- Hospital stocks face policy risk after panel proposes tighter private healthcare pricing controls
- Jefferies views the panel report as a buying opportunity with limited earnings risk
- Macquarie calls the recommendations more interventionist and maintains Underperform ratings
Hospital stocks are facing a fresh policy overhang after a parliamentary panel proposed tighter controls on private healthcare pricing and billing, but brokerages are divided on how much the recommendations could affect earnings. Jefferies sees limited earnings risk and said any sector-led correction could offer a buying opportunity, while Macquarie sees a more interventionist policy direction and reiterated Underperform ratings on Apollo Hospitals and Max Healthcare.
Jefferies takes a constructive view, calling the parliamentary report “another buying opportunity” for the hospital sector, arguing that the recommendations will now go through consultations with hospitals and are likely to face pushback. The brokerage sees limited earnings risk for hospital operators and said any sector-led correction should be viewed as a buying opportunity.
Macquarie, however, says that the committee's conclusions are “notably more interventionist” than previous policy discussions.
The brokerage pointed to the report's repeated focus on private healthcare as a major source of out-of-pocket spending and affordability concerns. It expects greater pricing oversight, although it also noted that the recommendations could support capex-intensive infrastructure.
ALSO READ: Parliament Panel Pushes Sweeping Reforms To Make Private Healthcare More Affordable
What Is Behind The Brokerage Divide?
The parliamentary panel has proposed an immediate legal mechanism to cap hospital room charges and asked private hospitals to publish tariffs before admitting patients. It has also recommended a fast-track ombudsman mechanism to examine excessive billing and resolve disputes between hospitals and insurers.
The panel's GST recommendation could have a different financial implication for hospitals. It has proposed moving healthcare services from the current GST-exempt regime to zero-rated GST, which would allow hospitals to claim input tax credit on capital expenditure such as medical equipment and infrastructure.
The panel has also suggested that corporate hospital chains use medical tourism revenue to cross-subsidise treatment for economically weaker domestic patients.
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