Jobs at stake as drop in revenue jolts hospitals

Private healthcare providers have warned they could be forced to lay off workers due to loss of revenue.

As the coronavirus distresses other sectors of the economy, private hospitals say the cash crunch has mainly resulted from a Ministry of Health directive suspending elective surgeries, which account for half of their revenue.

Delayed National Hospital Insurance Fund (NHIF) payments, falling outpatient numbers and rising costs of medical supplies are other factors that have ruined the finances for private hospitals.

Abdi Mohammed, the chairman of the Association of Private Hospitals said the institutions had lost their lifeline made worse by reducing numbers of patients.

Global demand

“Many doctors and owners of health facilities are now struggling to meet payroll and other expenses. The prices of medical consumables have in some cases increased by 1000 per cent due to shortages and global demand,” Dr Mohammed said.

Private hospitals partly blame the cash crunch on the National Hospital Insurance Fund, which owes hospitals billions and is not approving payment for procedures it does not regard emergencies, interviews with the management of a number of hospitals revealed.

Doctors said they were doing volume reduction and only performing essential procedures. In certain areas such as dental procedures and ENT where the risk of infection was high, there was almost a complete shutdown.

DN Bansal, the Chief Financial Officer at Mediheal Hospital, said the coronavirus has had a huge impact on the hospitals. For instance, beside the reduction in the number of patients, they were procuring protective equipment at higher rates. He said the hospital had seen reduction in revenues since the pandemic began as a result of fewer patients, shorter working hours and higher costs of equipment.

“NHIF is the primary player in the healthcare industry and it owes hospitals a lot of money, so the government should direct them to pay some of the money they owe to give support to the hospitals,” Bansal said.

He added that the government should also direct NHIF to approve the elective surgeries. Presently, NHIF is not approving payment for procedures that are not listed as emergencies, instead advising the patients to wait until the coronavirus pandemic is dealt with. While hospitals still perform urgent and emergency surgeries, some such as operations for early-stage cancer, joint replacements, kidney transplants, dental procedures and eye surgeries such as cataract removal have been halted.

Tight spot

Hospitals said the directive was unprecedented and had an effect on their revenues.

“If the situation keeps up for the next two or three months then we are going to see a lot of hospitals in a tight spot,” Bansal said.

The hospital also said it had been affected by the closure of borders and the grounding of planes since it catered to patients from the region who needed kidney transplants.

“There are patients from the region who come to Kenya for these surgeries and further to that most people come to Nairobi for treatment, therefore with proper protocol followed, the government should allow movement so that people can access the hospitals,” he said.

Timothy Olweny, the Director of Medical Services at Evans Sunrise Medical Centre in Nakuru, said elective surgeries and procedures accounted for half of the revenue and was central in settling the fixed costs of the facility.

“That means you have hospitals which have a fixed cost that does not vary and rent and salaries that do not change depending on the volumes you are dealing with,” he said.

“If it gets to a point where the revenues go below what the operational costs are then severe cost cutting measures have to be put in place. That means some hospitals might have to lay off staff or send some on leave and that goes counter to what we are trying to achieve. We are trying to ramp up capacity so that we are more prepared.”

As a result of the halting of elective surgeries, some patients who were lined up for procedures such as kidney transplants have been left languishing. For instance, Nairobi Hospital said earlier in the month that unless it was an emergency, the hospital had paused performing kidney transplants.

But doctors say that while the situation would help to free up bed space in case coronavirus cases escalate, it would be disastrous if patients waited on some of the surgeries.

“We need to review that decision and let people still get healthcare. For instance, if we postpone a biopsy because it is not an emergency procedure, how about a month or two later when that person has got cancer. Have we helped our cause? If you were to say that we don’t do elective procedures and only provide primary healthcare, the objective behind primary healthcare is to forestall issues before they become serious then we are sitting on a time bomb,” Dr Olweny said.

Some of the remedies that the Kenya Association of Private Hospitals is suggesting is to enforce pending bill settlement by NHIF and other insurances to improve hospitals’ financial status and for hospitals to be given grants as part of the economic stimulus and health system preparedness.