With the aim of scaling up medical infrastructure targeting underserved areas, the government has declared a Rs. 50,000 crores guarantee scheme. Under the same, National Credit Guarantee Trustee Company Limited would provide guarantees to entities expanding or setting up new healthcare facilities in cities other than the eight metropolitan cities.
While the guarantee coverage for aspirational districts is 75 per cent for both new projects and expansion, the same for the other districts is 50 per cent for expansion and 75 per cent for new projects. The interest rate on these loans will be capped at 7.95 per cent and the maximum loan which can be availed by any entity is capped at Rs. 100 crores. The guarantee duration would be up to three years.
|Exhibit 1: Details of guarantee scheme for healthcare sector|
|Total amount for which guarantee cover is being provided||Rs. 50,000 crores|
|Guarantee cover for aspirational districts||75 per cent for both new projects and expansion projects|
|Guarantee cover for other districts||75 per cent for new projects and 50 per cent for expansion projects|
|Maximum loan which can be availed under the scheme||Rs. 100 crores|
|Interest rate cap for loans||7.95 per cent|
|Guarantee duration||Up to three years|
Under the Covid Emergency Response and Health System Preparedness Package announced in April 2020 with an outlay of Rs. 15,000 crores in FY2021, the government has set up ~3,900 Covid-dedicated hospitals, ~7,900 Covid health centres, 9,954 Covid care centres and increased the oxygen-supported beds by 7.5x, isolation beds by 42x and ICU beds by 45x (~1.1 lakh beds).
To augment the current Covid-19 care infrastructure and considering warnings from healthcare experts that the third wave may affect children adversely, the government has also allocated Rs. 23,220 crores (for one year) under a new scheme focused on short-term preparedness with special emphasis on children and paediatric care/paediatric beds.
This scheme would be used to fund short-term HR augmentation through medical students and nursing students, increase availability of oxygen beds, ensure adequate availability of equipment and medicines, and enhance testing capacity and supportive diagnostics.
|Exhibit 2: Details of deployment of Rs. 15,000 crores towards health infrastructure for Covid-19 treatment|
|Category||As on March 31, 2020||As on March 31, 2021|
|Dedicated Covid health centres||–||7,929|
|Dedicated Covid care centres||–||9,954|
|Oxygen supported beds||50,583||~3.8 lakh|
|Isolation beds||41,000||~17.2 lakh|
|ICU beds||2,500||~1.1 lakh|
While hospitals have witnessed an all-time high occupancy in Q1 FY2022 with resurgence in Covid-19 cases and revival of elective surgeries in recent weeks, revenues of hospitals are expected to witness healthy expansion in FY2022. However, with Covid ARPOB (Average Revenue Per Occupied Bed Day) remaining 30-40 per cent lower than non-Covid ARPOB for most hospitals and the evolving nature of the pandemic, margins of hospitals would remain a key monitorable in the short-term.
Furthermore, while relatively lower-interest backed loans are available through the previously announced RBI on-tap liquidity window of Rs. 50,000 crores and ECLGS 4.0 and the current guarantee scheme, hospitals will need to evaluate the demand prospects and impact of additional loans on their balance sheets before incurring capital expenditure for expansion.