Hospital groups feel the pinch as Covid-19 puts elective surgeries on hold
Surgical cases account for 50%-60% of private hospital revenues and occupancies are now down as the focus is on coronavirus
Though the health-care sector is normally seen as a defensive investment and on the surface should benefit from a health crisis such as the coronavirus pandemic, it is also feeling a significant effect from the lockdown and other remedial measures, which have curtailed most revenues other than those from Covid-19 treatment.
Since the middle of March, when elective surgeries were cancelled, SA hospital groups have been experiencing reduced occupancies, to as low as 40% from highs of 65%-70% previously. The expectation is that occupancies will continue to fall and many hospitals may actually need to be temporarily closed if elective surgeries continue to be restricted. Surgical cases account for 50%-60% of private hospital revenue and generate a higher margin. The loss of electives for the duration of the pandemic should translate into demand deferred, as opposed to lost, but in the short term this puts pressure on income, and in the absence of being able to meaningfully cut sta...