One of the most debated question these days is how hospitals can cope up with the loss of business during the Covid-19 lockdown and how the post Covid scenario is likely to shape up.
It indeed has been challenging times for the healthcare industry. On one hand the industry is struggling to serve the Covid infected, and on the other hand, it is struggling to tide over the financial difficulties caused by Covid.
Revenues of hospitals has got limited to urgent and emergency care, and the number of elective surgeries has drastically reduced. It is estimated that ~6 Lac elective surgeries have got ‘postponed’ and this could take 8 to 9 months for the hospitals to clear this ‘backlog’. So, in a way, it may be a case of deferred business and not of lost business.
Unfortunately, costs do not get deferred in the same way. Hospitals must still incur their fixed costs, and this generates both the margin pressure on them and creates cash flow issues.
Short term actions for medium term sustainability
During the slow down period during Covid, hospitals have been exploring ways and means to reduce their operating costs and defer their cash out flows to a future period. Hospitals have negotiated reduced rentals with balance amount being deferred by few months, implemented salary cuts to varying extent across their cadre (higher in the hierarchy, higher the salary cut), modified doctor remuneration towards fee for service model and renegotiated maintenance contracts. To retain cash and improve cash flows, the hospitals have reduced inventory, worked aggressively on realizing receivables, managed the payables and deferred capital investments by 3 to 6 months.
At the same time, to boost the top line, hospitals are re-considering their short-term business focus. Some have converted themselves for Covid care. Many others have aggressively implemented home-healthcare which include implementing video-consultation solution to serve the patients wherever they may be. We have enabled many hospitals with our home-healthcare platform and have seen patients scheduling video consultations with expert doctors from all parts of India and even abroad.
Medium term outlook and preparing for the recovery
Patients will continue to be concerned about coming to the hospitals for treatment. So, while the deferred demand would present a huge opportunity to make up for the losses, hospitals would need to prioritize couple of focus areas:
1. Establishing trust that hospitals are safe to visit for elective surgery
2. Establish strong protocols to quickly contain the spread of infection if a patient turns out to be Covid positive
3. Maintain connect with your patients and keep your stakeholders, such as referring doctors, engaged
4. Invest into tele-health solutions: Fear of Covid is likely to stay in the mind of people for some time to come. Hence it would be important for hospitals to set-up easy to use tele-health solutions for its patients.
5. Gear up to cater to anticipated surge in demand for healthcare services to clear the case backlog
6. Take a hard look at their cost structures: Any attempt by the hospitals to increase the price (applicable to self-paying patients) would be scrutinized very closely. To recoup the financial loss, hospitals would need to aggressively act on reducing costs.
Some initiative could include optimizing formulary, managing consumption, rationalize manpower deployment models and use technology to make things better faster and cheaper
Ride the wave of emerging longer-term trends
Pandemics are caused by two agents – viruses and people. The experience during the last few months is likely to change people’s attitude towards hygiene, health, and healthcare. Two trends standout:
1. Part of healthcare may go ‘tele’ or virtual: The lockdown period during Covid has driven acceptance of remote working and enabling technologies among the masses – be it work-from-home or online school at home. Sensing the need to enable tele-health during the lockdown period, government issued guidelines and made tele-medicine legal in India. Now it is up to the healthcare providers to:
· Integrate tele-medicine and virtual health into end-to-end patient care pathways – e.g. care pathways which avoids hospital visits but without loss of revenue to hospital and also saves time and money to the patients.
· Weave in tele-health into new products and services – e.g. create digital front doors, digital first services, e-clinics
2. Patient centricity enabled by advanced analytics and AI: Hospitals got bad press about inflated treatment bills to patients and poor quality of care. There is an increased need to further stoke up patient centricity and imbibe it in DNA of hospital operations by utilizing new age technologies like AI, ML and AA.
For example, a simple way to start would be revamp patient feedback system – most hospitals have one, but current system hides more than they reveal. This is where advanced analytics and AI comes in – cutting by g away personal biases, providing the pulse of what patients feel and suggesting actionable insights to the management.