The healthcare sector has experienced a decline in the shares of prominent hospital and healthcare companies over the last two trading sessions. Max Healthcare, the largest hospital chain in the country, saw its shares fall by nearly 16 percent in this period. Other companies, including Apollo Hospitals (down by 1.43 percent), Medanta (down by 4.82 percent), krishna Institute of Medical Sciences (down by 3.81 percent), and Fortis Healthcare (down by 4.57 percent), also witnessed declines.

 Investors are exhibiting caution in response to the potential impact of an upcoming supreme court decision regarding fee rates. This decline is attributed to investor concerns stemming from a public interest litigation filed in the supreme Court. The litigation calls for the determination of patient fees in accordance with the Clinical Establishment Act, 2012.

 The Act mandates that the central government collaborates with states and union territories to set hospital fees. The supreme court directed the Secretary of the health Department to work with states and union territories to formulate a proposal within six weeks. The supreme court, during the hearing, questioned why hospital service rates had not been fixed despite the existence of the act for 12 years. If the central government fails to submit a proposal, the supreme court indicated that it may implement CGHS rates across all private hospitals, offering relief to the public.

Implementing CGHS rates could pose challenges for private hospitals, potentially leading to financial losses. Experts express concerns that such a move could result in negative Ebitda situations for most hospitals, as the uniform rate of services may not align with the diverse technology and quality services offered across different establishments. The potential negative impact on the shares of hospitals like KIMS, Yatharth, Narayan, Max, and Fortis is anticipated if stringent rules are enforced.

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