Coronavirus Pandemic: The new normal for private healthcare sector post COVID-19

Updated: Jul 24, 2020 4:29 PM

Availability of good and prompt healthcare facilities cannot be a substitute to the epidemiological requirements of creating a good system for early detection, isolation / quarantine and treatment facilities. 

Coronavirus Pandemic, private healthcare sector, post covid 19, public health infrastructure, frontline workers, covid 19 crisis, PPE, IRDA, latest news on coronavirus outbreakA recent cost study available in the public domain shows the true cost of care per day per bed in public hospitals is almost comparable to similar figures in the private sector. (Representational image)
By Dr Harish Pillai

The emergence of COVID-19 pandemic has exposed the glaring inadequacies in our health infrastructure investments over the past few decades. This is much more relevant to public health infrastructure and resources. Private sector healthcare facilities, through constant investment in latest technologies and optimum utilization of their resources have still managed to create an infrastructure that is capable of handling most prevalent communicable and non-communicable diseases though on a limited scale. Availability of good and prompt healthcare facilities cannot be a substitute to the epidemiological requirements of creating a good system for early detection, isolation / quarantine and treatment facilities

Both public and private facilities have been overwhelmed due to the current surge in COVID-19. In all states/districts there exists nodal agencies that distribute patients across both public and private hospitals. Real time dashboards are being used to assess bed availability as well as diagnostic testing capacity. A vast majority of citizens in the country rely on private healthcare of varying capacity and quality. Unfortunately, there seems to be a great reluctance to appreciate and understand the challenges involved in the running of private healthcare. Our socialist mindset and the freebie prone culture expects the government to step in and distribute either free or subsidized services overlooking the true cost of healthcare delivery. While this approach is required to serve the population below the poverty line, others who can afford to pay are reluctant to do so and does not understand nor appreciate the true costs involved to create and run an excellent institution

A recent cost study available in the public domain shows the true cost of care per day per bed in public hospitals is almost comparable to similar figures in the private sector. Whereas the public sector is fully funded by the taxpayer, the private sector must make do with its own efforts to generate funds for creation as well as upkeep of their modern facilities. Lack of adequate regulation and grievance handling mechanism does allow the existence of a few black sheep within the private healthcare domain, who tend to exploit system lacunae. It is grossly unfair to classify the vast majority as profiteers who are indulging in making a quick buck and exploiting the misery of the population. Major price regulatory reactions across states have now pushed many private providers to a very difficult fiscal position. In the most simplistic terms, the revenue of a hospital is directly proportional to the volume of patients visiting the facility, the number of surgeries being performed along with the type of patients. At the same time, the kind of payments, whether it’s cash out of pocket, insurance/TPA, government funded schemes, employer funded or international patients, all these factors play a role in smooth revenue inflow and outflow for running operations of private entities

Following the lockdown announced on March 21st and complete stoppage of international arrivals, this revenue resource has completely dried up. There has been a big fall in terms of patient footfall for outpatients as well as inpatients for routine ailments and regular surgical procedures, with most hospitals catering only for emergency procedures and fever clinics across the country. This immediate fall in earnings exposed most providers to the stiff reality of high direct costs, which mainly consist of manpower, materials, and overheads that in turn consist of lease rentals for the premises or utility costs consisting of electricity and water charges. To survive this crisis, almost all hospitals have resorted to drastic pay cuts of their staff, some of them preferring to ring-fence and protect the lower-level employees from salary cuts, while all seniors including the doctors have accepted a large percentage of pay cuts to help their respective organization to tide over these difficult times. The various trade bodies have made due representation to the government of India for fiscal support along with other sectors. Unfortunately, other than the moratorium announced by the Reserve Bank of India for interest and principal re-payment of loans and the quicker disbursement of receivables from government agencies such as ESI, ECHS, CGHS, nothing else has happened. The material cost component of direct cost for the large section of patients being treated for COVID related ailments, has dramatically shot up due to extensive use of PPE’s and the requirement to guard the safety of their healthcare work force
Despite taking due precautions many frontline workers including doctors, nurses, and paramedical staff have fallen victim to the pandemic.

Many of them have recovered and joined back to duty, unfortunately, some of them have succumbed and passed away in the line of duty. The country needs to have an open and transparent debate on what is the true cost of running a private enterprise. The media has also not played a balanced role and has been a source of creating and consolidating misperceptions. While on one hand several print media editions have shut down and laid off many employees including journalists, they remain insensitive to the pains being suffered by private healthcare providers who don’t have the luxury of closing due to the COVID-19 crisis. There also needs to be a multi-stakeholder discussion between the IRDA, healthcare service providers, TPA’s & insurance companies to arrive at a rational cost structure for the delivery of care. A single one size fit all formula for this complex case scenario may not make sense

The new normal emerging out of post-COVID would be an intense focus on efficient utilization of human resource, material and other overheads cost with much more intense scrutiny on cash flow statement rather than blindly looking at the daily revenue collections and overall a much more disciplined approach to hospital management and clinical outcomes.

(The author is Member, FICCI Health Services Committee and CEO – Aster India, Aster DM Healthcare. Views are personal.)

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