India's healthcare sector is at a crucial juncture, driven by rising demand, increasing investments, and evolving financial models. Our report, 'Vitals for growth: Decoding healthcare financing and funding in India', in collaboration with the Association of Healthcare Providers India (AHPI), provides an in-depth analysis of the healthcare investment in India, funding avenues for hospitals, and key metrics influencing hospital valuations.

As hospitals play a central role in delivering quality care, understanding investment trends and strategies is vital for stakeholders, including healthcare providers, investors, and policymakers. Our report highlights the sector's growth trajectory, emerging opportunities, and strategies to bridge infrastructure and funding gaps, ensuring a robust and sustainable healthcare ecosystem in India. Additionally, it explores how public-private partnerships, innovative funding models, and digital health advancements are shaping the future of healthcare financing in India, creating a more efficient and inclusive healthcare system.

 

Key trends in the Indian Healthcare sector

Hospitals are leveraging private equity, venture capital, bank loans, foreign direct investment (FDI), and public-private partnerships (PPPs) to expand infrastructure, adopt advanced technology, and enhance patient care.

Higher occupancy rates, strong EBITDA margins, and better revenue per bed are key factors that attract investors, ensuring hospitals secure the necessary capital for growth.

Single-specialty hospitals focusing on IVF, oncology, and nephrology are seeing significant investor interest, with USD 1.4 billion in private equity investments in recent years.

With 70% of India’s population living in smaller cities, investors see huge potential in expanding hospital networks to meet rising healthcare demand in these underserved regions.

AI-powered diagnostics, telemedicine, and robotic surgeries are reshaping healthcare delivery, improving efficiency, and enhancing patient outcomes—making hospitals more attractive to investors.

Hospitals with clear financial plans, scalable operations, and well-defined expansion strategies are more likely to attract investors through IPOs, mergers, and acquisitions.

Between 2022 and 2024, healthcare and pharma recorded 594 major deals worth over USD 30 billion, with hospitals accounting for 40% of total deal value, signaling strong investor confidence.

Investors are valuing hospitals at 20x to 30x EBITDA, with higher valuations for those improving operational efficiencies, expanding specialised services, and achieving strong patient volume growth.

Between 2022 and 2024, hospitals dominated healthcare investments, securing 44% of total deal value, amounting to USD 6.1 billion in 2024 alone. The USD 5 billion merger between Aster DM Healthcare and Quality Care highlights a strong trend of consolidation, as investors prioritise scalable, high-growth hospital networks.

Bhanu Prakash Kalmath S J
As the healthcare sector evolves, clinical excellence must remain its cornerstone. Delivering high-quality patient care, supported by innovation and operational efficiency, is essential to building trust and sustaining value. India’s healthcare sector, backed by strong fundamentals and a supportive investment climate, continues attracting domestic and international investors. Achieving clinical excellence alongside operational optimisation—through metrics such as EBITDA margins, patient volumes, and cost management—will be critical for hospitals. Expanding into underserved regions and investing in specialised services will be pivotal in bridging healthcare gaps and driving equitable access.
Bhanu Prakash Kalmath S J Partner and Healthcare Industry Leader, Grant Thornton Bharat
Dr. Girdhar Gyani
To strengthen India’s healthcare infrastructure, it is crucial to address the shortage of healthcare professionals, with a deficit of 1.54 million doctors and 2.4 million nurses. The urban-rural disparity remains a challenge, as 60% of hospital beds are concentrated in metro cities while 70% 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. Addressing these concerns through enhanced medical training programs, incentives for rural healthcare expansion, and digital health adoption will be pivotal in ensuring equitable access to care across all regions of India.
Dr. Girdhar Gyani Director General, AHPI

Healthcare investment in India

  • The Indian healthcare sector has attracted over USD 30 billion in M&A and private equity deals between 2022 and 2024, reflecting strong investor confidence.

  • Hospitals accounted for nearly 40% of total healthcare deal values, driven by the demand for quality care and expansion into underserved markets.

  • Single-specialty hospitals, such as IVF, oncology, and nephrology, are gaining traction due to their high operational efficiency and scalability.
  • Digital health investments, including AI diagnostics and telemedicine, are reshaping patient care and enhancing cost-effectiveness. The adoption of telehealth platforms is particularly notable in rural areas, improving access to specialist consultations.

  • Government policies, including 100% FDI in healthcare under the automatic route, are facilitating foreign investments and boosting infrastructure growth. Increased regulatory support for health-tech startups is also creating new investment opportunities.

