Additional cost, OPD gaps: Covid reaches revenue model

From large hospital chains to smaller nursing homes, Covid’s lockdown and pandemic have redesigned operations.

The facilities at Remedy Hospital in southern Kolkata are deserted in appearance, with missing staff caring for some patients in the OPD. There are also no people at the 681-bed Rabindranath Tagore International Institute of Cardiac Sciences (RTIICS).

“Compared to approximately 1,000 patients who visit the hospital on a regular basis, only about 50 patients come now,” said RTIICS CEO R Venkatesh. Most private hospitals have witnessed a large drop in the number of emergency patients, as well as OPDs, and almost all patients have rescheduled their elective surgeries.

From large hospital chains to smaller nursing homes, the Covid blockade and pandemic have redesigned operations: revenue has dropped 70-80 percent, operating costs have risen with hospitals needed to provide financial incentives personnel, personal protective equipment (PPE), transport service and even accommodation.

At Hinduja Hospital in Khar, Mumbai, elective surgeries generated 80 percent revenue, said its Medical Director, Dr. Avinash Supe. “The occupation is only 20 percent since elective surgeries like cosmetic procedures, joint replacement, have come to a complete stop. We are treating only cancer and fracture cases. OPD is also down, ”he said.

For the hospital, EPP, transportation and accommodation, on the other hand, have added 10 percent to the cost, he said.

Operating a Covid facility is much more expensive, said Abhay Soi, president of Max Healthcare and CMD, Radiant Life Care. “It is three times that in a regular hospital due to the cost of protective equipment and the tests we perform to ensure that our healthcare workers are not infected. We also have to exercise caution when operating other facilities (25% more expensive now) so that patients with other critical conditions and the doctors and nurses who treat them do not become infected, ”he said.

Cost tests. Take, for example, Bhatia Hospital in South Mumbai, where 51 employees tested positive. He spent Rs 32 lakh to test more than 700 employees. “And these tests will be done routinely over and over again,” said R B Dastur, the hospital’s medical director.

Then there are safeguards. “Our hospital requires 300 EPP daily for its staff and we spend Rs 2.4 lakh per day on this,” said an administrator at Breach Candy Hospital in South Mumbai. “Our hospital income comes primarily from heart and stroke patients. But those cases have disappeared, we don’t know why. There may be pay cuts in other industries. But in private hospitals, we are paying more than 20 percent incentives to employees who agree to work, “said the administrator.

Some may bear these additional costs, others, including several neighborhood nursing homes, have been locked up.

At Ruby Hospital in the city’s suburbs, staff attendance dropped by 40% as soon as the first Covid cases appeared. “We cannot pay EPP on a daily basis for each staff member. Some demanded a raise. Without patients, it is difficult to handle the increased cost,” said a nursing home pediatrician.

Breach Candy manager said a hospital makes a profit only if occupancy rates are 80-85 percent. “Since the pandemic started, bed occupancy is just 30 percent,” he said.

With occupancy levels of 20 percent, revenue per quarter from private hospitals is likely to decrease to Rs 18,000 crore from Rs 59,000 crore (pre-Covid) and losses of around Rs 22,000 crore, he said Dr. Sangita Reddy, Joint Director of Apollo Hospitals Enterprises. and President of the Federation of Indian Chambers of Commerce and Industry.

“The pain facing the private sector is the total lack of income right now,” he 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 also in a very bad scenario. Most of them are losing money and don’t know how to pay wages, “said Dr. Reddy.

Dr. Naresh Trehan, President and Managing Director of Medanta – The Medicity said: “Healthcare facilities are already sailing close to the ground in terms of revenue and profit. Now, the outbreak and blockade have resulted in a drop in revenue. There is a big 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 billion to stay alive, ”he said.

Unlike in other industrial sectors, where shutdown means units are closed and staff stay home, Reddy of Apollo Hospitals said, hospitals don’t have that elbow room.

“For (sectors like) aviation, you know they are closed. They are closed, they are at home and it is done until they reopen. For healthcare, not only do you have no patients, but you must be open for the 10 percent or 20 percent who will come because they need it. In addition to that, you must also deal with this unfamiliar (critical and unwieldy) third environment (the outbreak) … and deal with the insecurities of your staff, “he said.

Trehan said the government needed to support the working capital requirement at a lower interest rate. “We are not asking for subsidies, 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 not from Covid can go to their treatment without fear. Once that happens, the financial situation will improve, “he said.

Meanwhile, Ficci has applied for exemptions and waivers on indirect taxes, income tax benefits, deferral of legal liability payments and liquidity support.

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

In one case, a Covid patient, who was admitted to a large private hospital for more than 10 days, was billed more than Rs 8 lakh per treatment, with PPE costs of almost Rs 50,000. The hospital is not named because the patient remains admitted and the family shared the bills on condition of anonymity.

Dr. Shaktivel Selvaraj, Director, Economics, Finance and Health Policy of the Indian Public Health Foundation, estimates the average cost of treating a Covid patient admitted to the ICU for 10 days and with ventilation assistance in a charitable sector hospital at Rs 2.5-3 lakh, only a third of Rs 8 lakh the patient has so far been billed.

Hospitals prefer brands that give them higher fees, leading to higher costs for patients. “This is valid even during a pandemic,” said Malini Aisola, representative of the All India Drug Action Network (AIDAN), a group of patient activists. “We have observed that the costs of repeated tests for Covid, EPP, etc. are all passed on to the patient.”

Selvaraj said that hospitals and private clinics have benefited, even benefited, for several years. “Ideally, they should be able to reinvest this money right now to manage it. They have land at favorable prices in some states, they have subsidized electricity and water, and the only important cost for them is to pay wages. As long as they can pay their wages, they should be able to get their income back … I can tell you, keep an eye on it for the next six months or so: They won’t close large or even small clinics. This is only a short-term phenomenon, “he said.

In some states, private hospitals, especially in Tier II or Tier III cities, trust non-Covid patient businesses and distrust the “mahamari aspatal” label. For example, the leading Paras HMRI corporate hospital in Patna refers four to five suspected Covid cases to specialized hospitals every day instead of treating them themselves. When asked why, S.A. Rahman, Medical Superintendent, Paras HMRI, said: “Because we have to deal with non-COVID-19 cases.”

(With reports from Santosh Singh in Patna and Atri Mitra in Kolkata)

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