IGI Logo

Rating agency ICRA in its latest report has said that domestic hospital industry revenue growth is likely to moderate in FY23 due to the large base in the previous fiscal, although income and profit margins are expected to remain healthy ahead. While occupancy is expected to slightly moderate in FY23 given the ongoing capacity addition, average revenue per occupied bed (ARPOB) is expected to expand steadily going forward.

The rating agency said the performance of its sample set of hospital companies remained strong in Q3 FY22 on the back of continued momentum of elective procedures and strong ARPOB. It noted that with most patients reporting mild infections on account of Omicron, pent-up demand and market share gains for organised players in the high-end/complex surgery space supported healthy occupancy levels for the sample set, and added that hospitals also witnessed an additional uptick in patient visits at metro centres on the back of a surge in international patients.

According to the report, benefits from improving scale and strong ARPOB levels, cost-optimisation efforts, and ancillary revenues from COVID-19 have supported margin improvement for industry players in FY2022. Given the favourable demand outlook for the industry, it said several large hospital players have recently announced sizeable capacity expansion plans across the country. It said with the threat from the pandemic seemingly over, players are now looking at adding bed capacity within their existing infrastructure, while some players have announced new greenfield projects.