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Private Healthcare Sector In ICU

COVID-19 has left the private healthcare sector in a financial distress. Private hospitals and laboratories that were already facing multiple challenges will witness an acute crisis because of the pandemic and the subsequent lockdown, which has resulted in occupancy levels fall to a mere 40% by late-March as against pre-COVID occupancy levels of over 65-70%. It is expected to go down further, a FICCI-EY study showed.

The impact on diagnostic labs is even worse with almost 80% fall in patient visits and revenues, said the study, conducted by the Federation of Indian Chambers of Commerce & Industry and Ernst and Young. Dr Sangita Reddy, president, FICCI, and Joint Managing Director, Apollo Hospitals Enterprises, said, “The private healthcare sector has stood beside the government to contain the virus and is committed to the war against COVID-19.

However, there is an urgent need to consider the healthcare industry’s triple burden, low financial performance in pre-COVID state; sharp drop in outpatient footfalls, diagnostic testing, elective surgeries and international patients across the sector impacting cash flow; and the increased investments due to COVID-19 impacting the hospitals and laboratories like never before.” Dr Alok Roy, Chair, FICCI Healthservices Committee and Chairman, Medica Group of Hospitals, said, “The crisis has forced several standalone and small nursing homes in tier II and III cities to down the shutters.

Many others are at high risk of closing down soon since their cash flows have dried up due to steep decline in patient footfalls, and they are facing liquidity crisis for even sustaining their staff salaries.” “Private hospitals and nursing homes that constitute more than 60% of beds at 8.5-9 lakh, 60% of inpatients and 80% of doctors in India have been investing heavily over the past month in additional manpower, equipment, consumables and other resources to ensure 100% preparedness for safety in the healthcare facilities and eventual treatment of patients, if needed,” the study said.

It will take at least three quarters to return to normalcy and operating losses of Rs 14,000-24,000 crore for the quarter are expected. The sector would need liquidity infusion, indirect and direct tax benefits, and fixed cost subsidies from the government to address the disruption, it said.Hospitals felt that the government is taking cognisance of financial strain in sectors like hospitality, tourism and construction, but ignoring the distress felt by the private healthcare sector.

Other recommendations for providing urgent financial stimulus for the sector are:

  • Indirect tax reliefs/ exemptions/ waivers like- recoup amount equivalent to ineligible GST credits paid on procurements for a stipulated period; Customs duty / GST exemption on essential medicines, consumables and devices for treatment of COVID patients; Waiver or reduction of health cess on medical devices, Extension of time under the EPCG scheme etc.
  • Income tax benefits and deferment of statutory liability payments without interest, penalty for a stipulated period (3-6 months)
  • Rebate on commercial rate of power for a stipulated period

For report please visit: COVID 19 – Impact assessment for private healthcare sector and key recommendations – Medical Buyer Bureau

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