Hospital stocks extend fall for 2nd day; Apollo, Fortis, Max, Medanta down up to 11%

Shares of hospital chains remained under stress for the second consecutive session on Friday, with Max Healthcare, Apollo Hospitals, Fortis Healthcare, Yatharth Hospital, Global Health (Medanta), and others falling up to 11% on the domestic bourses. Max Healthcare was the top laggard for the second day with a loss of 11% in intraday trade, while Fortis Healthcare and Apollo Hospitals Enterprise shares dropped up to 3% during the session so far. In a similar trend, Yatharth Hospital and Trauma Care Services shares declined 6%, while Medanta, Jupiter Life Line Hospitals, Rainbow Children's Medicare, Aster DM Healthcare slide in the range of 2-4%.

The healthcare space was the worst performer among the sectoral indices, with the BSE HCS index falling as much as 0.7%, led by Max Healthcare Institute, Ajanta Pharma, Krishna Institute of Medical Sciences, Syncom Formulation (India), Aster DM Healthcare. 

Hospital stocks had lost over ₹1,600 crore in market capitalisation on Thursday, dented by up to 9% fall in Max, Apollo, Fortis, Medanta, Rainbow, Aster DM Healthcare shares, after the Supreme Court asked the central government to fix discrepancies in hospital rates for treatment and procedures across all states. The apex court warned that if the Union government fails to find a solution to fix standard rates for different medical procedures, then it will consider applying Central Government Health Scheme (CGHS) prescribed standardised rates at private healthcare facilities.

The bench of Justices BR Gavai and Sandeep Mehta, while hearing a PIL by the NGO 'Veterans Forum for Transparency in Public Life,' criticised the central government for failing to standardise rates for different medical procedures in hospitals. The court has given the government a month to fix standard rates for treatment and procedures in hospitals across metros, cities, and towns.

The PIL, seeking clarity on medical expenses, had urged the government to fix the fee chargeable to patients based on Rule 9 of the Clinical Establishment Rules 2012.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart, says, “The Supreme Court's threat to impose CGHS charges on private hospitals is the reason behind the recent decline in hospital stocks, including those of Fortis Healthcare, Apollo Hospitals, and Max Healthcare. Investors are worried about the possible effects this may have on these companies' profitability, which has created uncertainty in their minds.”

“It is significant to remember that the Supreme Court has not yet rendered a definitive ruling in this case. However, the market is now extremely uncertain as a result of the court's threat, which is affecting hospital stocks. Investors are probably keeping a close eye on the situation to see if there are any new developments or whether the regulatory framework governing private healthcare providers is clarified,” says Gour.

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