Hospital revenues dwindle as non-Covid treatments drop

Hospitals like Fortis Healthcare have witnessed an overall decline in occupancy from 68% in FY20 to 55% in FY21, according to an investor presentation

Even as the Covid-19 pandemic has opened up a big business opportunity for large hospitals, their operating revenues have taken a hit due to lack of patients for regular illnesses in the fiscal ended March.

Many corporate hospitals have seen up to 23 per cent decline in operating revenues in FY21 despite an alarming rise in the number of Covid patients. This has largely been due to a reduction in non-Covid surgeries, IVF treatment, organ transplants, and fewer international patients, say analysts.

Hospitals like Fortis Healthcare have witnessed an overall decline in occupancy from 68 per cent in FY20 to 55 per cent in FY21, according to an investor presentation.

Non-Covid occupancy is also low. For instance, Manipal Hospitals says its non-Covid occupancy is now around 20 per cent. Dilip Jose, MD and CEO of Manipal Healthcare Enterprises, expects non-Covid business to rebound as coronavirus cases start to fall.

“Lifestyle diseases are increasing and people need healthcare facilities in the long run, hence expansion makes sense,” Jose said when asked why Manipal is expanding at a time when people are hesitant to visit the hospital. “People are only postponing treatment because of Covid.”

Manipal has already made two acquisitions this year.

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Fortis Healthcare had a non-Covid occupancy of 43 per cent in FY21. Surgical revenue versus non-surgical stood at 49:51, a shift from the previous fiscal when it was 56:44. In terms of revenue, it witnessed a drop from Rs 398 crore in FY20 to Rs 131 crore in FY21.

From over 31,000 cardiac surgeries to 23,000, and over 20,000 orthopedic surgeries to just over 13,000 in FY21, Max Healthcare has seen a decline in surgeries across therapies except for oncology.

Max shared in its filings that transplants dipped from over 800 in FY20 to just over 550 in FY21. Robotic surgeries fell from 600 to 160.

Analysts feel that as Covid cases drop and the vaccination drive picks up, this segment will also look up. “We anticipate this to happen in the next two quarters of FY22,” says Dr Rana Mehta, partner and lead-healthcare at PwC.

HCG's infertility centre Milann has witnessed a double-digit decline in new registrations, IVF cycles and revenue. Till the end of Q3FY21, there was a 17.1 per cent decline in new registrations over last year, a 16.4 per cent decline in IVF cycles, and 26 per cent fewer revenues compared to the last year.

The hospital noted in regulatory filings that international patients comprised 35 per cent of the normal number. It went on to state the radiation segment was a laggard.

Hospitals like Narayana Health, Fortis Healthcare and Max Healthcare mention that the international payor base has declined to around 3 per cent in FY21 from 10 per cent in FY20.