Hospital stocks rose up to 4.5% on October 6 after Central Government Health Services (CGHS) decided to revise rates for nearly 2,000 medical procedures under the scheme. The new rates will be effective October 13, 2025.
At 11:25 am on October 6, shares of Fortis Healthcare, Apollo Hospitals and Max Healthcare were trading 7%, 2.3% and 4.3% higher, respectively. Max Healthcare, a recent entrant in Nifty 50 index, was the top gainer on the benchmark.
The stocks were among the top gainers on Nifty Healthcare index, which climbed 0.6%.
On October 6, Narayana Hrudalaya shares were trading 5% higher while those of Yatharth Hospitals climbed 4%.
Macquarie sees procedure rates in key therapy areas of cardiology, neurology, oncology, orthopedic rising by 5%-30%. The global brokerage said the 'meaningful' price revision, first in 15 years, is a positive for hospital industry.
The brokerage estimates EBITDA of Max Healthcare and Apollo Hospitals to see mid-single-digit percentage increase, assuming high-teens percentage increase in procedure rates.
CGHS primarily caters to central government employees and pensioners, as well as their dependent family members. As of October 5, around 4.26 million beneficiaries are covered by CGHS in 80 cities all over India, according to data from the CGHS portal.
In another positive development for Fortis, Malaysia's IHH Healthcare got SEBI's approval to acquire an additional 26.1% stake each in Fortis and its unit Malar. IHH's stake in Fortis stands at 31.17%, as of June 30.
Meanwhile, DAM Capital said preliminary review suggests average hikes of 25–30% across key procedures, reported CNBC-TV18.
A 25% hike could mean 2.5% revenue uplift and 10% EBITDA growth for private hospitals, the brokerage said.
Among listed players, hospitals with higher CGHS exposure to benefit are Fortis, Max Healthcare, Narayana Hrudalaya, Yatharth Hospitals as they derive up to 35% revenue from government, added DAM Capital.
DAM Capital remains constructive on the sector as they see positive earnings impact across the sector with significant FY27 EBITDA upsides.
The first major haul of the programme in 15 years brings reimbursement levels closer to market rates. The rates have been rationalised based on accreditation status, city category, hospital type and ward entitlement.
The revised rates also mandate fresh memoranda of agreement between hospitals and the CGHS directorate within 90 days, with existing MoAs expiring on October 13.
The revision comes after repeated calls from the healthcare industry, which said outdated reimbursement rates made it difficult for private hospitals to sustain CGHS empanelment.
The revision will benefit private hospitals as the cost of treatment for CGHS patients will go up. Healthcare stocks such as Apollo Hospitals Ltd, Max Healthcare Ltd, Global Health Ltd, Narayana Health, Fortis Healthcare and Yatharth Hospitals were trading up to 6 percent higher on October 6.
The new structure is expected to improve participation and ease access for millions of beneficiaries, including central government employees and pensioners.
With inputs from Reuters
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