from coronavirus.

Also read: Coronavirus Lockdown India Live Updates: Delhi second worst-affected state after Maharashtra with 1,578 cases

The precarious condition of private hospitals was flagged in a recent study by consultancy firm EY and industry chamber FICCI. They found that the private hospitals and laboratories have seen occupancy levels fall to 40 percent by late-March vis-a-vis pre-coronavirus occupancy levels of 65 to 70 percent. Diagnostic labs have seen 80 percent fall in patient visits and revenue.

FICCI-EY study estimates the operating losses of private healthcare providers to be about Rs 4,500 crore for a month and Rs 13,400 crore for a quarter if revenues are at 50 percent (occupancy of 35 percent).

India's private hospitals and nursing homes account for more than 60 percent of beds at 8.5-9 lakh, 60 percent of inpatients and 80 percent of doctors in India. The leading hospitals have been investing heavily over the past month in additional manpower, equipment, consumables and other resources to join the fight against coronavirus.

"The private healthcare sector in India has stood beside the government firmly to contain the virus and is deeply committed to the war against COVID-19. However, there is an urgent need to consider the healthcare industry's triple burden viz. low financial performance in pre-COVID state; sharp drop in out-patient footfalls, diagnostic testing, elective surgeries and international patients across the sector is impacting cash flow; and the increased investments due to COVID-19; which has impacted the hospitals and laboratories like never before", Sangita Reddy, President, FICCI and Joint Managing Director, Apollo Hospitals Group, said.

While it's a financial crisis for the major healthcare providers, the small, standalone nursing homes and hospitals across India are finding it difficult to run the institutions.

In a letter to the central government, United Nurses Association of India, a body that represents over 5 lakh nurses in the country, alleges that several private hospitals nursing homes that are unable to procure protective gear for frontline healthcare workers are asking them either to work without protective equipment or leave their jobs, thus creating enormous mental stress and distress among the fraternity.

The FICCI-EY study had also sensed the level of distress among small nursing homes. "The financial distress accentuated by COVID-19 lockdown has forced several standalone and small nursing homes in tier II and III cities to down the shutters. Many others are at high risk of closing down soon since their cash flows have dried up, due to steep decline in patient footfalls, and they are facing liquidity crisis for even sustaining their staff salaries,"  Alok Roy, Chair- FICCI Healthservices Committee and Chairman, Medica Group of Hospitals, said.

The FICCI-EY report, which looked at the median performance of 74 hospital groups and 17 diagnostic chains suggests that the central government should take urgent measures to assist the private sector players through liquidity infusion, tax reliefs and other waivers to tide over the crisis. It recommends government support through liquidity infusion for financing the operating losses through short term interest free/concessional interest rate loans to address the liquidity gap to the tune of Rs 14,000-24,000 crore.

"While the private sector stands fully committed to partner with the government as a national duty, it truly finds itself in a compelling situation to beseech the government for 'differential' financial forbearance measures and to be supported well, in order to best utilise its capabilities and capacity to serve the nation in this hour of crisis," Kaivaan Movdawalla, Partner-Healthcare, EY India, said.

The industry has also asked for immediate release of government dues under CGHS and ECHS schemes, which is in the range of Rs 1700-2000 crore, to private hospitals.

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