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Hospitals' revenues to swell over demand surge for Covid treatment

The hospital sector witnessed a spike in Covid-19 occupancies during Q1 FY22 in line with the active cases in India that touched an all-time high in May 2021, peaking at more than four times the first wave

Hospitals revenues to swell over demand surge for Covid treatment
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Hospitals' revenues to swell over demand surge for Covid treatment

Mumbai: The hospital sector witnessed a spike in Covid-19 occupancies during Q1 FY22 in line with the active cases in India that touched an all-time high in May 2021, peaking at more than four times the first wave. The overall occupancy levels were supported by longer average length of stay for Covid patients even as localised lockdowns resulted in a sequential decline in non-Covid occupancies to a certain extent.

The blended occupancy of both Covid and non-Covid patients for ICRA sample set stood higher at 64.2 per cent in Q1 FY22 (against 36.9 per cent in Q1 FY2021 and 58.8 per cent in Q4 FY21), an ICRA report said.

Most multi-speciality hospitals derived 25-30 per cent of their Q1 FY22 footfalls and revenues from Covid-19 treatments and vaccination drives. While the Y-o-Y revenue growth of 129 per cent in Q1 FY22 for ICRA sample set was optically high aided by the low base, the Q-o-Q revenue growth was also healthy at 15 per cent. However, higher share of revenues from Covid treatments resulted in a 4.2 per cent Q-o-Q contraction in the average revenue per occupied bed (ARPOB) in Q1 FY2022, even as complex nature of infections and higher proportion of patients requiring critical care treatment and oxygen support aided Y-o-Y growth of 8.7 per cent in ARPOB.

Operating leverage benefits in addition to incremental revenues and margins from vaccination drives and Covid tests resulted in an improvement in OPM for ICRA sample set to 19.3 per cent in Q1 FY22 (against -9.3 per cent in Q1 FY21 and 18.4 per cent in Q4 FY21), the highest witnessed by the sample set in the last few years. This was despite absence of revenues from international patients.

MythriMacherla, Assistant Vice President and Sector Head, ICRA, said: "While both in-patient (IPD) and out-patient (OPD) footfalls declined sequentially in Q1 FY22 on account of Covid 2.0, footfalls were far higher than Q1 FY21, wherein hospital operations were adversely impacted on account of the nationwide lockdown. Most hospitals have witnessed sequentially higher footfalls in July and August 2021 compared to Q1 FY22 levels." "To assess the on-ground sentiments and understand the outlook for FY22, ICRA conducted a survey of its rated hospital entities. Key findings suggest that with strong performance in Q1 FY22 and expected benefits from pent-up demand for electives, respondents expect occupancies in FY22 to be better than FY20 levels and ARPOB to remain range bound in FY22 despite higher contribution from Covid.

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