Grant Thornton Bharat and AHPI unveil ‘Vitals for Growth’ report: Mapping India’s healthcare investment landscape

Grant Thornton Bharat, in collaboration with the Association of Healthcare Providers India (AHPI), has released the report titled ‘Vitals for Growth: Decoding Healthcare Financing and Funding in India’. The report explores financing trends in India's healthcare sector, which has become a cornerstone of the nation's economy, driven by demographic changes, technological advancements, and increasing demand for quality healthcare.

From 2022 to 2024, India's healthcare and pharma sector recorded 594 M&A and private equity transactions, totaling over USD 30 billion in deal value. Hospitals accounted for nearly 40 per cent of this, underscoring the investor focus on infrastructure expansion and operational efficiency. In 2024, the hospital segment dominated deal values with a 44 per cent share, totaling approximately USD 6.1 billion—a robust year-on-year growth of nearly 24 per cent. Key growth drivers include:

• Multispecialty hospitals continue to lead in healthcare delivery, with recent consolidations aimed at achieving operational efficiencies and regional expansion. Single-specialty hospitals have attracted USD 1.4 billion in private equity investments over two years, demonstrating strong operational efficiency and scalability.
  
  
• FDI in healthcare and diagnostics has reached USD 3.2 billion between 2022 and 2024 Hospitals require diverse funding solutions to sustain growth, ranging from equity financing, debt financing, and foreign direct investment (FDI) to public-private partnerships (PPPs). 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.

“India’s healthcare landscape is being reshaped by shifting demographics, increasing cases of chronic lifestyle diseases, and a rising emphasis on preventive care and quality healthcare services. These structural shifts, coupled with growing insurance penetration and post-pandemic resilience, are redefining patient expectations and healthcare delivery models. Simultaneously, 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. Delivering high-quality patient care, backed by innovation and operational efficiency, is essential to attract investors, building trust and sustaining value. Optimising key performance metrics—such as EBITDA margins, patient volumes, and cost management—will be critical for hospitals to thrive in the years ahead.”

Bhanu Prakash Kalmath S J
Partner and Healthcare Industry Leader, Grant Thornton Bharat

“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 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. 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

Hospitals remain the primary focus of healthcare investments due to their robust operational metrics and scalability. Valuation multiples range between 20x and 30x EBITDA, particularly in high-demand specialties such as oncology, cardiology, and mother-and-child care. Hospitals with higher EBITDA margins, patient volume growth, and strong occupancy rates continue to command premium valuations. Key valuation insights include:

• The listed companies in the healthcare sector are currently valued in the range of 3.5x to 5.0x revenue multiples.
  
  
• The industry has witnessed improved margins due to higher ARPOB and sustained occupancy rates, with EBITDA multiples ranging between 20x and 30x.
  
  
• Expanding bed capacity in hospital chains is expected to sustain high margins and attract continued investor interest in the medium term.

“The hospital segment within the healthcare sector is at a critical juncture, where valuations are increasingly influenced by stronger EBITDA margins, higher ARPOB, occupancy levels, and optimised service mix. The industry has seen improving margins. Hospitals that demonstrate long-term growth potential through digital adoption and strategic acquisitions will strengthen their market positioning and command premium valuations, reflecting investor confidence in scalable and high-performing healthcare models.”

Darshana Kadakia
Partner, Grant Thornton Bharat

India’s healthcare sector is at a pivotal moment, offering immense investment opportunities alongside the need for strategic growth. Bridging infrastructure gaps, expanding into underserved regions, and fostering digital health innovations remain key priorities. The Vitals for Growth report provides a roadmap for hospital owners, investors, and policymakers to navigate this evolving landscape with actionable strategies. A collective effort will be crucial in ensuring sustainable growth, equitable access, and a resilient healthcare ecosystem for all.