Indian private hospitals' revenue growth set to continue, reaching 11-12% in FY25: CRISIL | 24 April, 2024

Indian private hospitals' revenue growth set to continue, reaching 11-12% in FY25: CRISIL

Private hospitals in India are predicted to witness a robust 11-12% growth in revenue in the fiscal year 2025, credit rating agency CRISIL said on Tuesday. This comes on the heels of an estimated 14% growth in the fiscal year 2024, primarily fuelled by healthy occupancy levels and a consistent rise in average revenue per occupied bed (ARPOB).

“Healthy demand for healthcare services, increased awareness of lifestyle treatments, rising medical tourism, and increasing health coverage will ensure bed occupancy is sustained at 60-62% even on significantly enhanced capacities in fiscal 2025," said Anuj Sethi, Senior Director, CRISIL Ratings.

Medical tourism, accounting for 10-12% of revenue, is expected to grow at nearly double the overall rate in the mid-term, driven by affordable treatment costs, world-class facilities, and skilled medical personnel, the agency said. The preponderance of medical tourists is seen to come from South-East Asia and the Middle East. Moreover, the rising trend in health insurance coverage, growing at over 20% in the last two fiscal years, is making quality treatment more affordable and accessible. Demand for healthcare services is also expected to increase due to the rising occurrence of lifestyle diseases and an ageing population.

CRISIL has predicted that in response to this demand, hospital chains will add 2,000-2,500 beds in fiscal 2025, following an estimated addition of 2,000 beds in fiscal 2024.

Poonam Upadhyay, Director, CRISIL Ratings, suggested the growing revenue and healthy operating margins will “ensure strong cash accrual, which will help fund more than 65% of the total planned capex of Rs 4,500 crore by private hospitals in fiscal 2025.”

However, despite these promising business prospects, CRISIL warned that the sustainability of high occupancy levels and any potential impact of regulations on private hospitals should be closely watched.

(Source: Business Today)