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Backed by sustained healthy demand for healthcare services and continued market share gains for organised players, the aggregate occupancy for the Indian hospital industry will remain strong at 61-63 per cent in the financial year 2025, according to a report by rating agency ICRA on Thursday. 

New Delhi, Aug 8 (IANS) Backed by sustained healthy demand for healthcare services and continued market share gains for organised players, the aggregate occupancy for the Indian hospital industry will remain strong at 61-63 per cent in the financial year 2025, according to a report by rating agency ICRA on Thursday. 

Rising incidence of non-communicable lifestyle diseases, growing per capita spending on healthcare and awareness levels, increasing penetration of health insurance, and higher medical tourism volumes will continue to support the business prospects of industry players going forward.

The report showed that average revenue per occupied bed (ARPOB) is expected to witness a moderate growth of 4-6 per cent in FY2025. This came after an expansion of 11 per cent in FY2024.

Improving the speciality mix, better payor mix (with a focus on cash and insurance patients) and annual price revisions by companies to offset cost inflation is expected to support the ARPOB growth for the sample set companies.

ICRA expects its sample set companies to add over 4,000 beds and 3,400 beds in FY2025 and FY2026, respectively.

“This cumulatively translates to about 23 per cent of the existing capacity as of March 31. While the capex will be partly debt-funded, the debt metrics are expected to remain strong, with total debt/OPBDITA for ICRA’s sample set companies as 1.0-1.2 times as on March 31, 2025,” said Mythri Macherla, Vice President and Sector Head–Corporate Ratings, ICRA.

The report estimates revenue growth of 12-14 per cent for its sample set companies in FY2025. Improving operating leverage, coupled with continued cost optimisation and digitisation measures, is expected to support a healthy operating profit margin (OPM) of about 22-23 per cent in FY2025. In FY2024, it was 23.1 per cent.

“Even the return on capital employed (RoCE) is expected to remain stable at about 14 per cent in FY2025 supported by strong earnings. Many hospital companies also continue to scout for inorganic opportunities to expand their network. ICRA notes that private equity investments have also increased in the recent past,” Macherla added.

The in-patient footfalls for sample set companies in FY2024 (barring Q3 FY2024, which witnessed moderation owing to deferrals of elective procedures during the festive season) remained healthy.

It was 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.

Further, medical tourism footfalls which expanded YoY by about 33 per cent in CY2023 are expected to exceed the pre-pandemic levels of 0.7 million (witnessed in CY2019) in CY2024.

The steps taken by the government to extend e-medical visa facility to nationals of 167 countries, are expected to increase medical tourism footfalls, going forward, the report said.