Improved efficiency, demand help hospital chains make gains in 2024

Average revenue per occupied bed of major health care companies grows

India's private hospital sector in 2024 clocked single digit growth in average revenue per occupied bed (ARPOB), helped by improved operations and advanced medical treatment. Apollo Hospitals and Fortis Healthcare reported strong revenue growth, showcasing the impact of strategic measures and enhanced patient care.

 

Apollo, a leading health care provider, reported a 3 per cent increase in hospital occupancy in 2024, alongside a modest 2 per cent price hike for services. The growth was attributed to higher patient volume, fewer invasive surgeries, and shorter hospital stays.

 

The chain said 30-35 per cent of cases it treats are daycare procedures: A shift that has reduced the average length of hospital stays to 3.2 days and helped saving costs without compromising revenue.

 

Krishnan Akhileswaran, group chief financial officer at Apollo Hospitals Enterprise, highlighted that revenue per occupied bed (RPOP) is not just a pricing metric but reflects case complexity, technology use, and average length of stay. “As many as 70 per cent of Apollo’s patients paid less than Rs 2 lakh per admission, emphasising affordability despite rising costs from wages, medical technology imports, and GST input costs,” he said.

 

Apollo said its focus on minimally invasive and robotic surgeries ensured sustained RPOP growth of 6-7 per cent annually. Of this, 4 per cent is attributed to pricing adjustments and 2-3 per cent to improved case mix and technology adoption.

 

Fortis Healthcare said ARPOB grew in 2024 due to a favourable case mix and growth in high-revenue specialties such as oncology and neurosciences. Ashutosh Raghuvanshi, the hospital’s managing director and chief executive officer, said strong patient volumes were supported by expanded bed capacity, advanced medical infrastructure and international medical tourism reviving after Covid-19.

 

Fortis benefited by integrating technologies and skilled clinical teams, enabling specialised treatments and better patient outcomes. These factors collectively enhanced ARPOB while maintaining accessibility through strategic pay or mix optimisation, it said.

 

Mythri Macherla, vice-president and sector head, corporate ratings, at ICRA Limited, said the sector's ARPOB growth was supported by annual tariff revisions, demand for elective surgeries, and the recovery of medical tourism. “Market share gains for organised players have also played a crucial role,” she added.

 

Bed occupancy at private hospitals improved in 2024 due to higher surgery volumes, especially in oncology and neurosciences, and the increasing contribution of digital channels in patient acquisition.

 

Despite positive trends, hospitals grapple with rising costs. Apollo faces annual wage inflation of 10 per cent and import duties of 27-37 per cent for advanced medical technologies. By focusing on volume-driven growth, Apollo has managed to offset such costs while maintaining affordability for patients.

 

The outlook for the sector remains strong, with ARPOB expected to grow further as hospitals invest in advanced treatments and expand their reach in underserved regions. The recovery in medical tourism and increased insurance penetration will help growth too, according to analysts. 

Booster shot 

 

> Apollo Hospitals reported a 3% increase in hospital occupancy and a 2% price hike for services in 2024

> Fortis Healthcare’s Average revenue per occupied bed (ARPOB) grew in 2024 due to a favourable case mix and growth in high-revenue specialties 

> Recovery in medical tourism and increased investment in advanced treatments is likely to help ARPOB growth

> Despite positive trends, hospitals grapple with rising costs