Private hospitals gasp for breath as occupancy slumps
The first of a two-part series looks at how private health care facilities are facing the pandemic
When a member of the engineering staff in a Delhi hospital tested positive for novel coronavirus recently, the hospital management was taken by surprise because it was a non-covid--19 facility and, additionally, the infected person had no contact with patients.
While the infection was traced to his wife — a nurse in a government hospital — the hospital had to cordon off the basement where the engineer worked. Fortunately, the hospital did not have to shut down its main operations since the protocols were in place and its floors were segregated.
Not all have been so lucky. A clutch of top-rung private hospitals in
Mumbai were sealed after their staff tested positive. These included Jaslok Hospital, Saifee, Wockhardt, Breach Candy, Bhatia Hospital, and Hinduja Hospital.
In times when occupancy in hospitals has dropped to almost 30 per cent, medical tourism has come to a grinding halt, and elective surgeries stand postponed, such incidents have only made a bad situation worse.
Most of these hospitals have reopened; some of them such as Saifee turned one of their facilities into an exclusive Covid--19 hospital.
Revenues, however, have taken a big hit. The outpatient department business is down 70-80 per cent, according to industry estimates. Add to this a 20 per cent rise in expenditure on protective gear.
Alok Roy, chairman of Medica Group of Hospitals, which runs hospitals in West Bengal, Odisha, Jharkhand, and Bihar, says if the current situation continues, the corporate chain can at best sustain the losses for another three months. “Our revenues are down by 70 per cent, while our operational expenses have gone up by 20 per cent,” said Roy.
Salaries have borne the first brunt. In most hospitals, it is the senior management and executives who have taken a pay cut. For instance at Apollo Hospitals, the top level has taken a cut of 10-20 per cent.
At Delhi-based Aakash Healthcare Super Speciality Hospital, too, while the front line staff has been given their full salaries, the top executives have reduced their take-home package significantly. The move, experts say, can help in showing one’s intent while approaching a financial institution for a loan moratorium.
Malini Aisola of patient activist group AIDAN said that every sector has taken a hit. “Hospitals are playing up their losses. They are trying to make up for their lost business by overcharging those who come, both Covid-19 and non-covid19 patients.” She claims, for example, that it does not cost ~4,500 to do a test inhouse. Mumbai’s Breach Candy, however, is an exception. It is paying incentives to its staff to come to work. Medica, which employs 6,000 people, has decided to defer part of the salaries to its staff and give the remaining dues when the situation improves. “The hospital business has margins of 10-12 per cent and there is no way one can keep digging into cash reserves to pay salaries and meet operational expenses,” added Roy. Manipal Group, which runs a hospital chain, has cut 25 per cent of salaries for the April-june period for its management staff earning above ~2 lakh a month. For doctors too, a similar pay cut has been mirrored. “Some of the senior doctors had voluntarily offered to cut salaries by 50 per cent or so,” said Dilip Jose, chief executive officer, Manipal Hospitals.
Delay in payments to be made under the Central Government Health Scheme has dented the revenues of many hospitals. Salary cuts aside, they are looking a hard look at expenses and reconsidering a lot of them.
Apollo, for instance, has decided not to undertake any discretionary spending, such as advertising and marketing, for now. “We plan to cut cost by ~100 crore for the year. We are also expecting some attrition. When we resume work, we will also cut back on some non-discretionary spend,” said Akhilesh Krishnan, chief financial officer, Apollo Hospitals.
The Maharashtra government’s decision to cap the prices of surgeries is also pinching the hospitals.
While the cost of items such as personal protective equipment, priced at ~1,800-2,000 per piece, has added to expenditure, the cost of many allied services has come down. “This has been an opportunity for us to look at wasteful activities. Our electricity bill is down 30 per cent, in part also due to lower utilisation of the operation theatre,” said Aashish Chaudhry, MD of Aakash Healthcare Super Speciality Hospital. “Covid facilities have to be standalone facilities. We have around 600 beds dedicated for Covid in our hospitals,” said Sangita Reddy, joint MD, Apollo Hospitals. Most hospitals have isolation bed facilities of 10-12 beds at best. Refurbishing the entire hospital air-conditioning to scale up isolation wards is not easy.
Private capacity, which is lying idle because of non-covid patients not showing up, is likely to get filled once lockdown is lifted. “Once lockdown lifts, there would be demand. By keeping Covid hospitals separate, the country’s health care infrastructure would not be overwhelmed with non-covid patients all coming at once,” said Ashutosh Raghuvanshi, MD of Fortis Healthcare, India’s second-largest hospital chain. West Bengal has, however, asked private hospitals to treat Covid-19 patients. Medica is treating around 60 of them at the moment and the number is rising rapidly. The hospital has adopted a rotation strategy for its staff in two cycles — front line staff, who work for 14 days at a stretch, while non-front line workers are being rotated every seven days. Some of their staff are being housed in the hospital, while some are staying in nearby guest houses.
In Delhi, due to hurdles in moving across borders from Gurugram, etc, Aakash Healthcare Super Speciality Hospital has rented a 20-room Oyo property for its staff near its hospital. Maharashtra has found shutting off entire facilities if a health worker gets infected is not a wise idea in these times. The BMC has asked hospitals to not remain shut for more than two days even if a staff member tests positive.