Max Healthcare, Aster DM, KIMS shares tank up to 8% today. Here's why
You're correct. Shares of several hospital companies in India, including Max Healthcare, Aster DM, and KIMS, experienced a significant decline today, March 1st, 2024.
Here's a breakdown of the situation:
- The reason for the drop: The Supreme Court of India's recent ruling played a key role. The court stated that it would enforce Central Government Health Scheme (CGHS) rates across hospitals as a temporary measure if the central government and individual states fail to reach an agreement on hospital rates in accordance with the Clinical Establishment Act (CEA).
- Impact on specific companies:
- Max Healthcare witnessed the steepest decline, dropping 7.68%.
- KIMS shares fell by 3.23%.
- Aster DM also experienced a drop, but the exact percentage is not specified in the source I found.
- Other hospital chains, including Apollo Hospitals, Narayana Hrudayalaya, and Global Health, also saw a decrease in their share prices, though to a lesser extent.
Why the decline?
Investors are concerned that implementing CGHS rates, which are generally lower than the rates currently charged by these hospitals, could negatively impact their profitability. This is because hospitals may be forced to reduce their charges, potentially leading to lower revenue and, consequently, lower profits.
It's important to note that the situation is still developing, and the final impact on hospital chains remains to be seen. The central government and individual states may still reach an agreement on hospital rates, potentially mitigating the impact of the Supreme Court's ruling.
