India’s Healthcare sector saw some positive development this festive season. After more than a decade of no action, the Government finally revised the rates under the Central Government Health Scheme (CGHS), a move analysts across brokerage houses agree could redefine the economics of private healthcare in India.
CGHS rate reset: Nuvama says move ‘welcome development’
For years, private hospitals have treated CGHS patients at tariffs that barely covered operational costs.
According to Nuvama Institutional Equities, “the revision is nothing short of a long-overdue correction. The new pricing mechanism distinguishes hospitals by accreditation, city tier, and ward category acknowledging, for the first time, the cost differentials between a metro hospital and one in a smaller city.”
Super-specialty hospitals will now receive 15% higher rates, Tier-II hospitals will get 10% lower, and Tier-III 20% lower. Private wards are priced 5% above semi-private, while general wards fall 5% below. As per the brokerage, the system has finally accepted that quality, infrastructure, and location carry real costs.
This recalibration, Nuvama noted, “is a welcome development amidst the bed expansion phase and ongoing dispute with private insurers.” The brokerage expects an immediate 4 – 8% uplift in revenues and 150 – 400 basis-point margin expansion across the sector.
The new framework links reimbursement to accreditation, city tier, and ward category, offering differentiated pricing that better reflects real costs. Super-specialty hospitals with over 200 beds will earn 15% higher rates, while Tier-II and Tier-III cities receive 10% and 20% lower rates respectively. NABH-accredited hospitals get the full base rate, and non-accredited hospitals face a 15% deduction.
CGHS rate reset: Nuvama predicts 4-8% margin expansion for hospitals
According to Nuvama’s analysts the new rates could lift hospital revenues by 4 – 8% and expand margins by 150 – 400 basis points.
The rate changes as per Nuvama’s research:
- Heart transplant packages have risen to Rs 15 lakh from Rs 3.17 lakh.
- Coronary Artery Bypass Graft (CABG) without bypass has been revised to Rs 2.36 lakh from Rs 1.46 lakh.
- Normal delivery now fetches Rs 35,000, up from Rs 9,200.
Nuvama: The big gainers now
Among listed players, Max Healthcare emerged as the clear frontrunner. With 20% of revenue coming from government patients and about 10% directly linked to CGHS, Max could see a 5–8% boost in topline and as much as 18% growth in EBITDA a rise of 350–400 basis points in margins, as per Nuvama’s research.
Fortis Healthcare, with a similar 10% CGHS exposure, may see a 5% increase in revenue and 22% in EBITDA. Apollo Hospitals, more diversified and less government-heavy, is estimated to record a 3% topline benefit and 11% in EBITDA, translating into 200–250 basis points of margin expansion, the report added.
Even smaller players like Yatharth Hospitals and Narayana Health stand to gain meaningfully, with expected EBITDA jumps of 14–16%, supported by large footprints in Tier-I and Tier-II cities, as per Nuvama’s research.
Here’s how Nuvama models the potential impact of CGHS rate revisions on major hospitals (FY25 revenue base):
- Max Healthcare: Rs 82,897 crore revenue ; 27.3% EBITDA margin; 5% potential revenue uplift. CGHS patients 10% of revenue; largest benefit expected due to Tier I city super-specialty beds.
- Apollo Hospitals: Rs 1,11,475 crore revenue; 24.2% EBITDA margin; 3% potential revenue uplift. CGHS patients 5–6% of revenue.
- Fortis Healthcare: Rs 65,280 crore revenue; 20.5% EBITDA margin; 5% potential revenue uplift. CGHS patients 5% of revenue; strong Tier I city presence.
- Narayana Health: Rs 40,675 crore revenue; 22% EBITDA margin; 4% potential revenue uplift. CGHS patients 9% of revenue.
- Yatharth Hospitals: Rs 8,805 crore revenue; 25% EBITDA margin; 4% potential revenue uplift. CGHS patients 12% of revenue.
Note: Numbers are estimates by Nuvama based on CGHS rate revision modelling; not actual reported results.
The new rate structure, Nuvama wrote, “comes as a big respite given aggressive expansion,” and could spark similar changes in allied schemes such as ECHS.
Nuvama framed the change as a “welcome development amidst the bed expansion phase and ongoing dispute with private insurers.” It expects the revision to provide operational headroom for hospitals already managing inflation in staff costs and consumables.
The broader point is strategic, by anchoring reimbursements to accreditation and city class, the policy encourages quality improvement and creates a more predictable pricing base across India’s fragmented healthcare market.
DAM Capital says CGHS rate revision a ‘major reset’
DAM Capital Advisors,highlighted the impact of the rate revision on the capacity and operating leverage.of hospitals.
The brokerage called the CGHS revision “a major rate reset” that finally aligns reimbursement rates with current medical costs. While the changes were announced for CGHS, DAM Capital expects central and state schemes to adopt similar rates, making this the new national benchmark.
The firm noted that hospital with 10% of revenue coming from central government schemes and 20% EBITDA margins could see a 2.5% revenue boost, translating into roughly 10% higher EBITDA.
Many leading chains Fortis, Max Healthcare, Narayana Health, and Yatharth Hospitals have large exposures to government-linked schemes, with Yatharth drawing about 37% of its revenues from such programs. For these players, the reset is an instant structural tailwind, as per DAM Capital.
The report’s laid out how procedure prices have jumped across categories: a Brain Biopsy up to Rs 43,000 from Rs 6,679; Aortic Dissection at Rs 2.74 lakh from Rs 14,548; Kidney Transplantation (related) up to Rs 3.74 lakh from Rs 2.30 lakh.
DAM Capital goes beyond the rate hike’s arithmetic. It observed that the shift toward links reimbursement to hospital quality and city tier, calling it “a framework designed to incentivize compliance and quality improvement.” The firm believed this not only boosts profitability but also strengthens the credibility of India’s private healthcare system in the eyes of insurers and government programs.
The report maintained a constructive stance on the sector, with Apollo, Fortis, Max, and Narayana Health as top picks. Yet it stops short of exuberance. It cautions that companies are still assessing formal guidance on the earnings impact, even as it acknowledges “significant FY27 EBITDA upsides” across coverage.
DAM Capital’s claimed that the sector is entering a phase of “measured expansion,” supported by predictable pricing and steady utilization levels. That predictability, after years of margin pressure, is what hospitals needed most.
CGHS rate reset: Motilal Oswal bets on Max Healthcare
Additionally, in the research report “Corner Office” on Max Healthcare by Motilal Oswal Financial Services the spotlight turns on efficiency, the quiet backbone of sectoral strength.
After a meeting with Yogesh Sareen, Senior Director and CFO at Max Healthcare, the brokerage projects 21% revenue CAGR, 22% EBITDA CAGR, and 27% PAT CAGR over FY25–27. The report highlights how Max’s brownfield and greenfield expansion strategy, combined with build-to-suit (BTS) partnerships, creates a scalable yet capital-light growth model.
It’s a lesson in how Indian hospital operators are growing smarter, not just bigger. Motilal Oswal credited Max for a “proven track record of improving acquired assets,” a trait that offers resilience as consolidation continues.
Operationally, the company’s Average Revenue Per Occupied Bed (ARPOB) stood at Rs 1.55 lakh in Q1FY26, up slightly from the previous year, while occupancy remained at 76%. This consistency, the report noted, “reflects disciplined operating management.”