NEW DELHI: For the already shaky private healthcare industry, the nationwide lockdown to contain the spread of COVID-19 has come as a body blow, says study jointly released by Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young on Thursday. With occupancy rates plunging, the report expects the sector to see significant operational losses.
According to the analysts, the sector would see operational losses of Rs 4,500 crore a month if occupancy levels remain at 35 per cent and a whopping Rs 7,500 crore a month if occupancy rates fall to 20 per cent.
“Hospitals are witnessing a drop in both domestic and international patient footfalls and elective surgeries, resulting in occupancy levels to fall to a mere 40 per cent by late-March vis-a-vis pre-COVID occupancy levels of ~65-70 per cent and is expected to reduce further,” the report said, adding that diagnostic labs have seen an 80 per cent fall in revenue and footfall.
“The sector would need liquidity infusion, indirect and direct tax benefits, and fixed cost subsidies from the government to address the disruption,” the study noted. The onset of operating losses will cause cash balances to be fully depleted if the situation persists for a quarter, it added.
“There is an urgent need to consider the healthcare industry’s triple burden: low financial performance in the pre-COVID state; sharp drop in out-patient footfalls, diagnostic testing, elective surgeries and international patients across the sector impacting cash flow; and the increased investments due to COVID-19,” said Sangita Reddy, president, FICCI.
Loss of Rs 4,500 crore a month
Healthcare sector will see operational losses of Rs 4,500 crore a month if occupancy levels remain at 35 per cent and a whopping Rs 7,500 crore a month if occupancy rates fall to 20 per cent.