Aggregate occupancy for hospital industry’s sample set companies likely to remain strong in FY25: ICRA
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Credit rating agency ICRA in its latest report has said that the aggregate occupancy for its hospital industry’s sample set companies is likely to remain strong at 61-63% in FY2025 (64.7% in FY2024) backed by sustained healthy demand for healthcare services and continued market share gains for organised players. The average revenue per occupied bed (ARPOB) is expected to witness a moderate growth of 4-6% in FY2025 (after witnessing an expansion of 11% in FY2024), given the high base of the previous year. Improving speciality mix, better payor mix (with a focus on cash and insurance patients) and annual price revisions by companies to offset cost inflation will support the ARPOB growth for the sample set companies.
Overall, ICRA estimates revenue growth of 12-14% for its sample set companies in FY2025. Improving operating leverage, coupled with continued cost optimisation and digitisation measures, is expected to support a healthy OPM of around 22-23% in FY2025 (23.1% in FY2024). ICRA maintains its Stable outlook on the Indian hospital industry supported by expectations of healthy revenue growth and strong OPM for ICRA’s sample set companies. This is despite the incremental debt to be availed to fund the sizeable bed capacity expansion plans over FY2025 and FY2026. Rising incidence of non-communicable lifestyle diseases, growing per capita spend on healthcare and awareness levels, increasing penetration of health insurance, and higher medical tourism volumes are expected to continue to support the business prospects of industry players going forward.
The in-patient footfalls for ICRA’s sample set companies in FY2024 (barring Q3 FY2024, which witnessed moderation owing to deferrals of elective procedures during the festive season) remained healthy, aided by the strong revival in medical tourism, coupled with changing patient preferences towards large hospitals on the back of increasing insurance coverage. The average length of stay (ALOS) in FY2024 stood at 3.4 days and is expected to remain low, backed by faster throughput of patients, which is also supported by technological advancements.
