At all costs

IN THE FIRST WAVE of Covid-19, which struck India in the first quarter of 2020, all listed hospitals across the country reported heavy loses and a sharp decline in revenue. Smaller hospitals laid off staff and cut salaries to contain costs. During the second wave this year though, there was a sharp turnaround, with most listed hospitals showing good profits. This was true not just for India but for hospitals in the Middle East as well.

So what changed between the first and second wave? How did hospitals overcome the crisis? These and other such questions were answered at the ‘Sustaining quality and affordable health care in the post-Covid world’ webinar, held by THE WEEK and Medi Q Healthcare Group.

On the panel were Latesh Sen, group chief financial officer, Medi Q Healthcare Group, a Dubai-based company that provides organisations with comprehensive health care advisory services; Dr K. Hariprasad, president, Apollo Group of Hospitals; Dr Harish Pillai, CEO, Aster India, Aster DM Healthcare; Davendra Singhvi, group CFO, Saudi German hospitals, UAE; Sameer Agarwal, group CFO, Manipal Health Enterprises Pvt Ltd; and Cdr Navneet Bali, regional director-north, Narayana Health.

While Hariprasad agrees that the initial period of Covid-19 was total mayhem, what eventually worked was a better understanding of the virus, followed by a better response to fight it. “A study in our own hospital found that among health care workers who were vaccinated, the number of people who needed hospitalisation after turning positive was less than one per cent and there was no mortality in these patients,” he says. “And so, vaccines did work and helped health care workers attend to patients well.”

For Manipal Health, which has acquired Columbia Asia and Vikram Hospitals, the pandemic provided an opportunity for expansion. Also, the finance function there went digital, says Agarwal. “That way we conserved cash,” he says. “We did supply chain and cost optimisation at least thrice a year and that’s why we have not passed on any cost increase [to the patient].”

Narayana Health did not bother about profit margins, says Bali. “We spoke to doctors to see if we could tweak the settings on ventilators to give optimal oxygen to patients as a way of cutting costs,” he says.

Hospitals in the Middle East, meanwhile, tried to make health care accessible to all. Pillai says hospitals in Dubai work on a 100 per cent health insurance model, which means more pressure on hospitals to be cost-efficient. “In India, as in my own hospital in Kochi, the pay for treatment is 70:30, where 70 per cent will be cash or out-of-pocket payment and the rest will be different forms of credit,” he says. By 2025, he predicts a decline in out-of-pocket expenses in India, owing to a massive growth in private health insurance.

Singhvi agrees, pointing out another difference: “The health care spending of the UAE is around 4.8 per cent; in India it is around 1.3 per cent of its GDP.” Also, visa and investment regulations have been relaxed by the UAE, thereby increasing the scope of medical tourism.

With the virus here to stay, Sen says we need to devise strategies to keep the cost of care under control, and that makes the role of chief financial officers more important. She uses the example of Kaizen, a Japanese term meaning constant improvement with zero waste, as a way for hospitals to continue providing quality health care at affordable prices.