Top Indian private hospital chains have announced major expansion plans for financial year 2024-25 (FY25) on the back of reporting growth in average revenue per occupied bed (ARPOB) per day in financial year 2023-24 (FY24), indicating increasing demand for services.

Max Healthcare is looking at big capacity additions over the next year, by adding 300 operational beds in Dwarka by June 2024 and expanding their bed capacity in their Lucknow and Nagpur units by the end of this year, Abhay Soi, chairman and managing director, Max Healthcare, had told Business Standard earlier.

Similarly, Fortis Healthcare has chalked out a plan to add around 700 beds in the same period. Apollo Hospitals Enterprise has planned to add 1,170 beds in FY25, according to its Q4 FY24 investor presentation.

The bed expansion drive comes as hospitals have been reporting growth in ARPOB numbers in FY24. Analysts suggest that ARPOB per day is further expected to increase by 5 to 6 per cent in FY25.

For the full FY24 period, Max Healthcare reported a 12 per cent increase in ARPOB figures, amounting to Rs 76,000 per bed per day from Rs 67,000 per bed per day in financial year 2022-23 (FY23).

Similarly, the FY24 ARPOB figures for Apollo Hospitals Enterprise reflect a growth of 11.3 per cent, reaching Rs 57,488 per bed per day from Rs 51,668 per bed per day last year. Fortis Healthcare also reported a 10.7 per cent increase, with ARPOB reaching Rs 60,887 per bed per day in FY24, from Rs 54,954 per bed per day in FY23.

“The growth in ARPOB in FY24 is largely on the back of improving specialty and case mix, better payor mix, and healthy recovery in footfalls from international patients in addition to annual price revisions by companies to offset cost inflation,” Mythri Macherla, vice president and sector head, corporate sector ratings, ICRA, said.

The ARPOB growth is also being attributed to high surgical volumes and an increase in high-end procedures. Speaking to Business Standard, Ashutosh Raghvanshi, managing director and chief executive officer (CEO), Fortis Healthcare, said that the increase is mainly 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 high ticket sizes, resulting in higher ARPOB,” he said.

Yogesh Sareen, senior director and chief financial officer, Max Healthcare, said that price revisions, including those for institutional segments like central government health service (CGHS) and insurance companies, also added to the improvement in ARPOB.

“Relatively higher growth in revenue from international patients, upcountry patients, and a steady increase in outpatient department (OPD) footfalls contributed to ARPOB growth,” he added.

According to rating agency ICRA, 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 FY23.

The growth in ARPOB figures comes even as hospital chains increase the bed count. ICRA’s sample set of companies added 545 beds in FY22 and 1,043 beds in FY23. The agency also reported that these companies added an estimated 1,591 beds in FY24.

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

First Published: Jun 03 2024 | 6:25 PM IST