On a recent visit to Miraj, a small town in western India where I grew up, I counted more than 50 multi-specialty hospitals, diagnostics centres and health clinics packed along a five kilometre stretch of road.
Many of them had come up in just the past five years, even though the town has historically been a regional medical hub in the state of Maharashtra.
The proliferation of these new facilities tells the story of the unprecedented boom in India’s private healthcare industry over recent years.
Hospitals have been undertaking breakneck expansion every quarter by adding thousands of new beds, diagnostics chains are expanding their footprint across smaller towns and medical institutes are raising hundreds of millions of dollars through the public markets to expand presence across the country.
In early August, Manipal Health, India’s largest multi-specialty hospital, raked in nearly a billion dollars in what became India’s second largest initial public offering (IPO) this year.
The sector has also been a darling of global private equity (PE) investors. Between 2022 and 2024, Indian healthcare and pharma companies recorded nearly 600 mergers and acquisitions and private equity transactions valued at more than $30bn.
Forty per cent of these funds went to hospitals, according to data from Grant Thornton.
An additional amount over $20bn was raised by the sector in the last two years, as per more recent data obtained from the consultancy by the BBC.
Yet, even as the country’s health infrastructure has seen a radical improvement in access as a result of this investment wave, millions of Indians have been priced out by the boom.
This was borne out by a new report released by a government panel recently, which highlights the strikingly unequal nature of India’s burgeoning healthcare economy, raising serious concerns about a “deepening affordability crisis” in the country’s private hospitals.
The report found that treatment in private hospitals is often between five and 10 times costlier than in government facilities, with the gap further widening for serious illnesses such as cancer, heart disease and kidney failure. It also said the “unbridled” growth of clinics, nursing homes and diagnostic centres and uneven implementation of regulatory standards had led to “glaring disparities in both the quality and cost of care in private sector, leaving patients vulnerable to arbitrary pricing and substandard practices”.
It further blamed “rampant commercialisation of private healthcare” for increased patient grievances when it came to things such as excessive billing, unnecessary diagnostics, and soaring costs for routine procedures like childbirth, which it said was “directly pushing vulnerable households into catastrophic debt and distress, causing asset sales”.
Earlier this week, the food and drug regulator in India’s richest state, Maharashtra, also found IV (intravenous) sets being sold at an astonishing profit margin of 2,800% in hospitals, raising concerns over the pricing of medical devices, which it said was almost entirely unmonitored.
The government panel had a range of recommendations to address the challenges: among the more contentious of them, a cap on hospital room tariffs to the nearest three-star hotel level, price regulation of essential treatments, diagnostics, and routine procedures across all private hospitals and standard treatment guidelines to prevent over-treatment. It also red-flagged foreign ownership of over 51% in hospital chains.
India’s private hospitals have pushed back against some of the proposals.
In a statement to the BBC, Siddhartha Bhattacharya, Secretary General of NATHEALTH, an association representing India’s private healthcare sector, said the government should focus on reducing structural costs of healthcare delivery including taxes, land, capital, manpower and regulatory compliance requirements - rather than capping rates.
According to him, healthcare delivery is capital-intensive and investment-heavy and return on capital employed “hovers at around 10%, significantly lower than many other sectors of the economy, which often generate 1.5-2.5 times higher returns on capital”.
He also cautioned against comparing hospital tariffs with hotel tariffs, saying it overlooks key compliance requirements that hospitals have to adhere to, such as infection control standards and patient safety norms, all of which add up to costs.