New Delhi, February 28 – Private hospital chains in India are set to invest approximately ₹11,500 crore to expand their infrastructure with an additional 4,000 beds in the next financial year, according to a report by Crisil Ratings.
The rating agency analyzed 91 private hospitals, which collectively generated around ₹64,000 crore in revenue in the previous fiscal year. The report indicates that private healthcare providers are ramping up their expansion efforts, having already added approximately 6,000 beds in the ongoing fiscal year.
This surge in bed additions over just two financial years will match the total capacity expansion witnessed between FY20 and FY24, highlighting a significant acceleration in healthcare infrastructure investment.
Surge in Investments Amid Rising Demand
With hospital occupancy levels nearing peak capacity at 65-70% and a consistent demand for high-quality healthcare services, private hospital chains are allocating around ₹25,000 crore in capital expenditure across FY24 and FY25. This investment marks an 80% increase compared to the average annual spending over the past four fiscal years.Anuj Sethi, Senior Director at Crisil Ratings, emphasized that nearly three-fourths of this capital expenditure will be funded through internal accruals. Additionally, strong return metrics in the sector have attracted investments worth ₹55,000-60,000 crore from private equity firms and capital markets since FY22.
Breakdown of Expansion Strategy
According to the report, the expansion will be driven through multiple approaches:- 50% via Greenfield Projects: A major share of the expansion will come from setting up new hospitals, reflecting a strong push for fresh healthcare infrastructure.
- 40% via Brownfield Development: Significant investment will be directed toward modernizing and optimizing existing hospital facilities.
- 10% via Acquisitions: Large hospital chains will also acquire under-construction hospitals and smaller healthcare institutions to fuel growth.
Sector Growth and Investment Trends
Private hospitals currently contribute 63% of the total revenue in India's healthcare sector. Between FY20 and FY24, these hospitals achieved an 18% compound annual growth rate (CAGR) in revenue, along with a healthy operating profitability of 18%, ensuring strong cash flows.This robust financial performance, coupled with India's relatively lower hospital bed capacity per capita compared to other developing and developed nations, has made the sector attractive to investors. Private equity funding and IPOs have significantly strengthened hospital chains’ balance sheets, enabling them to undertake aggressive expansion plans without significantly affecting their credit profiles.
The rising healthcare investments underscore a strategic shift towards enhancing hospital infrastructure to meet growing patient demand and improve overall healthcare accessibility in India.
