Hospital stocks in good health

Hospitals are in a good mood today and that’s thanks to the Govt which overhauled CGHS package rates for 2,000 medical procedures, effective October 13, 2025. This the first major overhaul in 11 years.

The new structure factors in hospital accreditation (NABH/NABL vs non-accredited), hospital type (super-specialty), city tier, and ward entitlement (general / semi-private / private) in pricing.

Also the non-accredited hospitals will be reimbursed at 15% lower than base rates, while super-specialty institutions may get 15% premium.

These changes are intended to reduce refusals for cashless treatment under CGHS, improve hospital participation and reflect rising medical costs.

Hospitals are naturally celebrating today as it means better margins / revenue for hospitals that are well-accredited (NABH/NABL), in major cities, and those offering super-specialty services. This also means that participation in CGHS (government scheme) becomes more financially viable for hospitals that may earlier have avoided or limited it under old, low rates.

Another advantage that we see is that the tiered model may improve access in smaller cities (though rates are lower), increasing volume, which could partially offset lower per-unit rates.

Immediately after the announcement, hospital stocks including Apollo, Max, Narayana Hrudayalaya, Metropolis Healthcare, Vijaya Diagnostic Centre, Fortis saw upticks (up to 5%) as markets priced in better future earnings.