Retailers will feel aggrieved that they should have opened sooner
YOU can almost hear retailers breathe a sigh of relief that they can open from tomorrow after shuttering their premises for several months. Many will feel real frustration that they had to stay closed for so long at all, especially given what is now emerging about the nature of the coronavirus and how it is spread in the community.
Investment bank JP Morgan recently found in a survey of each US state after lockdown, that in almost all states infection rates declined, not increased, after lockdowns ended. The evidence pointed to the idea that “common sense measures unrelated to full lockdowns”, such as social distancing and hand-washing, were more effective in containing the virus.
What would JP Morgan know about pandemics, you might say? But in Wuhan, officials found that after testing 10 million people in the space of just a few weeks, there were only 300 coronavirus cases and all of them were asymptomatic.
Businesses are counting the financial cost of this lockdown. They will try to find a new way forward, and still try to make some money at the same time. Yet a big question remains — was it necessary to close down every single DIY, clothing, homeware and electrical goods store in the country?
Supermarkets that remained open, and with basic protection measures in place, do not appear to have been a major contributor to the spread of the virus.
In the months ahead, large and small Irish businesses will need an estimated €12bn in liquidity, according to Goodbody Stockbrokers — a lot more than the Central Bank estimate of €2.4bn to €5.7bn. It is also a lot more than the Government’s own estimation of around €6.5bn. It is far from clear where this money is going to come from. Banks will lend cautiously. Many smaller companies don’t want to borrow at what they see as rates which are too high anyway.
SMEs are not exactly grabbing the hands off lenders or Government-backed agencies offering cheaper loans.
In all likelihood many businesses will simply not get that liquidity they require to get
through this crisis. Firms will go to the wall and the Government will have tough calls to make on who to save and who to let go.
More supports will be made available by Government for SMEs. But the Government will not want to provide guaranteed loans or grants directly to businesses that it believes are going to fold anyway.
Exactly how these distinctions are drawn will become a very fraught process in the months ahead.
It will take time to count the cost of private hospital deal
IT may be far too early for a full post-Covid analysis of mistakes that were made, but the process has certainly begun when it comes to the deal the State did with the private hospitals.
Fault-lines, tensions and disagreements were obvious when the topic was assessed
by an Oireachtas sub-committee during the week.
The deal will cost the exchequer an estimated €300m by the time it is finished at the end of this month. The Taoiseach and the Department of Health have both said it will not be a financial win for private hospital owners such as billionaires Denis O’Brien and Larry Goodman. They have said it was based on a cost-only reimbursement model. In other words, instead of paying the private hospitals a negotiated set fee for using beds at 19 private hospitals as part of the public health system, the private ventures will be reimbursed whatever their costs were.
Surely, that sum is hard to calculate. The agreement saw the cancellation of ordinary private hospital work so there is inevitably an income foregone for the hospitals.
Blackrock Clinic had a turnover of €122m in 2017 (the last year for which accounts are available) so it stood to lose out on one-quarter of that revenue during the three months.
Turnover at Goodmans’ Hermitage private hospital was €78m in 2018. O’Brien’s Beacon Hospital Group had a turnover of €122m in 2018. Divide that by four and you see what their possible revenue foregone might have been. Presumably, these hospitals continued to provide the nursing and other staff required to keep the hospitals operating as part of the public system. That should form part of the cost to be reimbursed.
The deal was hammered out in a hurry over a weekend and the full details of how it is all calculated have not been disclosed.
Fianna Fáil health spokesman Stephen Donnelly put it well last week when he said private patients ended up being treated in private hospitals by private consultants, all paid for by the public.
He wanted to know why the health insurers were not still paying for this care in private hospitals. If so, then they would have provided the income to the owners of the hospitals and not the State.
Given the modest take up of the extra 2,500 beds available, the agreement looks like poor value for money. The Irish Hospital Consultants Association thinks so too.
The deeper cost will be the pressure on the health system caused by the suspension of testing and procedures and use of beds for other conditions in private hospitals.
If the fee for this deal is calculated on a cost-reimbursement model then surely not all of the costs have been submitted yet.
The final bill will not be available for quite some time.
Fexco job cuts will come as a major blow to rural Ireland
JUST a few months ago, back in February, Kerry-based fintech group Fexco was in the news with its new hub in the county which would develop startups and hopefully end up employing 300 people in the years ahead.
Last week Fexco, which employs around 1,000 people in Co Kerry, announced 150 job losses because of the impact the virus has had on international travel.
It is ironic that so much has been said about what post-Covid business might look like and how more people working from home could become a real boost for rural areas. Why live in Dublin if you can do your job with a Dublin-based company from your house in Kilkenny or Kerry? Yet a company like Fexco has done so much for rural living by bringing a thousand good quality jobs to towns like Killorglin and Cahirciveen.
A hit of 150 jobs in an area like that, especially when tourism will be on its knees for a while, is a real blow.
On the positive side, an Irish multi-national like Fexco will be well placed to take full advantage of any upside when it comes in international markets and foreign travel. It should be in a good position to gradually bring its employee numbers back.
Meanwhile, the fintech hub, backed by Fexco, Tralee IT and Kerry County Council, will remain a draw for people to locate in the area. Who knows, maybe some of the 150 will set up their own businesses in the hub and the next Fexco will be born.