Rating agency ICRA in its latest report has stated that the performance of the hospital sector has considerably affected due to Coronavirus disease (COVID-19) pandemic, with occupancy falling from 60-70% in weeks just preceding the spread of Covid-19 to 25-30%. It also warned that revenues are expected to decline by over 50% and the high operating leverage inherent in hospital business, coupled with sharp drop in revenues is expected to translate into losses for the players in Q1 FY2021.
According to the report, the travel and visa restrictions have impacted the flow of international patients, the out-patient department visits have been significantly curtailed, elective procedures have been postponed, and in a majority of the private sector hospitals, the infrastructure reserved for COVID-19 patients remains under-utilised. It noted that the short-term outlook for the sector has turned negative due to a sharp fall in volumes - both in the OPD and the IPD.
However, ICRA continue to maintain the stable outlook for the long term as it believes the performance of healthcare companies will remain robust over the long run due to favourable supply-demand dynamics, an ageing demographic profile, the rising per capita income, increasing penetration of medical insurance, rising healthcare awareness and double-digit growth in medical tourism (excluding the period of impact of COVID-19).