ICRA announced on Tuesday that it anticipates the revenues for the hospital industry to grow by 8-10 per cent in FY24, due to a rise in lifestyle diseases, increased awareness, and penetration of health insurance. Meanwhile, the operating margins are projected to remain at around 22 per cent, supported by cost optimisation and operating leverage.
ICRA's analysis includes the hospital business of nine listed companies: Apollo Hospitals Enterprise Limited, Aster DM Healthcare Limited (India business only), Fortis Healthcare Limited, Healthcare Global Enterprises Limited, Krishna Institute of Medical Sciences Limited, Max Healthcare Institute Limited, Narayana Hrudayalaya Limited, Rainbow Children's Medicare Limited, and Shalby Limited.
The rating agency expects the aggregate occupancy for its hospital industry's sample set to remain strong at 60-65 per cent in FY24, building on the prior year's 65.1 per cent. This is attributed to sustained demand for healthcare services and ongoing market share expansion among organised players. A moderate growth of 5-7 per cent in the average revenue per occupied bed (ARPOB) for FY24 is foreseen, following a 10 per cent increase in FY23, considering the elevated baseline.
ICRA explained that the ARPOB growth for the sample set would be supported by "improving the specialty mix, with a focus on cash and insurance patients, and annual price revisions by companies to offset cost inflation."
Mythri Macherla, Assistant Vice President and Sector Head at ICRA, stated that the companies in ICRA's sample set have announced considerable expansion plans, supported by sustained improvement in demand. "These include the addition of over 8,400 beds and an upgrade or refurbishment plan over the next four years." Macherla continued, "This translates to over a 26 per cent increase in capacity compared to March 2023 levels." Moreover, some prominent companies in the industry are exploring inorganic growth opportunities, which could lead to incremental beds being added through mergers and acquisitions.
During the financial year of 2023, the in-patient footfalls within ICRA's examined subset showed a consistent sequential improvement across all quarters, except for Q3 FY23, a period marked by the postponement of elective surgeries during the festive season. This positive trend is attributed to a resurgent medical tourism sector and evolving patient preferences favouring larger hospital establishments, driven by expanding insurance coverage.