CGHS rate revision a positive step for cancer care, says HCG's BS Ajaikumar

Dr BS Ajaikumar, Chairman of HealthCare Global Enterprises (HCG), said the government’s decision to revise rates for nearly 2,000 medical procedures under the Central Government Health Scheme (CGHS) is “a step in the right direction,” especially for cancer patients. The new rates will take effect on October 13.

“I think the cancer patients who are under CGHS will definitely benefit,” Ajaikumar said, adding that HCG is still reviewing the details. “Oncology is very complicated - we have to look at chemotherapy rates, drugs, radiation, and what the reimbursement is for surgery, which has been the key point in the past.”

He noted that surgical reimbursements have often been low and hoped that the new revision “will ensure CGHS patients get the right treatment at the right time without having to pay cash out of pocket.” Ajaikumar added that if the changes work well, other government-backed schemes such as ESI, ECHS, and state health programs could follow.

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HCG, a healthcare organisation headquartered in Bengaluru, is assessing the financial impact of the new rates. “It may be in the region of 5 to 6%,” Ajaikumar said, though he emphasised that the effect could vary by city. “We need some time to do our homework and see what the real impact will be… as we always say, the devil is in the details.”

On payment delays under CGHS, he said, “Average delay may be close to six months but that was in the past. I don’t know the recent part of it; we’ll have to check whether they have improved.”

Ajaikumar estimated that around 20-25% of HCG’s exposure comes from government schemes such as Ayushman Bharat, Employees' State Insurance (ESI) scheme, and the Ex-Servicemen Contributory Health Scheme (ECHS). “Honestly speaking, the cancer care reimbursement in India is terrible to put it mildly,” he said. “Hospitals have to do cross-subsidy because schemes pay very nominal amounts.”

He added that if the new CGHS rates are implemented smoothly, hospitals could begin to see benefits “in the fourth quarter,” provided the changes apply to both existing and new patients.

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HCG has a market capitalisation of ₹9,274 crore, with its shares gaining over 52% in the past year.

Industry experts noted that while the revision is significant, it may have a limited impact on listed hospital chains. Shriram Subramanian, Founder of InGovern, said, “Private hospital chains deal with government cases that come to them; they don’t go in search of those cases. From that perspective, it is neutral for revenues and margins.”

Kunal Dhamesha of Macquarie Capital said the revision was the first major overhaul in more than a decade. “Rates in key therapies such as cardiology, orthopaedics, neurology, and oncology have been hiked by anywhere between 5% and 30% over the 2024 rates,” he said, noting that government-linked revenues form around 10-20% of total income for most hospital groups.

For the full interview, watch the accompanying video

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