Surge in Private Healthcare Expansion
New Delhi: Private hospitals in India are set to expand their capacity by over 4,000 beds in the next fiscal year, backed by an investment of ₹11,500 crore. This follows an aggressive expansion of around 6,000 beds in the current fiscal, as per a recent report by Crisil Ratings.
The bed additions over these two years will match the total capacity expansion seen between fiscal 2020 and 2024, indicating a significant acceleration in private healthcare investments.
Key Findings from the Crisil Ratings Report
- Private sector dominance:
- Private hospitals contribute 63% of total sectoral revenue in India.
- Over the last four years, private hospitals have achieved an 18% compound annual growth rate (CAGR) in revenue and operating profitability.
- Investment Trends:
- Private hospitals are investing ₹25,000 crore across two fiscals (2024-25 and 2025-26)—nearly 80% higher than the previous four-year average.
- ₹55,000-60,000 crore has been raised through private equity and IPOs since fiscal 2022, strengthening hospital balance sheets.
- 75% of the total capital expenditure (capex) will be funded through internal accruals.
- Types of Expansion:
- 50% Greenfield projects: New hospitals with significant infrastructure investments.
- 40% Brownfield expansion: Modernization and optimization of existing hospitals.
- 10% Acquisitions: Large healthcare players taking over under-construction and mid-sized hospitals.
Challenges & Risk Factors
- Greenfield expansion risks: Timely completion and achieving occupancy remain critical.
- Regulatory changes: Policy shifts could impact profitability.
- Debt and financial stability:
- Interest coverage ratio and debt-to-EBITDA remain healthy at 8.0x and 1.2x, maintaining credit stability.
Despite the rapid expansion, high demand for quality healthcare is expected to sustain occupancy levels at 65-70%, ensuring continued profitability and sectoral growth.
