Huge growth in Indian hospital industry fuelled by gigantic private equity investment

Historically it was witnessed that the biggest gamechanger in healthcare was the emergence of  VIRUS. For example,  in 1918-19,around  50 million (5 crores) people got killed during Spanish flu pandemic at the time of 1^st world war. The lessons learnt during this phase helped to save millions of life thereafter with the development of vaccine and  antibiotics around the  2^nd world war. Post second world war massive developments took place in the healthcare and pharmaceutical industries across the globe.

Something same was witnessed now after the COVID pandemic. After COVID pandemic of 2020,  healthcare industry in India is gearing for a major shift. Around 46 lakhs people died during covid in India. Acute healthcare services shortage was witnessed in India during Covid pandemic. New Capital era has started in the healthcare industry post Covid. Huge investment has been pumped into the healthcare sector.

Temasek (Singapore sovereign wealth fund) has invested INR 16,400 crore in Manipal group. Manipal group in September bought 84% stake in AMRI Hospital (Emami backed) in Kolkata for INR 2400 crores. In November biggest private Equity company of the world Blackstone, bought 73% stake in Quality Care Hospital for INR 4785 Crores. Care Hospital bought major stake in KIMS Health in Kerala as well as in a major UAE Hospital.

Aster DM Healthcare sold GCC healthcare businesses  stakes to Alpha GCC Holdings for $ 1 billion in November. Ontario Teachers bought significant majority stake in Sahyadri Hospital (Largest private hospital chain) from Maharastra. Piramal Enterprises Ltd. Backed India RF fund bought Punjab based Ivy Hospitals for INR 525 Crores. Likewise Max Healthcare took over Sahara hospitals for INR 900 crores. So, around 3-4 wealth funds, some big investors have invested bigtime in the flourishing healthcare industry in India and is just the beginning.

More exciting news are expected in 2024 with hospital investments are anticipated to reach an all-time high. For instance, Omega Hospitals, Hyderabad has initiated discussions with Morgan Stanley and other investors regarding the sale of a minority stake. Likewise, Hyderabad based Renova group, Gujrat based Sunshine global hospitals, Pune based Lokmanya Hospitals, Kerala based Baby memorial Hospitals are looking for both debt as well as equity funding.

This, according to the latest  E&Y Report, In 2023, the healthcare industry in India experienced an unprecedented surge in investment, receiving in excess of $4 billion. Private equity (PE) investments increased by 9-10%, a significant increase from the 2% recorded prior to the COVID-19 pandemic and the 5% recorded last year.

In 1943, Bhore Committee Report suggested 3 tier healthcare system i.e primary, secondary(small Hospitals), tertiary hospitals (big hospitals) to cater to the healthcare needs of the Indian population post independence.For example, it was suggested that for a population of 40,000, 24 PHC had to be created and this target was supposed to be achieved by 1953.But even after 70 years on independence, government has failed to achieve so.

Post Covid, the industry has realized that governments in india  will not be able to acter to the healthcare needs as well as the aspirations and growing health needs of the burgeoning population and therefore  investments is expected to grow in India and will culminate into exponential growth and boom in the hospitals across the country especially T-II and T-III cities. This growth is expected to fuel the demand for increased manpower in the hospital industry in various domains including quality control and assurance, marketing, billing, floor management, general administration, TPA, Human Resource etc. According to conservative market estimates, India requires approximately 44,936 health management professionals by the year 2030 to maintain the normative standard of 2.97 health managers per 100,000 population in the government positions.