As the lockdown relaxes, healthcare facilities slip further into the red, with no immediate fiscal relief, while Vocal for Local revives the medtech turf battle
As we complete two months of living with COVID-19, we are finally accepting that this unseen intruder will not leave us soon. Like an irritating in-law/frenemy/neighbour, we have tried to outsmart it with distancing tactics.
But soon enough, and maybe already, each of us will know a COVID-19 positive patient. A friend who lost her ageing father to septicaemia because she could not find healthcare staff to drain his abscess in time. A colleague who went through quarantine because he/she happened to honeymoon in Italy during the peak of the pandemic. Colleagues whose housing societies were /are quarantined as a neighbour tested positive. Another colleague spoke of a 94-year-old who tested positive and then recovered. As these Chronicles of COVID-19 mount, there is no doubt that COVID-19 has raised patients’ expectations from the pharma/medtech/hospital staff. Will these communities live up to it?
One section is certainly living up to their mission to save lives, even at the cost of their own. More than 500 healthcare staff, ranging from doctors, nurses, paramedics, are COVID-19 positive, with deaths too being reported. And this number will only increase.
Various state governments, from Chhattisgarh, Rajasthan, Madhya Pradesh, Maharashtra, and Karnataka, have forced private hospitals to reserve wards and in some cases taken over entire hospitals to cope with the increasing number of patients.
As the lockdown is gradually relaxed, especially in green and orange zones, will patients with non-COVID-19 ailments, who have postponed elective surgeries, feel confident of being treated in these hospitals?
Hospitals are doing all that they can to instil confidence, by installing sanitation tunnels, using robots to triage patients, monitoring frequent hand washing and alcohol spray stations. This too is part of the new normal.
Healthcare facilities slipping further into the red …
But the additional strain on the sector’s balance sheet will be stark. As per a FICCI-EY report released in April, the lockdown is likely to result in significant operating losses for the private hospital sector, to the tune of Rs 13,400 – 22,000 crore for the quarter and a liquidity crunch. FY21 performance for the sector is estimated to be muted, with revenue lower by 20-35 per cent and negative EBITDA.
A more recent report by CARE Rating report dated May 20 predicts that the hospital sector will remain stressed in June, start a partial recovery over July – October and continue towards recovery from November, becoming the fifth sector on the path towards recovery. This is because it will continue to face challenges on liquidity, lack of demand, and capacity utilisation.
Liquidity will remain a problem for hospitals as non-essential treatments and routine services will continue to be disrupted, even though the government has called for a resumption in services. This has further affected cash flows as they continue to bear fixed costs like consultation charges for doctors, salaries of nurses and other employees, which make up around 50 per cent-60 per cent of operational costs.
… with smaller healthcare facilities hardest hit …
While the larger multi-speciality hospitals and chain hospitals might withstand the strain for a few months, smaller hospitals and clinics are hit the hardest. They have reportedly been unable to hold on to their staff, who have left for their home states when they realised that there was no cash flow to pay salaries. This has reduced the number of hospital beds which could have been used for COVID-19 patients with milder symptoms not required oxygen support.
In some cases, nurses who had been pressed into service in COVID-19 wards found themselves overworked, under-appreciated and worse, left to fend for themselves when they tested positive for COVID-19.
Many states are now facing a shortage of healthcare workers. Maharashtra’s Directorate of Medical Education and Research (DMER), has written to Kerala Health Minister K K Shailaja to ask for 50 trained specialist doctors and 100 nurses to help it cope with the rising COVID-19 caseload.
… yet, no immediate fiscal relief from the Finance Minister …
The fiscal incentive announced by the Finance Minister in mid-May has not provided much immediate succour to the hospital sector and industry lobby groups have registered their disappointment. While FICCI has lauded the strategic reforms announced for public health infrastructure, Dr Alok Roy, Chair-FICCI Health Services Committee & Chairman, Medica Group of Hospitals has pointed out that the lack of consideration for immediate relief to the healthcare industry is discouraging. Measures like creating a public-private infrastructure of hospitals, provision of 30 per cent viability gap funding (VGF) for PPPs for hospitals in tier- II & III cities, etc are long term measures and do not address the stress put on the system by the COVID-19 pandemic, goes the FICCI statement.
Painting a grim picture, the FICCI statement points out that hospitals that were already financially fragile over past few years have been stressed with the unplanned investments for COVID-19 preparedness and response; and have seen their revenues topple due to 60-80 per cent decline in patient footfalls, leading to estimated operational losses of Rs 4500 crores per month (at 50 per cent revenues and 35 per cent occupancy levels). Many small hospitals and nursing homes in tier II and III cities had to down their shutters due to the challenges of liquidity and cash flow.
… while Vocal for Local revives the medtech turf battle
While Prime Minister Modi’s call for Vocal for Local and an Atmanirbhar (self-reliant) Bharat has expectedly revved up the domestic medical devices sector, others point out that the sector cannot expect to become self-reliant overnight, and that too in these pandemic times.
The local medical devices sector meanwhile believes that it can transform itself into the “second factory in the world for medical devices”, as proclaimed by Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD). Clearly following in the footsteps of India Pharma Inc’s positioning as the ‘pharmacy of the world’, there are strong merits to this goal.
But just as India’s pharma sector is paying a heavy price for being dependent on one country (China) for key active pharmaceutical ingredients, the country is heavily dependent on imports for key medical technology.
The country imports over 80 per cent of medtech used for intensive care, points out Abby Pratt, Vice President at Advanced Medical Technology Association (AdvaMed), an association of global medical technology manufacturers. The AdvaMed statement goes on to point out that these companies “are working 24/7, adding shifts and production lines to provide urgently needed, high-quality medical products to detect, prevent and treat COVID-19.” These products include diagnostic tests, protective gear and other critical medical equipment, without which India cannot hope to fight this pandemic.
Along the same lines, Harjit Gill, CEO, APACMed, a regional association of medical device, equipment, and in-vitro diagnostics industry in Asia Pacific, emphasises that local capacity is building critical and believes that the Prime Minister Modi’s ‘Vocal for Local’ is good progress toward achieving the vision to Make in India for the world.
But she also alludes to the significance of creating strong infrastructure, supportive policies for competition and innovation. She believes that for any industry to flourish, there is also a need for strong infrastructure, a supportive environment for competition, an impetus for innovation, and encouragement of the introduction of new technologies, be they indigenously developed or imported.
The COVID-19 pandemic has seen many start-ups incubated at IITs, collaborating with leading hospitals like AIIMS, and MSMEs pivot to making ventilators, PPE kits, hand sanitisers, cardboard beds for pandemic hospitals, and the like. These initiatives also a part of the Vocal for Local movement. But the sad fact is that we remain short of healthcare personnel as well as equipment of the right grade. Many more doctors and nurses are expected to die in the line of COVID-19 duty in the days to come.
Lost in this turf battle is the question. Which medical innovations serve the patient in India best? Balancing access, innovation and affordability in COVID-19 times and beyond will be a difficult argument. And sadly, with the mounting death toll across countries, one that seems tragically hollow too.