Network expansion on hold this year, Dilip Jose said.
As lockdowns begin to be eased across the country, inpatient treatment at hospitals, which too had been impacted as have other sectors of the economy, are seeing an uptick. Dilip Jose, MD and CEO, Manipal Hospitals Group, said in an interview that the group is now at about 80% of its pre-COVID levels both in inpatient count and in revenue. Excerpts:Your experience in these past few months…Across our network, we used to see 4,500-odd patients in our outpatient departments daily; that came down to about 500-600 during the lockdown. That’s the level of impact it had.One reason is, of course, the transport and other restrictions. And second, the fear factor held people back in March and April. There was a similar reduction in inpatient numbers also.April was the worst. May onwards, we have seen some uptick for two reasons: one is that people, who had avoided going to hospitals in April, and who now could not postpone treatment any further, came into hospitals. We are at about 70% of pre-COVID-19 levels in terms of our outpatient footfalls and about 80% of pre-COVID-19 levels in inpatient occupancy. The difference in these metrics could be that those with other co morbidities could not put off getting admitted to hospitals any longer and hence may have chosen to get treated, while outpatients may be able to take more time before visiting a hospital.Elective surgeries are seeing a mixed response. Certain kind of spine surgeries are getting done; joint replacements are yet to pick up. On those elements, we are still at about maybe 60% or so of pre-COVID levels. People are tending to postpone whatever they can postpone even now, so that’s why electives are seeing a slower recovery. After April, the number patients choosing to come back for dialysis treatment has risen. So Dialysis, chemotherapy, radiation therapy… those things have come back to near normal.Large hospitals would have a fair amount of traffic coming from outside of their respective geographies. If you take Bangalore as an example, we get about 10% of our patient traffic from outside of India, maybe about 25% of our patient traffic from outside of Bangalore city and even out of the State. So, till transportation links are restored, these numbers would not really come back. Part of the reason why we are seeing surgical work not really picking up is because of these out-of-geography patients are unable to come to cities like Bangalore or Delhi for surgical work or high-end intervention work.Revenue went down to 35-40% of our pre-COVID-19 level in April. Now, they are back at 80% of our pre COVID levels. We have stopped bleeding cash at this point. But, for a tertiary-care hospital such as Manipal, about 70% of our costs are fixed. This is related to our people. When revenue came down dramatically, and costs remained fixed, we lost cash in April. We’ve deferred certain kinds of expenditure. We have stopped bleeding as an enterprise, but we are nowhere near where we were pre-COVID.We have been able to negotiate some rental waivers from our landlords; several of our hospital buildings are on lease. Hospital lease is a major element of cost. and have got some reduction in annual maintenance amount with equipment suppliers. And on the cash flow side, from people who are not able to give us a waiver or reduction, we have been able to get deferred terms, so that we could pay them later in the year.Banks gave us the moratorium for the first quarter. We have now started repaying; we only availed ourselves of it for the first quarter. Apart from the management team taking a salary cut, our doctors also took a matching cut in pay.Would digital initiatives help protect against revenue loss in future waves of COVID-19 or other viruses?We have come out with a healthcare-at-home app for patients. Patients can do a lot through that app – consult doctors, order medicines, order home collection of samples and the like. Even after the peak infection for Covid passes, it may remain in the community and given the heightened sensitivity around this whole thing, people may prefer to digitally access healthcare, if possible. The follow-ups to consultation can be digital. Some medicines may need to be taken lifelong. This is an opportunity for us to remain engaged with them and also continue to provide home health care or home care wherever required. So, the digital gateways to accessing healthcare are here to stay. This also helps us expand our footprint beyond our State or outside of the country. From a revenue perspective, the digital channel may not replace lost revenues, but maybe partially help recoup some of our recent losses.Going forward, wWe would hope that the digital channel would contribute to maybe about 10% of our revenue. But, revenue for the hospital actually comes through inpatient or high-end clinical work, which you really can’t be doing through the digital route. Volumes may grow, but even then I don’t think it’s going to be anything more than 10% even when it fully shapes up. Right now, it’s a small fraction.How about capex?One part of our capex is the replacement capex, where equipment at the end of its lifecycle has to be replaced to help maintain continuity. Second comes the