Fortis Healthcare, one of India’s largest healthcare service providers with around 4,000 beds, said occupancy at its hospitals fell to a low of 29% in April from 69% due to the impact of the Coronavirus lockdown.
It, however, said that admissions have improved and occupancy levels had recovered to 35% for the month of May.
The healthcare provider, which reported a flat revenue for the fourth quarter due to the COVID-19 impact, typically reports occupancy levels in the late 60s.
For the year ended March, occupancy levels were on track to increase to 69% from 67% in the preceding year.
However, a fall in occupancy level in the final quarter (Jan-Mar) to 65% dragged the full year number to 68%.
The company, which swung to a fourth quarter loss of Rs 41.24 cr from a profit of Rs 151.19 cr a year earlier due to lower profit at associates and joint ventures, has set apart 1,000 beds for treating COVID-19 patients.
“The Company’s business was significantly impacted from February 2020 as a result of the increasing spread of the COVID-19 pandemic. This became more pronounced in the last week of March and the entire month of April due to the nationwide lockdown and witnessed a drop in hospital occupancy,” it said in a quarterly update.
“With the lockdown restrictions easing beginning May, the business has shown signs of gradual improvement with hospital occupancy… However, the business is expected to continue to face earnings pressure through the April – June quarter and beyond till the pandemic recedes and business momentum returns to normal,” it added.
PANDEMIC HITS HEALTHCARE
Somewhat counter intuitively, the pandemic has been bad news for the health care industry in the country.
Patients, especially those suffering from chronic conditions such as heart disease, have tended to postpone major procedures and regular check-ups in the fear that going to a hospital will expose them to SARS-CoV-2, the virus that has killed nearly half a million people across the world in the last six months.
Nevertheless, chains such as Fortis have seen a pickup in occupancy in the last 20-30 days as government sector hospitals have filled up, forcing COVID-19 patients to approach private sector providers.
In places like Delhi, even the private sector facilities have filled up, leading to patient distress.
Still, private sector hospitals have been loath to allocate more and more beds to COVID-19 patients in some locations for fear of scaring away non-COVID patients. For now, most hospitals have dedicated certain wings or buildings to COVID-19 treatment.
Moreover, caring for COVID-19 patients requires hospitals to take extreme precautions due to the highly infectious nature of the virus. Some hospitals have had to be shut down entirely after a large number of their nursing staff and doctors caught the virus.
However, given the financial stress that private hospitals find themselves under, many are likely to open up further to COVID-19 patients.
Fortis, which has 38 healthcare facilities, said it “has the potential to further scale up” its COVID-19 infrastructure if required.
It said “revenues saw a sharp reduction in April 2020” and are showing a gradual recovery. Volumes at its diagnostic arm, SRL, fell 75% in April and were still down 60% in May.
While some states have expressed their intention to take over private hospitals in case the public sector healthcare facilities run out of capacity while dealing with the COVID-19 challenge, others have announced caps on the maximum amount that can be charged from COVID-19 patients, putting pressure on private sector providers.
“The company also continued to face cost pressures as a result of the additional expenses incurred to cater to COVID patients and the regulations put forth with respect to COVID treatment in some geographies,” Fortis said.
However, “a slew of cost saving measures including voluntary salary reductions, optimization of administrative and sales and marketing costs, judicious allocation of capex along better working capital management and the availability of bank funding are enabling the company to effectively manage its liquidity position currently,” the Gurgaon-based company added.