Financing options for hospitals

Option Description
Equity financing
Raising capital by offering ownership stakes to private equity (PE) or venture capital (VC) investors.
Best suited for: Established hospitals or healthcare chains seeking growth capital and strategic expertise. Ideal for multi-specialty hospitals, hospital chains with 500+ beds.
Features:
  • No repayment obligations.
  • Dilution of ownership.
  • High investor return expectations (20–30% IRR)
Key deals:
  • Temasek Holdings: Invested USD 1 billion in Manipal Hospitals for tier-2 and tier-3 city expansion.
  • Medanta: Leveraged an initial public offering (IPO) to fund operational growth
  • General Atlantic bought a controlling stake in Ujala CygnusParas Healthcare raised by tapping the public market to fund its greenfield projects
  • Blackstone bought a controlling stake in Care Hospitals and Kerala Institute of Medical Sciences.
  • Further, Care & Aster DM will be merged
  • KKR bought a controlling stake in Baby Memorial Hospital
  • Norwest took a significant minority in Regency Hospital
Debt financing
Borrowing funds through bank loans, corporate bonds, or external 
commercial borrowings (ECBs).
Best suited for: Financing infrastructure projects like building facilities or upgrading equipment. Ideal for small to mid-sized hospitals, 50 to 150 beds.
Key features:
  • Retains full ownership.
  • Requires repayment of principal and interest.
  • Can strain cash flows if not well-planned.
Deals:
  • Aster DM Healthcare: Raised funds via corporate bonds for infrastructure expansion in India and the Middle East.
  • Artemis Medicare raised debt in the form of convertible debenture from IFC
  • Hospitals: Often use long-term loans from banks to modernise operations
FDI route
India permits 100% FDI in the healthcare sector under the automatic route
Best suited for: Hospitals seeking large-scale funding, technology adoption, or global expertise.  Ideal for large hospital chains or multi-specialty hospitals with 1,000+ bed chains.
Key features:
  • Long-term funding with access to international expertise.
  • Often involves equity stakes or greenfield project funding.
  • Requires compliance with regulatory frameworks.
Deals:
  • IHH Healthcare: Invested in Fortis Healthcare for advanced technology adoption and operational upgrades.
  • Columbia Asia and Manipal Health: Acquisition expanded Manipal’s network and improved service standards.
PPP
It is a collaboration between private hospitals and government agencies to develop and manage healthcare infrastructure.
Best suited for: Expanding healthcare access in rural and underserved areas from 50 to 1000
Key features:
  • The government provides land, subsidies, or viability gap funding.
  • Private players contribute expertise and operational management.
  • Challenges include bureaucratic delays and financial viability concerns.
Example:
  • Medanta Hospital in Patna, Bihar
  • Development of AIIMS-like hospitals in tier-2 and tier-3 cities through PPP models to bridge rural/underserved healthcare gaps.

Unlocking funding avenues for hospitals

  • Hospitals have multiple funding options, including equity financing, debt financing, FDI and PPPs.

  • Equity financing, through private equity in healthcare or venture capital, enables hospitals to scale operations while attracting strategic expertise. Many investors seek hospitals with strong governance frameworks and operational efficiency as key investment criteria.

  • Debt financing, such as loans and bonds, allows hospitals to expand infrastructure while retaining ownership but requires careful financial planning. Access to structured debt financing through healthcare-specific credit programmes is an emerging trend.

  • FDI provides access to global expertise and funding for large-scale projects, ensuring long-term sustainability. Several international hospital chains are exploring joint ventures with Indian healthcare providers to enter this high-growth market.

  • PPPs are instrumental in bridging healthcare access gaps in rural and semi-urban areas by leveraging government support and private sector efficiencies. Increased state and central government initiatives are paving the way for more hospital PPP models.

Metrics and trends in hospital investments

  • Hospitals with higher EBITDA margins, strong patient volume growth, and high bed occupancy rates attract premium valuations.

  • Revenue per bed and operating margins serve as critical financial indicators for investors assessing hospital performance.

  • Scalable healthcare models, including single-specialty platforms, are preferred by investors due to their ability to optimise costs and drive profitability.

  • Asset-light models, such as franchise-based specialty hospitals, are gaining popularity.
  • Technology-driven hospitals, leveraging AI diagnostics and digital health solutions, demonstrate higher investment appeal. Adoption of robotic surgeries and remote patient monitoring solutions is increasingly influencing investor interest.

  • Strategic partnerships and acquisitions among hospital chains are expected to continue, fostering market consolidation and operational efficiencies. The trend of international hospital chains acquiring Indian healthcare assets is also expected to accelerate.

Recommendations for hospital owners

Define short-term priorities like facility upgrades and long-term goals such as expansion into new regions. Match these priorities with the right funding option, balancing debt for immediate needs and equity for future growth.

Focus on improving key metrics such as bed occupancy rates, operating margins, and patient volume growth in order to attract investors. Transparent financial reporting and strong revenue streams enhance credibility and funding prospects.

Develop a compelling business plan with detailed financial projections, expansion strategies, and ROI expectations. Highlight unique market positioning to attract long-term investors.

Obtain NABH, JCI, or equivalent certifications to demonstrate adherence to global healthcare standards. These accreditations improve hospital credibility and investor appeal.

Hospitals must carefully evaluate financing options such as private equity, debt financing, FDI, and PPPs based on growth needs. A well-balanced capital mix minimiaes risks and ensures financial sustainability.

Digital tools like AI diagnostics, telemedicine, and electronic health records (EHRs) improve efficiency and patient care. Investors favour hospitals that integrate innovation into their operations.

Conclusion

The future of healthcare financing in India seems rock steady, as the country’s healthcare sector is undergoing a transformative phase, backed by increasing investments, evolving financial models, and government support. Hospitals, as key players in the healthcare ecosystem, must leverage diverse funding avenues and embrace technological advancements to drive sustainable growth. Addressing infrastructure gaps, improving operational efficiencies, and expanding into underserved regions will be critical to ensuring equitable healthcare access. With digital health initiatives and innovative financial structures gaining traction, hospitals that prioritise technology adoption and operational scalability will remain attractive investment prospects. As investors continue to show confidence in the sector, strategic collaborations and innovative financial mechanisms will pave the way for a more resilient and inclusive healthcare system in India, ultimately improving patient outcomes and access to quality care.

Vitals for growth: Decoding healthcare financing and funding in India
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Vitals for growth

Decoding healthcare financing and funding in India

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Meet our leaders

Abhay Anand
Abhay Anand
Partner and Medical Devices Industry...
Mumbai
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Bhanu Prakash Kalmath S J
Bhanu Prakash Kalmath S J
Partner and Healthcare Industry Leader
Bengaluru
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Darshana Kadakia
Darshana Kadakia
Partner, Deals Lifecycle
Mumbai
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