Returns on cath labs at Apollo Hospital halved with stent price cut: Report

Mumbai: Apollo Hospitals Enterprise Ltd has reported a 50 percent decline in returns on investment (RoI) of cardiac catheterization laboratories (cath labs).

RoI have halved following the government’s decision to slash prices of coronary stents in February this year, said a Media report in Livemint.

Cath lab is the unit of the hospital for performing angioplasty surgery on cardiac patients to open blocked arteries which accounts for 25% of the hospital's revenue.

During an interview chief financial officer, Krishnan Akhileswaran told Mint, “I make single digit RoI of about 8% on cath labs. Earlier it was 15-16%, which itself was not very high. Now at 8%, banks will also not fund me, forget the investors. Unfortunately, the government is of the opinion that we are profiteering out of this (stents, angioplasty). It is not correct.”

Talking to the daily he further added that the stent price cut would lead to Rs 40 crore hit on earnings before interest, tax, depreciation and amortization (EBITDA) of the company in the year ending 31 March.

Medical Dialogues had earlier reported that in a move to provide affordable treatment to the patients, the National Pharmaceutical Pricing Authority (NPPA) slashed the prices of coronary stents by up to 85% on 13 February 2017, fixing the ceiling price of bare metal stents at Rs 7,260 per unit and that of drug-eluting stents and biodegradable stents at Rs 29,600 per unit.On April 1^st this year, the prices were revised to Rs 7,400 for bare-metal stents and Rs 30,180 for drug-eluting stents adjusting to inflation.

Read also: Stent Prices Capped at Rs 29,600, profits slashed

Speaking of the daily, Akhileswaran said, “Services were cross-subsidizing the price of stents and while stent price has come down, we have not really completely re-priced on the services front until now. But eventually, we will do it as there is no other choice. Otherwise, how do I take care of my people and other costs? It is not something that is sustainable.”

“Government should understand the total cost of the surgery to the patient and see if that is what we are doing rightly or no. Unfortunately, just bringing an arbitrary price regulation on one side of the equation doesn’t really make sense,” he added.