New Delhi: Over the period of two years from 2022-24 Hospitals in India have become one of the preferred investment destination for Investors, attracting net investment of $4.96 billion from Private Equity and $3.2 billion through Foreign Direct Investment (FDI).
As per a report prepared by consultancy firm Grant Thornton Bharat in collaboration with the Association of Healthcare providers of India (AHPI), from 2022-24 hospitals in India undertook M&A deals worth $6.74 billion and attracted $4.96 billion from Private Equity (PE) investors.
During the period, hospitals also raised $466 million through Initial Public Offering (IPO), a process of selling shares to public through stock exchange.
The report which analysed 594 M&A and private equity transactions that took place during the period states that, “Hospitals require diverse funding solutions to sustain growth, ranging from equity financing, debt financing, and foreign direct investment (FDI) to public-private partnerships (PPPs).”
As per the investment analysis, ‘the top three investment via PE route includes: Temasek Holdings $2 billion investment in Manipal Health (2023); $656 million by BPEA EQT in Indira IVF (2023); and lastly Blackstone Group $591.1 million investment in Quality Care (2023).’
For the gross healthcare industry the report notes that, FDI in healthcare and diagnostics has reached USD 3.2 billion between 2022 and 2024 while since April 2000, FDI inflows into healthcare and diagnostics have reached USD 11.19 billion as of September 2024, primarily targeting hospital chains, diagnostics, and specialised care facilities.
Moreover in FY 24-25 till September hospitals and diagnostics players have generated $931.46 million through FDI inflows.
Behind the potential pullers the report underlines that, segments like nephrology, IVF, and oncology have attracted USD 1.4 billion in PE investments over two years due to their asset-light, scalable models; ageing population; and positive growth in health insurance penetration have attracted investors.
Commenting over the findings, Bhanu Prakash Kalmath S J, Partner at Grant Thornton Bharat said,”Investor interest in value-based care models and efficiently run hospitals continues to grow, supported by strong market fundamentals and a favorable investment climate. As the sector evolves, clinical excellence must remain its cornerstone and Optimising key performance metrics—such as EBITDA margins, patient volumes, and cost management—will be critical for hospitals to thrive in the years ahead.”
Programs like PMJAY (Pradhan Mantri Jan Arogya Yojana) have provided insurance coverage to over 500 million people, creating the demand for hospital services and ensuring financial protection for millions, Dr Girdhar Gyani, Director General, AHPI, added.
However the report also notes that, “Tier 2 and Tier 3 cities remain underserved, contributing less than 30 per cent of India’s hospital infrastructure despite representing a significant share of the rising demand for quality healthcare.”
Reflection upon this Dr Gyani, stressed. “With a deficit of 1.54 million doctors and 2.4 million nurses. The urban-rural disparity remains a challenge, as 60 per cent of hospital beds are concentrated in metro cities while 70 per cent of the population resides in non-metro regions.”
“The increasing cost of medical treatments and high out-of-pocket expenditures further necessitate innovative financing models.. enhanced medical training programs, incentives for rural healthcare expansion, and digital health adoption,” he added.