critical, medical-related procurement of additional ventilators, ICU equipment, with occupancies going up and all that. Critical medical equipment is what we have prioritised. We have temporarily put off expansion of the network. For this year, the expansion is within the existing facilities.Did you ramp up ICU beds?Actually, we have a fair amount of critical care capacity. We didn’t have to do too much apart from accelerating procurement of some ventilators. In ICUs, the differential is the people, not really the infrastructure. You might procure 20 ventilators and put up 20 more ICU beds. But if you don’t have intensivists, or in critical care, trained nurses whom you can’t produce overnight, that will remain fairly meaningless. Here, we focused on on was to ensure ramping up of testing capabilities in our network and ensure [ensuring] that all beds had oxygen lines and the like.Many COVID-19 patients do not need critical care, they need oxygen.If we can give adequate care like this, it takes away the burden from the ICU; then genuinely sick patients can go to the ICU. We also created additional capabilities in a high-dependency unit, which is a step down from an ICU. So, a patient who is not so sick but needs higher monitoring can be treated in these units.Is it tempting to invest in equipment, ICUs or even a step down unit in anticipation of future waves of viruses?Typically, a tertiary care hospital would have about 20% of its total beds as high-end or critical care beds. I don’t think COVID would change that dynamic. Even in this pandemic, over these past few months, awareness levels have grown and patients have realised they must get a quick review or seek medical opinion early if they suspected something was wrong. So that got established by maybe about early June or so. So, the number of people who required very high end care actually dropped. You don’t see the kind of headlines you saw earlier about bed shortages, etc. So that mix needs to change hence does not have a case for significant investment.Industries such as IT are looking at about 20-25% of their workforce working from home, and that is at least a fifth of about 4.2 million workers who could return to their home towns in the hinterland without affecting work prospects. Will that create tertiary care demand in these locations?Maybe tier-3 locations always had an opportunity. But I don’t think that is linked to this reverse brain drain that we see now. If you look at the total proportional population in a tier-2 or tier-3 town, and the number of people coming back from a city to live there, I don’t think the fresh influx is enough to make a demographic change now for you to justify a hospital. All hospitals have out-of-geography patients coming in. If there are enough patients coming in from West Bengal, then it makes sense for a brand to have a hospital there. This work-from-home is not a significant factor in taking a call like that. And second, youngsters who are hopefully well educated, and taking care of their health, are unlikely to be part of the population that requires tertiary care.Are you planning on a facility in Kolkata?That eastern region is of interest to us; we are on the lookout for an appropriate facility that we can add to our network.When you go for a new facility, would you prefer rental property?We look at both options. Rental property would give you quicker access to the market, because you’re saving time for constructing and getting all the approvals for the building, but often, it may not be built to suit your needs. We plan to build one more hospital in south Bangalore that we would want to construct ground up,Have you acquired the property?We would not own the building; we are getting somebody to build it for us and so that we don’t have to own the land and we will take it on long lease. The plan is to start ground work in early October. As to when it would begin operations, about 24 months from then is the typical pipeline.With the pandemic making survival difficult for smaller hospitals, would you look at acquisitions?Their economics are different from that of a large chain. If they were of a reasonable size – say, 200 beds – we could step in to acquire them but a hospital of that size typically has the ability to survive cash flow issues that come with a shutdown.What alarms you as a CEO of a hospital chain today?The progression of other diseases is of concern. The fear factor for people has made them avoid hospitals, and we are witnessing a situation where people who could have been treated with ease or treated with limited issues are now getting to a situation where they need more intensive engagement.India used to see about 750-800 kidney transplants a month. This is a life-saving procedure. In April, it went down to some 20-25 transplants that month; even now, it is less than 100. So you can imagine what is happening to the remaining people who need treatment but are waiting. Till August, India lost 40,000-45,000 people to COVID. To place that in context, gastroenteritis kills three lakh people in India every year. TB kills about 3-4 lakh every year. This is not to dilute the value for the treatment of the highly contagious Covid, but we should not neglect treatment for other diseases.
