CGS International Securities (Thailand) (CGSI) recently led a group of institutional clients to meet with management from Thailand’s Social Security Office (SSO) to discuss the structure of the nation’s social security system and its impact on private hospitals.
CGSI noted that the SSO has, in recent years, revised the reimbursement rates for inpatient care involving high-cost diseases—specifically, those cases with an Adjusted Relative Weight (AdjRW) exceeding two. This change has had a negative impact on private hospital revenue, leading to some institutional clients expressing concern over the effect of these adjustments on private hospitals treating social security patients.
The analyst pointed out the risk that the SSO might not be able to fully reimburse hospitals for high-cost cases in 2026, as the Cabinet is not expected to approve an increase in contributions to the Social Security Fund in the near term due to Thailand’s still-weak economy. As a result, CGSI believes it would be challenging for the SSO to raise medical service rates for hospitals if contributions are not increased.
Additionally, the SSO has tightened approval processes for expensive procedures, such as bariatric surgeries and cancer treatments, to prevent misuse of the system by healthcare providers.
According to CGSI, Bangkok Chain Hospital (SET: BCH) and Chularat Hospital (SET: CHG) are most sensitive to social security patient revenue.
In the second quarter of 2025, social security patients accounted for 37% and 28% of total revenue at BCH and CHG, respectively, compared to just 20% for Ramkhamhaeng Hospital (SET: RAM) and 2% for Bangkok Dusit Medical Services (SET: BDMS) in the first half of the year—leaving BCH and CHG more vulnerable to changes in SSO reimbursement rates.
CGSI also observed that valuations for Thai hospital stocks have declined, with the sector’s 12-month forward P/E falling from 24 times at the end of 2024 to 19 times as of September 25, 2025. The firm attributes this to concerns about lower patient inflows from the Middle East and Cambodia, a decrease in medical tourism, and lower reimbursement rates for high-cost inpatient care.
The analyst believes that the hospital group will face downside risk if the SSO further reduces reimbursement rates for expensive inpatient treatments or if Thai patients increasingly choose lower-cost providers during an economic slowdown. However, upside could materialize if the SSO increases reimbursement rates or if international patient numbers recover.
Despite the headwinds, CGSI finds the sector’s valuation attractive, trading at minus one standard deviation from the 10-year average, and considers hospital stocks a relatively safe haven amid ongoing political uncertainty.
The brokerage firm recommends an ‘Overweight’ stance for the sector, with Praram 9 Hospital (SET: PR9) and BDMS named as top picks. PR9 is favored as it does not treat social security patients, while BDMS derives just 2% of its revenue from this segment in the first half of 2025.
