Follow Us:
Wednesday, August 04, 2021

Extra cost, empty OPDs: Covid hits revenue model

In some states, private hospitals, especially in Tier II or Tier III cities, bank on business from non-Covid patients and are wary of the ‘mahamari aspatal’ tag.

Written by Tabassum Barnagarwala , Prabha Raghavan | Mumbai, New Delhi |
Updated: May 2, 2020 2:39:26 pm
From large hospital chains to smaller nursing homes, the lockdown and the Covid pandemic have re-shaped operations.

The premises of Southern Kolkata’s Remedy Hospital wears a deserted look, with stray staff attending to a few patients in the OPD. There isn’t any crowd either at the 681-bed Rabindranath Tagore International Institute of Cardiac Sciences (RTIICS).

“Compared with about 1,000 patients visiting the hospital on a regular basis, only around 50 patients are coming now,” said RTIICS CEO R Venkatesh. Most private hospitals have witnessed a huge drop in footfall of patients in emergency as well as OPDs, and almost all patients have rescheduled their elective surgeries.

Read| Sealing fears, dip in patients, wary staff are making private hospitals play safe

From large hospital chains to smaller nursing homes, the lockdown and the Covid pandemic have re-shaped operations: revenues have dipped by 70-80 per cent, operating costs have jumped with hospitals required to provide staffers financial incentives, personal protective equipment (PPE), transport service, and even accommodation.

At Hinduja Hospital in Khar, Mumbai, elective surgeries generated 80 per cent revenues, said its Medical Director, Dr Avinash Supe. “The occupancy is only 20 per cent since elective surgeries like cosmetic procedures, joint replacement, have completely stopped. We are treating only cancer and fracture cases. OPD has come down too,” he said.

For the hospital, PPE, transport and accommodation, on the other hand, have added 10 per cent to the cost, he said.

Operating a Covid facility is much more expensive, said Abhay Soi, Chairman, Max Healthcare, and CMD, Radiant Life Care. “It is thrice that at a regular hospital due to the cost of protective gear and tests we perform to ensure our healthcare workers are not infected. We also have to exercise caution in operating other facilities (25 per cent costlier now) so that patients with other critical conditions, and doctors and nurses treating them, do not get infected,” he said.

Read| Covid fight: Govt system in front, private hospitals do the distancing

Testing costs. Take for example, South Mumbai’s Bhatia Hospital where 51 staffers tested positive. It spent Rs 32 lakh to test over 700 staffers. “And these tests will be routinely done again and again,” said R B Dastur, medical director of the hospital.

Then there are safeguards. “Our hospital requires 300 PPEs daily for its staff and we spend Rs 2.4 lakh a day on this,” said an administrator at Breach Candy Hospital in South Mumbai. “Our hospital’s income comes mostly from cardiac and stroke patients. But those cases have disappeared, we don’t know why. There may be salary cuts in other industries. But in private hospitals, we are paying over 20 per cent incentives to staffers who agree to work,” the administrator said.

Some can take these extra costs, others, including several neighbourhood nursing homes, have locked themselves down.

In Ruby Hospital in the city’s suburbs, staff attendance dropped by 40 per cent as soon as the first Covid cases trickled in. “We can’t afford PPE daily for every staffer. Some demanded a raise. With no patients, it is difficult to handle the increased cost,” a paediatrician from the nursing home said.

The Breach Candy administrator said a hospital makes profits only if occupancy rates are 80-85 per cent. “Since the pandemic began, bed occupancy is hardly 30 per cent,” he said.

At 20 per cent occupancy levels, revenues per quarter of private hospitals are likely to drop to Rs 18,000 crore from Rs 59,000 crore (pre-Covid) and losses at around Rs 22,000 crore, said Dr Sangita Reddy, Joint Managing Director, Apollo Hospitals Enterprises, and President, Federation of Indian Chambers of Commerce and Industry.

“The pain that the private sector is facing is the complete lack of revenue right now,” she told The Indian Express. “The ability to say that we can provide free treatment for Covid-19 is not (possible)… other nursing homes and smaller hospitals are in a very bad scenario too. Most of them are losing money and don’t know how to pay salaries,” Dr Reddy said.

Said Dr Naresh Trehan, Chairman and Managing Director, Medanta – The Medicity: “Healthcare facilities are already cruising close to the ground in terms of revenues and profits. Now, the outbreak and lockdown has resulted in drop in revenue. There is a huge gap in our ability to pay our costs. We don’t want to get rid of our staff and we want to keep operations intact. The industry may have to borrow up to Rs 10,000 crore to keep alive,” he said.

Unlike other industrial sectors, where the lockdown means units are shut down and staff stays home, said Reddy of Apollo Hospitals, hospitals don’t have that elbow room.

“For (sectors like) aviation, you know they are shut down. They are closed, they are at home and it’s done till they reopen. For healthcare, not only do you have no patients, but you have to be open for the 10 per cent or 20 per cent who will come because they need you. On top of it, you have to also treat this unknown, critical and difficult to handle third type of environment (the outbreak)… and handle your staff’s insecurities,” she said.

Trehan said there was a need for the government to support the working capital requirement at a lower interest rate. “We’re not asking for grants, because we know that the government is already under pressure,” he said.

“Now that special COVID-19 hospitals have been created, there are no more Covid patients in hospitals like Medanta, so those who are non-Covid can come for their treatment without fear. Once that happens, the financial situation will improve,” he said.

Ficci has, meanwhile, sought exemptions and waivers on indirect taxes, income tax benefits, deferment of statutory liability payments, and liquidity support.

But some public health experts suggest that the industry always exaggerates its burden. A few hospital bills accessed by The Indian Express show that patients have been billed in the thousands for PPE used by hospital staff.

In one instance, a Covid patient, who is admitted in a large private hospital for over 10 days now, was billed over Rs 8 lakh for treatment, with PPE costs running up to nearly Rs 50,000. The hospital is not being named since the patient remains admitted and the family shared the bills on condition of anonymity.

Dr Shaktivel Selvaraj, Director, Health Economics, Financing and Policy, at the Public Health Foundation of India, estimates the average cost of treatment of a Covid patient admitted to the ICU for 10 days and on ventilator support at a hospital in the charitable sector at Rs 2.5-3 lakh, just a third of Rs 8 lakh the patient has been billed so far.

Hospitals prefer brands that provide them higher commissions leading to higher costs for patients. “This holds good even during a pandemic,” said Malini Aisola representing All India Drug Action Network (AIDAN), a patient activist group. “We have observed that costs of repeated Covid testing, PPE etc are all offloaded to the patient.”

Selvaraj said private hospitals and clinics have profited, even profiteered, over several years. “They should ideally be able to plough this money back at this time to manage. They have got land at concessional rates in some states, they have got electricity and water subsidised, and the only major cost for them is paying salaries. As long as they are able to pay their salaries, they should be able to get back their revenues… I can tell you, watch it for the next six months or so – no big, or even smaller clinics, are going to shut down. This is just a short-term phenomenon,” he said.

In some states, private hospitals, especially in Tier II or Tier III cities, bank on business from non-Covid patients and are wary of the ‘mahamari aspatal’ tag. For instance, leading corporate hospital Paras HMRI in Patna refers four to five suspected Covid cases to specialised hospitals everyday instead of treating them itself. When asked why, S.A. Rahman, Medical Superintendent, Paras HMRI, said, “Because we have to take care of non-COVID-19 cases.”

(With reporting by Santosh Singh in Patna and Atri Mitra in Kolkata)

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest India News, download Indian Express App.

  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
0 Comment(s) *
* The moderation of comments is automated and not cleared manually by