Corporate hospitals are set to achieve 8-10 per cent revenue growth and strong margins in the current financial year, ICRA Ratings said in a report on Thursday.

The rating agency has maintained a stable outlook for the sector, stating that improvement in operating leverage, coupled with continued cost optimization and digitization measures, should support a healthy operating margin of 22-23 per cent in 2023-24 (FY24). are supposed to.

The report is based on a sample of the agency’s nine listed hospital chains – Apollo Hospitals, Aster DM Healthcare, Fortis Healthcare, Healthcare Global Enterprises, Krishna Institute of Medical Sciences, Max Healthcare, Narayana Hrudayalaya, Rainbow Children Medicare and Shelby Hospital.

It added that higher revenue and margin expectations are driven by rising incidence of non-communicable lifestyle diseases, rising per capita expenditure on healthcare, increasing number of health insurance coverage and growth in medical tourism.

The overall occupancy is likely to be 63-65 per cent in FY20, as against 65.1 per cent in FY23, the report said.

Average revenue per authorized bed (ARPOB) is expected to be 5-7 per cent of total revenue in FY24, as against 10 per cent in FY23.

Overall, the rating agency estimates revenue to grow by 8-10 per cent on account of 22-23 per cent operating margin expansion.

These hospital chains have announced plans to add more than 8,400 beds in the next four years due to the continuous improvement in demand, said Mythri Macherla, assistant vice-president at ICRA Ratings.

This means an increase in capacity of over 26 per cent from March 2023 levels.

According to the report, there has been a steady sequential improvement in patient volumes during each quarter of FY23, except for the October-December period, when elective surgeries were postponed by patients due to the festive season.

The return on capital employed at most of these hospitals increased from 6 percent in fiscal year 2011 to 18 percent in fiscal year 2012, before peaking at 16 percent in fiscal year 2013, the report said. I expect the same to happen. The -15 percent limit is moving forward.

(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content was auto-generated from a syndicated feed.)


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