Private hospitals may opt out of govt health plans

Bengaluru: The contribution of government health schemes to the revenues of India's leading private hospital chains is declining, a possible sign that private healthcare providers may be reevaluating their participation. Experts said profitability squeeze due to payment delays, low reimbursements and pricing curbs may be the reasons. While hospital chains have not announced that they are limiting their particip ation in government health programmes, Max Healthcare, Narayana Health, Fortis Healthcare and HealthCare Global are among those that have reported revenue impact and highlighted challenges in managing these schemes.Typically, state-backed health schemes, such as the Central Government Health Scheme (CGHS) and the Ex-Servicemen Contributory Health Scheme (ECHS), account for about 25% of revenue at most top private hospitals, according to data from business advisory firm Praxis Global Alliance.Praxis Global Alliance told ET that the revenue share of government schemes could drop by 3-5% by the first quarter of FY27 through selective de-empanelment or capped bed allocation. While CGHS covers central government employees and pensioners, ECHS serves defence personnel and their families. Both set rates for empanelled private hospitals and have been central to the current dispute.130868060Although the signs of discontent have been visible since 2020, industry voices have grown louder only over the last one year.Apollo Hospitals has not explicitly spoken about government schemes, as they form only a small share of its business. According to its management, in the third quarter of FY26, 83% of inpatient revenue came from insurance and cash patients. The figure implies that all other categories, including government schemes, accounted for a smaller part of the remaining 17%.An email query sent to Apollo Hospitals remained unanswered till as of press time.Experts said the pressure is from two directions-lower reimbursement rates and slow payments. "We estimate that hospitals are trying to change their payer mix, moving towards payers with shorter collection periods to maintain healthier working capital," said Akhil Puligadda, practice member, healthcare and life sciences, Praxis Global Alliance. Max Healthcare has quantified its losses. On its Q3 earnings call, it estimated a ₹200-crore revenue impact from joining CGHS. Under its memorandum of understanding, it must offer a 30% discount on chemotherapy drugs."We discontinued supply of drugs where the margin was less than 30%. Where the margin is more than 30%, we still supply, but at lower revenue," chief financial officer Yogesh Sareen, said in an earnings 2call. After netting out oncology and GST effects, he pegged the ongoing hit at ₹140 crore. "That is the net impact on an ongoing basis, not one time."Chairman Abhay Soi said, "What they asked is to sell below purchase cost. So obviously, everybody has discontinued it." He said that ECHS rate revisions only took effect in December, so the full financial impact is still unfolding. Narayana Health made a conscious decision to cap scheme volumes at hospitals in its northern region, driven by delayed payments and drug reimbursement caps.

from Economic Times https://ift.tt/mqEp10x