Government should focus more on public healthcare & create manpower in the segment: Viren Shetty, Narayana Health

Viren Shetty, Executive Director and Group COO, Narayana Health, talks about March quarter results, recovery in the segment, debt & fundraising plans and expectation from the government among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: March quarter numbers are slightly weak as revenue has dropped by almost 3% and PAT has declined by 67% however EBITDA has gone up by 7.2% and margin stands at 13%. What are the highlights of the quarter and what led to a decline in numbers? 

A: Only one excuse, COVID. Patients were not able to come to the hospital in the last two weeks of March as a nationwide lockdown was announced. We also have an international hospital in the Cayman Islands, where a lockdown was announced in early March due to which the hospital was shut down. We have faced difficulties at our hospitals in April and May but there is an improvement in it since June and we are seeing that the normal run rate of patients has increased from 20% to 40%-50% and is still around 50% of the regular levels. In the time it should improve but the COVID lockdown has affected the healthcare sector quite seriously.   

Q: When do you expect recovery and when do you think that things will get back to normal to pre-COVID levels? How things are changing since Lockdown 1.0 and what impact is it having on the business?

A: We are not COVID-experts. Those who were experts were saying that it will be dull in summers and will peak in winters. But it is not happening that way and cases are constantly increasing maybe not increasing very exponentially but it is increasing. So honestly, we don’t know. ICMR has published a report that November is the month when we will at the peak. Previously the peak was in June than it moved to August and now they are saying that the peak is in November. But it doesn’t matter. I don’t think that lockdown is practical and I don’t think that we should not shut down the economy because the COVID number will just keep increasing. So, we have to do the work that should be done and patients are accepting that there is a chance of risk but the more chance of risk is if you don’t get the operation done and so people are accepting doing online OPD, we are putting clinics and lot of precautions and put all the doctors in full PPE care and so we are building the confidence that even though there is a COVID everywhere, you come to the hospital, we will take care of you because you cannot delay the procedures. When it will finish, we really don’t know.

Q: COVID has had an impact on operations. So, what are your outlook and guidance? If I talk about the CapEx that were lined up in the pre-COVID world then are they on track or there can be certain changes in it?

A: Has been freeze. We are managing the day-to-day maintenance CapEx, which is anytime monotonous replacement or equipment is there. But we have cut down to the bare minimum simply because there is not that much footfall and occupancy. The cash situation is very precarious, so it doesn’t make any sense at this point to go for a larger CapEx then.

Q: What about debt reduction what is your guidance on it and do you think that there can be a need to raise more funds, if yes, how will you do that?

A: We do not need it so much because we have Rs 100 crore cash from FY 20, which we use for managing the working capital. We have also brought back $7 million from our Cayman Islands subsidiary. There is another $8 million there, which whenever required, we may bring it back. So, we haven’t really borrowed a lot of money but starting from June, we may borrow in the magnitude of Rs 10-20 crore per month, which is quite manageable as we have enough lines of credit with major banks. It is not serious and our debt to equity ratio is very low compared to most of the people in the industry. So, debt wise, we are quite comfortable.

Q: How many hospitals do you have and what were plans in terms of expansion? Also, update us about the number of hospitals are treating COVID and do you have enough arrangement and set up for treatment of another disease?

A: We have 20 hospitals in India, one in Cayman and few heart centres and clinics outpatient centre. As far as COVID is concerned, then almost all of those are seeing COVID patients, except in few places like Jamshedpur and Shimoga, where such many of COVID patients are not available. But by and large, all the hospitals are seeing COVID patients as it is there everywhere. Going forward, we may not think to expand very much in this year but year after that what we see that this cannot last forever and eventually the number will come down and become manageable, there will be a vaccine. Then we look at expanding in our co-geography.

Q: Medical tourism has a contribution of around 10% in your revenue but the international travel and tourism are restricted. So how it is going to impact your business can you tell the time by when it will reach a breakeven level?

A: That 10% is now proper zero as it is completely dependent on international flights. So, whenever the international flight opens it will start to recover but until them, it is very clear that no flights mean zero international revenue. And, when the recovery happens already we are seeing a lot of interest from patients in Africa, Bangladesh and Middle-East who want to come but they say that let the flight come, then I will come. So it will bounce back very fast as soon as the flights reopen.

Watch Zee Business live TV below:

Q: What is your expectation from the government in terms of what kind of role it should play particularly in the healthcare sector as India is quite behind if we talk about the healthcare infrastructure, which has been recognized more amid COVID crisis?

A: If you ask us then my personal belief is that the government should not give any support for the private sector. I think the government should really focus more on spending more money on public health. It should not give any bailout or any other money towards improving the private hospital because it is not required. There is a large group of people who can pay and access healthcare in private. If the government has to spend, if it has very little money to spend then it should spend it on education, more doctors, more medical colleges, more nurses and more technician because there is a big shortage. Everyone is saying that we need 1 lakh to 2 lakh to 10 lakh beds but where are the doctors; there are no doctors, people are not there who can manage ICU, there are no nurses who can take care. So, the government should focus entirely on producing more manpower. That is the support that will help not just us but the whole country.