India’s private healthcare sector needs at least three quarters to return to normal as the restricted treatment of non-coronavirus health conditions has brought patient footfall down by 70% to 80%, a report has claimed. The sector needs a liquidity push as well as subsidies from the government to recover, said the report, prepared by the Federation of Indian Chambers of Commerce and Industry and consultancy firm EY.
The Covid-19 pandemic has infected more than 20 lakh people globally – around 13,000 of those in India. With the fast transmission rate of the coronavirus that causes the infection, most countries have had to lock down cities and restrict public movement. India has been under lockdown since March 25, and the government has asked citizens not to overwhelm hospitals by visiting them for regular health checkups and surgeries that can be postponed.
According to the FICCI-EY study, revenue of the private healthcare sector declined 50% to 70% in the last 10 days of March, and this is expected to remain so in April due to the continuing lockdown. Occupancy levels in private hospitals fell to just 40% in late March, as compared to around 65% to 70% before the pandemic, the report said, projecting an even bigger decline ahead. Diagnostic laboratories in the private sector have seen a worse impact, with an almost 80% decline in patient visits and revenue, the report added.
Many small hospitals and nursing homes, especially in Tier-2 and Tier-3 cities and towns, have been forced to close down their operations since their cash flows have dried up, the study found. The sector is likely to report operating losses of Rs 14,000 crore to Rs 24,000 crore in a three-month period, the report said.
“For the sector which is already constrained in terms of liquidity, the onset of operating losses will cause cash balances to be completely depleted if the situation persists for a quarter,” the report said. It noted that despite low bed utilisation, private hospitals cannot really cut fixed costs unlike other sectors, because they are still expected to be “super ready” to manage any situation.
The report said it had not factored in the increased costs due to infection control and protective kits.
The recommendations made by the report included indirect tax reliefs and waivers for the sector, such as exemptions in customs duty and goods and services tax on essential medicines and devices for treatment of Covid-19 patients, tax benefits, and deferral of statutory liability payments without interest or penalty.
FICCI President Sangita Reddy, who is also the joint managing director of Apollo Hospitals, said the healthcare industry was under a “triple burden” – an already financially-constrained position before the pandemic; a sharp drop in out-patient footfalls, diagnostic tests, elective surgeries and international patients; and the increased investments due to Covid-19.