Hospital Stocks Tumble for Second Day As Supreme Court Warns of Applying CGHS Rates for Private Players

26 Mar 2024 , 03:18 PM

While Apollo Hospitals, KIMS, and Fortis Healthcare all declined about 2%, Max Health’s stock dropped over 8%.

The court criticised the government for failing to outline the range of prices that private hospitals and clinical institutes might charge for medical services. It was also highlighted that the regulation in this respect, despite being established 12 years ago, has not yet been implemented.

During the proceedings of a public interest case brought by the NGO ‘Veterans Forum for Transparency in Public Life,’ a bench comprising Justices BR Gavai and Sandeep Mehta attempted to implement Rule 9 of the Clinical Establishment (Central Government) Rules, 2012. This rule mandates hospitals and healthcare institutions to disclose service charges and set up fee structures within the boundaries established by the federal government in collaboration with state authorities.

In response, the court ordered the Union health secretary to schedule a meeting with state equivalents within a month to establish a specific plan before the next hearing date for the announcement of a standard tariff.

The court warned that if the centre did not find a solution by then, it would consider the petitioner-NGO’s proposal to adopt the uniform rates applicable to CGHS-empanelled institutions as an interim remedy and give relevant orders.

This has raised investor concerns, since the adoption of CGHS prices is anticipated to reduce revenue and realisations for hospital majors that are currently in the midst of significant capacity growth.

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