India’s leading private hospital chains have revealed 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 indicates an increasing demand for their services. This financial year Max Healthcare is planning significant capacity additions, with 300 operational beds expected to be added in Dwarka by June 2024. The company also wants to increase bed capacity at their Lucknow and Nagpur units by December, says Abhay Soi, chairman and managing director of Max Healthcare.
Fortis Healthcare, too, has outlined a plan to add around 700 beds in FY25, and Apollo Hospitals Enterprise is set to add 1,170 beds in 2024-25, as revealed in its Q4FY24 investor presentation. This drive to increase the bed amounts comes as hospitals report progress in ARPOB figures for FY24. Analysts predict a further increase of 5-6 percent in ARPOB per day for FY25. For the entire 2023-24 period, Max Healthcare reported a 12 percent 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. Apollo Hospitals Enterprise and Fortis Healthcare also reported growth in their ARPOB figures for FY24, with year-on-year increases of 11.3 percent (at Rs 57,488) and 10.7 percent (at Rs 60,887), respectively.
Mythri Macherla, vice-president and sector head-corporate sector ratings at ICRA, attributed the progress 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 connected to high surgical volumes and an increase in high-end procedures. Ashutosh Raghvanshi, managing director and CEO of Fortis Healthcare said that the increase is mainly due to growth in core specialties, particularly oncology and high-end surgeries in many other areas. Our surgical volumes were slightly higher at about 58 percent, and procedures like transplants, robotic surgeries, and radiation therapies saw volume growth exceeding 50 percent. These measures have larger ticket sizes, which results in higher ARPOB.
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 a steady increase in outpatient department (OPD) footfall contributed to ARPOB growth.
According to ICRA, the ARPOB per day for its sample set of hospitals was estimated at Rs 49,800 per bed per day, compared to Rs 45,800 per bed per day in 2022-23. This progress in ARPOB records comes even as hospital chains increase their bed count. In 2021-22 ICRA’s sample set of companies added 545 beds and in 2022-23 1,043 beds, and an estimated 1,591 beds in 2023-24. ICRA’s sample set includes the hospital business of nine listed companies, namely Shalby Hospitals, Max Healthcare Institute, HealthCare Global Enterprises, Rainbow Children’s Medicare, Narayana Hrudayalaya, Appollo Hospitals Enterprise, Fortis Healthcare, Aster DM Healthcare (India business only) and Krishna Institute of Medical Science.
