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India’s leading private hospital chains have unveiled expansion plans for 2024-25, on the back of an increase in the average revenue per occupied bed (ARPOB) per day in 2023-24. This growth signals a rising demand for their services.
Max Healthcare is planning significant capacity additions this financial year, with 300 operational beds expected to be added in Dwarka by June 2024. The company also plans to expand bed capacity at their Lucknow and Nagpur units by December, Abhay Soi, chairman and managing director of Max Healthcare, recently told Business Standard.
Fortis Healthcare, too, has outlined a plan to add approximately 700 beds in FY25. Apollo Hospitals Enterprise is set to add 1,170 beds in 2024-25, as revealed in its Q4FY24 investor presentation.
This drive to expand bed capacity comes as hospitals report growth in ARPOB figures for FY24. Analysts predict a further increase of 5-6 per cent in ARPOB per day for FY25.
For the full 2023-24 period, Max Healthcare reported a 12 per cent increase in ARPOB figures, amounting to Rs 76,000 per bed per day, up from Rs 67,000 per bed per day in 2022-23.
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Apollo Hospitals Enterprise and Fortis Healthcare also reported growth in their ARPOB figures for FY24, with year-on-year increases of 11.3 per cent (at Rs 57,488) and 10.7 per cent (at Rs 60,887), respectively.
Mythri Macherla, vice-president and sector head-corporate sector ratings at ICRA, attributed the growth in ARPOB in 2023-24 to an “improving specialty and case mix, better payer mix, and a healthy recovery in footfall of international patients, in addition to annual price revisions by companies to offset cost inflation”.
Growth in ARPOB is also linked to high surgical volumes and an increase in high-end procedures. Ashutosh Raghvanshi, managing director and CEO of Fortis Healthcare, told Business Standard that the increase is primarily due to growth in core specialties, particularly oncology and high-end surgeries in various other areas. “Our surgical volumes were slightly higher at about 58 per cent, and procedures like transplants, robotic surgeries, and radiation therapies saw volume growth exceeding 50 per cent. These procedures have bigger ticket sizes, resulting in higher ARPOB,” he said.
Yogesh Sareen, senior director and chief financial officer of Max Healthcare, noted that price revisions, including those for institutional segments like the Central Government Health Scheme (CGHS) and insurance companies, also contributed to the improvement in ARPOB. “Faster growth in revenue from international patients and upcountry patients, and steady increase in outpatient department (OPD) footfall contributed to ARPOB growth,” he added.
According to ICRA, the ARPOB per day for its sample set of hospitals reached an estimated Rs 49,800 per bed per day, compared to Rs 45,800 per bed per day in 2022-23. This growth in ARPOB figures comes even as hospital chains increase their bed count. ICRA’s sample set of companies added 545 beds in 2021-22, 1,043 beds in 2022-23, and an estimated 1,591 beds in 2023-24.
ICRA’s sample set includes the hospital business of nine listed companies, namely Apollo Hospitals Enterprise, Aster DM Healthcare (India business only), Fortis Healthcare, HealthCare Global Enterprises, Krishna Institute of Medical Sciences, Max Healthcare Institute, Narayana Hrudayalaya, Rainbow Children’s Medicare, and Shalby Hospitals.
Major Hospitals' ARPOB per day for FY24 vs FY23
ARPOB: Average Revenue Per Occupied Bed
*ICRA's sample size includes hospital business of nine listed companies
Source: ICRA Research, Investor PPT's from companies
