Leading rating agency ICRA has released a report indicating significant growth and capacity expansion in the Indian healthcare industry in the next years. The research highlights important trends and market expectations, projecting a stable prognosis for the fiscal year 2024.
Projections for Capacity Building and Occupancy: According to ICRA’s analysis, the Indian hospital sector is experiencing a significant increase in both capacity building and occupancy. According to the prediction, a sample group of enterprises’ revenue is expected to expand by 12 to 14 percent in FY24, as opposed to 17 percent in FY23. The increased investment in building new healthcare facilities and infrastructure is the reason for this expansion.
With an estimated investment of Rs 32,500 crore, private hospitals, including those in ICRA’s sample set, are anticipated to make a substantial contribution to this trend by adding over 30,000 beds over the course of the next four to five years. Assistant Vice President and Sector Head at ICRA Mythri Macherla highlights the industry’s dedication to significant bed expansions, which supports the sector’s overall expansion.
Outlook for Occupancy: ICRA anticipates a strong 64–65% overall occupancy rate in FY24, which is comparable to the previous fiscal year. A minor reduction to 61 to 63 percent is projected by the report for FY25, owing to the notable increase in bed capacity. The sector is confident despite this anticipated reduction because of the robust operating metrics and ongoing need for healthcare services in India.
Plans for Significant Capital investment: Industry participants have announced plans for significant capital investment in the upcoming years in response to the favorable demand forecast. It is anticipated that the enterprises in the ICRA sample set will add 3,900 beds in FY24 and FY25, which represents 15% of their current bed capacity. This calculated growth is in keeping with the rising need for medical travel and healthcare services, especially in light of the difficulties the pandemic has presented.
Growth and Drivers of Revenue: In FY24, the research projects a strong 8–10% increase in average revenue per occupied bed (ARPOB). Improved specialty and case mix, a better payor mix with a bigger contribution from cash and insurance patients, and yearly pricing changes to counteract cost inflation are some of the factors driving this rise. Nonetheless, taking into account the high base of FY2024 and the start of operations at new hospitals, ICRA projects a reduction in ARPOB growth to 4 to 6 percent in FY25.
Operational Profit Margin and Efficiency Measures: Based on the 23 percent recorded in FY23, ICRA predicts a robust operating profit margin (OPM) of approximately 22 to 23 percent for the industry in FY2024. According to the survey, the industry’s growing digitization, cost optimization programs, and enhanced operating leverage are all responsible for this steadiness. It is anticipated that these efficiency initiatives will maintain long-term profitability given the industry’s projected expansion.
The ICRA research concludes by highlighting the promising future of the private hospital sector in India and stressing its dedication to increased capacity, enhanced operational effectiveness, and steady revenue growth. The industry’s response to the rising demand for healthcare services is evident in the projected addition of 30,000 beds over the next five years, further solidifying India’s status as a major player in the global healthcare arena.
