Hospital stocks are on fire this morning. After 15 long years of waiting, and negotiation, the government has finally revised the Central Government Health Services (CGHS) package rates. The announcement came instantly sparked a rally across key hospital sector stocks. Apollo Hospitals, Max Healthcare, Fortis, Narayana Health, Global Health, and Yatharth Hospitals stocks jumped as mucjh as 5% intra-day .
Hospital stocks on fire
In Monday’s trading session, Apollo Hospitals climbed as much as 3.7% to reach Rs 7,730 per share. Fortis Healthcare advanced by 5%, touching Rs 1,027, while Global Health hit an intra-day peak of Rs 1,347, marking an increase of just over 1%.
CGHS scheme scenario
For years, the CGHS scheme was running on outdated rates. This revision in rate is the largest in the last 15 years and the older rates have been a cause of concerns for patients and hospitals alike. Medical costs havemoved up steeply, equipment prices have multiplied, and staff salaries have also risen significantly. The hospitals were expected to function under prices fixed more than a decade ago. Several refused to offer cashless treatments under CGHS as a result and patients were caught in the middle, paying hefty amounts out of teir own pocket and waiting months for reimbursements.
CGHS: What has changed?
The government has introduced a new multi-layered structure for nearly 2,000 medical procedures, effective October 13. This is not just a price update but also being seen as a structural overhaul. The rates will now be decided based on four criteria. These include, hospital accreditation, type of hospital, the city’s classification, and the patient’s ward entitlement. Each layer introduces a degree of differentiation that was missing earlier.
Can city-wise classification help
These rates are based on the city’s category (Tier-I, Tier-II, Tier-III) and the hospital’s quality (such as NABH accreditation).
For example, NABH-accredited hospitals the ones meeting the national standards of quality will now set the benchmark rate. Non-accredited facilities will be paid 15% less, a reasonable incentive for hospitals to maintain higher standards. Similarly, hospitals in smaller cities will see rates 10–20% lower than those in Tier-1 metros, a reflection of varying operational costs. There’s also a 5% reduction applied to general ward treatments, presumably to manage the government’s overall spending while still being fair to hospitals.
To many in the industry, this revision doesn’t just fix an old issue it reopens a channel that had grown stagnant. For private hospitals, which had begun distancing themselves from CGHS due to poor margins, this could mean renewed participation and smoother cashless operations.