Hospital Business Downturn, Cash Flow Pressure, Upstream Supplies Companies Return Cycle Extension

The cash flow of the medical system is affected by the epidemic and continues to be transmitted to the upstream related enterprises. The return rate of some consumables companies was affected, and the order volume was also reduced.

Recently, according to the official micro message of Nanjing medical insurance bureau, the Nanjing Municipal Health Insurance Bureau issued the notice of the Municipal Medical Security Bureau on promoting the centralized purchase and Centralized Settlement of medical consumables (drugs) by medical institutions and pharmaceutical enterprises (hereinafter referred to as the notice), which will extend the periodic settlement of medical consumables.

The circular requires that in order to alleviate the impact of the new crown pneumonia epidemic on the operation of designated medical institutions and production (distribution) enterprises, it will temporarily extend the centralized purchase and acceptance of medical consumables online to online payment Centralized Settlement for no more than 30 days or 60 days, and extend it to 3 months. For medical consumables purchased with quantity, the medical insurance fund is prepaid to the designated medical institutions with the quantity purchased at the 30%-50% ratio of the total cost, so as to accelerate payment of goods and pay for the quantity. In principle, 2 months after the volume purchase results are determined, the prepaid payment should be paid to the relevant designated medical institutions.

The head of a generation of related equipment also told reporters that hospitals such as Zhejiang and Shandong had to start tendering after the end of the year, but all of them stopped because of the outbreak.

Hospital cash flow is tight

A questionnaire released by the medical profession shows that 87.3% of hospitals are suffering from the financial pressure brought by the epidemic. Among them, labor cost, protection material cost and house water and electricity cost are the main sources of pressure, accounting for 68.4%, 15.2% and 7.6% of the cost respectively.

A hospital operation questionnaire survey conducted by Aili, a third - party hospital management consultant in Guangzhou, shows that since February this year, the number of out-patient clinics has fallen by more than 40%, accounting for 78.48%. At the same time, the hospitalization and operation volume of hospitals also declined correspondingly. Data show that nearly 60% of the hospital visits and operation volume dropped by 50% and 60% over the same period.

The sharp drop of hospital business brings the pressure of cash flow. The survey also showed that only 31% and 27% of hospitals in public hospitals could get subsidies or loan financing channels from finance and banks.

On the other hand, the expenditure of hospitals is not small during the epidemic period. Medical institutions need to buy protective devices such as medical masks, blindfold, protective clothing, etc., to transform the fever clinic, increase the purchase of ventilators and other treatment facilities, and build scientific research facilities such as testing laboratories. According to the previous director of a hospital, the total investment of treatment equipment is about 30 million yuan, and the total investment of scientific research equipment is about 20 million yuan.

Zhuang Yiqiang, director of the hospital management research center in Aili, Guangzhou, told the twenty-first Century economic news reporter that during the epidemic period, hospital revenue dropped significantly, while the fixed expenditure for protective clothing and disinfectant was also greatly improved. Both public hospitals and social medical hospitals are faced with short-term financial pressure.

Zhuang Yiqiang told the twenty-first Century economic news reporter that, according to the public hospitals' period of settlement for medical consumables, according to different competitive environment, the exclusive products with strong competitiveness should be at least three months, and the general category settlement period is six months to one year. Hospitals usually relieve some pressure by extending the reimbursement cycle.

Medical consumables enterprises are divided into two categories, one is non new crown pneumonia epidemic related categories, such as scaffolds and artificial joints, which represent high value consumables with a unit price of up to 10000 yuan, which are mainly imported joint ventures, and low value consumables such as cotton and cotton balls. The Department of Stomatology, Department of ENT and ophthalmology are affected more by specific departments, and their corresponding consumables enterprises are also affected more. The other is related to new crown pneumonia, such as respirators, respirators, etc., and related businesses are still strong cash flow parties, and are less affected by the epidemic.

Upstream enterprises are affected

For upstream enterprises, the long repayment cycle is not unusual for pharmaceutical consumables enterprises, and the reduction of the "cake" share is even more difficult.

A pharmaceutical circulation industry in Southern China told reporters on twenty-first Century economic report that as a purchasing agent, public hospitals must be strong in purchasing process of consumables, equipment and medicines, so the procurement process always first supply and then pay, and the slow repayment of hospitals has become the norm. Hospital reimbursement is slow based on hospital operation. In addition to self financing items, medical expenses and social security payments are involved. The health insurance bureau usually rechecks whether it is illegal in a year and a half to two years, and if it breaks the rules, it can refuse to pay the money. Under normal circumstances, the medical insurance part may be paid for a year or even longer before the hospital receives the money back. Therefore, the reimbursement of suppliers to hospitals will be delayed for three months, usually at least one to two years. In order to maintain liquidity, suppliers are also quite familiar with the transfer of accounts receivable to other suppliers, the formation of triangular bonds or the withdrawal of financial institutions.

This year's new crown pneumonia epidemic has turned this norm into a "magic spell" for some medical device companies.

On the one hand, under the pressure of hospital funds, the rate of repayment is even slower. While upstream companies maintain their own operating costs, short-term receivables are also limited and liquidity risks increase. On the other hand, hospitals with cash flow shortages can only reduce the number of normal tenders, leading to the stagnation of upstream medical business.

As early as mid March, the Chinese government procurement network published a "scrap / termination notice of a unit's medical device procurement project". After that, local procurement networks have also issued a notice on the termination of procurement projects. In April 20th, the Luoyang municipal government procurement network said that a hospital in Luoyang would terminate the first batch of medical equipment procurement projects in 2019. On the same day, the Chinese government procurement network showed that the Navy No. 971 hospital and the third people's Hospital of the Xinjiang Uygur Autonomous Region also announced the termination of some procurement projects.

The founder and CEO of the joint medical group of Weill hospital, Guangdong, told reporters on twenty-first Century economic report: "for the upstream medical consumables enterprises, the total loss of direct business revenue is greater than that caused by the slow repayment time, and the turnover of the hospital directly reduces the demand for consumables, and the whole plate decreases. At present, enterprises are also actively helping themselves, such as qualified enterprises to sell more masks and other ways to get more room for survival.