Shares of major hospital chains tumbled after the Supreme Court warned it might impose government-controlled rates on private healthcare services.
Max Healthcare sank 7.12%, leading the pack of decliners which included Krishna Institute of Medical Sciences (down 5.89%), Global Health (down 3.84%), Aster DM Healthcare (down 2.11%), Fortis Healthcare (down 1.71%), Kovai Medical Center & Hospital (down 1.62%), Narayana Hrudayalaya (down 1.48%), Apollo Hospitals Enterprise (down 0.67%), Rainbow Children's Medicare (down 0.64%) and Shalby (down 0.26%) tumbled. This follows earlier losses of 2-6.5% during the previous session.The Supreme Court's stance stems from its criticism of the government's inaction on regulating hospital charges and enforcing existing rules. It has directed the government to develop a standardised rate plan within a month, or it might enforce rates applicable to government-empanelled hospitals, which are significantly lower than what private hospitals typically charge.
Investors fear this potential change in pricing will negatively impact the revenue of hospital chains. A domestic broker highlighted the strong opposition this proposal is likely to face due to lower Central Government Health Scheme (CGHS) rates, uneven implementation of regulations (Clinical Establishment Act) across states, and the complexity of standardising costs given varying factors like treatment needs, individual health conditions, and hospital services.
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