MSME hospitals in the pink of health; revenue, margins to remain healthy

Revenue of micro, small, and medium enterprises (MSMEs) in the hospital segment is expected to grow 8-12 per cent Y-o-Y this financial year to Rs 4.2-4.9 trillion, driven by growing demand for elective surgeries, outpatient department care and routine treatments, as well price hikes by healthcare providers. 

The strategic expansion of large corporates into Tier-II locations is also contributing to the growth. MSMEs account for a whopping 65-75 per cent share of the hospital segment revenue pie. The growth trajectory is projected to sustain next fiscal, rising 10-14 per cent Y-o-Y, driven by rising demand for healthcare services, particularly in areas such as orthopedics, critical care and oncology, and more MSME hospitals focusing on a single specialty. 

The operating margin of MSMEs hospitals is also estimated to improve 50–100 basis points Y-o-Y to 16–18 per cent next financial, from 15–17 per cent in the current one, supported by higher average revenue per occupied bed and occupancy, and increased patient enrollment. 

Ayushman Bharat, launched by the government in September 2018, will continue to be a driver of volume growth for the MSME hospitals. The scheme provides healthcare assurance of Rs 5 lakh per family, facilitating access to quality treatment for the economically disadvantaged.

In the 12 months through January 2024, the number of Ayushman Bharat cards surged 52 per cent Y-o-Y to 30.4 crore, total treatments increased 42 per cent to 6.16 crore, and the total claim amount increased 49 per cent to Rs 77,074 crore. Implemented in 33 states and union territories, the scheme has empaneled over 28,000  hospitals, with 43 per cent being private hospitals in January 2024.