Private hospitals to log 15-17% revenue growth in FY22

As the second wave recedes in the second quarter, Crisil expects pent-up demand for non Covid treatments to rebound and support occupancy.

New Delhi: Higher occupancy due to surge in Covid-19 cases would help private hospitals post 15-17 per cent revenue growth this fiscal year, a shade higher than what they attained in 2020-21, ratings agency Crisil said on Tuesday.

The growth will aid recovery of operating margin by 100-200 basis points to 13-14 per cent, but still fall short of the 2020-21 mark due to higher proportion of Covid-19 treatments, which are less profitable, it said in a statement.

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“While the second wave lashed again in April, the first quarter this fiscal will be sharply better on-year, with occupancy of 75 per cent, almost double on-year. This will be largely on account of a surge in Covid-19 treatments more than offsetting the deferral of elective surgeries and outpatient footfalls,” Crisil Ratings senior director Manish Gupta said.

As the second wave recedes in the second quarter, Crisil expects pent-up demand for non Covid treatments to rebound and support occupancy, he added. “Overall, higher occupancy of 65-70 per cent this fiscal versus 58 per cent in the last, would drive rebound in revenue growth,” Gupta said.

Recovery in revenue and margins will nevertheless spur hospitals to resurrect capex, which had almost halved year-on-year last fiscal. “Much of the capex this fiscal is expected to be brownfield in nature, towards bed addition and related infrastructure including oxygen plants, and funded significantly through accruals,” Crisil Ratings associate director Rajeswari Karthigeyan said.

The performance of hospitals was severely impacted in the first quarter of last fiscal year due to postponement of elective surgeries and preventive healthcare which together account for 60 per cent of revenue, in addition to travel restrictions and curbs on Covid-19 treatment by private hospitals.

The sector clawed back in the second quarter and had recovered completely by the third as elective surgeries and preventive healthcare treatment increased and Covid treatments, too, were permitted for most private hospitals. This helped limit the overall revenue decline to 12 per cent for the full year.

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