Private hospitals expect a boom in revenues beating pre-Covid times

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Despite lower inbound tourists, private hospitals are expecting revenue and margin growth to go past the pre-pandemic levels, owing to better occupancies, higher revenue per bed and cost rationalisation, which are pushing them into recovery, as the public health care system was brought to its knees, owing to the second wave of the Covid-19 pandemic, Business Standard reported. In August, Max Healthcare’s occupancy levels touched 75%, while Covid dedicated beds accounted for just 1% of the overall occupied beds.

With this the hospital has touched pre-Covid levels, the publication said. In the second quarter the Average Revenue Per Occupied Bed (ARPOB) of Max is expected to be better in the second quarter in FY22 as against the preceding quarter, it added

It had also undertaken several cost saving measures like material cost rationalisation and personnel cost rationalisation, among others.

Similarly, Fortis Healthcare said that occupancies were up by 62% and expects the occupancy to be around 65%. Barely 2% of the occupancies come from Covid cases at present. It also added that, a revenue growth of 30-35% as compared to the last year. While the revenue growth should be just below 10% compared to the pre-pandemic period, it said.

Dip in medical tourism a cause of concern

The ARPOB also increased to Rs 1.85 crore from a pre-Covid level of Rs 1.7 crore, which showed a sign of recovery, the hospital said. It said that the growth is primarily due to a case mix, rather than pricing change.

According to the publication, hospitals have taken price rises from the first quarter of this year, leading to a growth in revenue. If occupancies are high due to pent-up demand, then it would eventually taper-off.

However, medical tourism is down due to travel restrictions, which is a cause of concern. But hospitals expect this to improve with the resumption of international flights.