India’s healthcare sector needs long-term partners

India today carries a contradiction that few other economies do. The country’s Gross Domestic Product (GDP) has crossed $4 trillion. By some metrics, India’s population has surpassed China’s, while it still has a working-age demography that much of the world envies. India is among the fastest-growing major economies with an aspirational middle class and millions moving out of poverty every year.

While this progress is remarkable, India’s healthcare system continues to spend around 2% of GDP, placing it among the lowest in the G20 group of countries. As per statistics compiled by the World Bank and other organizations, India’s bed-to-population ratio hovers around 1.6 per thousand (2021), below the World Health Organization’s threshold for adequacy.

India’s central government and the states have taken steps to strengthen India’s healthcare system. The central government extends insurance coverage to eligible households through Ayushman Bharat. States have parallel tertiary and catastrophic care schemes. Most of the inpatient care in urban India is delivered by private hospitals, and public capacity, however well-funded, will continue to require a private complement.

There is a need for long-term partners to improve the healthcare system

Walk into any large urban hospital built in the last decade. The architecture and setup there tell their own story. A patient seeking healthcare encounters polished atriums, glass façades, valet parking, a retail concourse with a coffee chain and a pharmacy, and, increasingly, a wellness boutique. Rather than focusing on healthcare, hospitals increasingly appear to be engineered to resemble a premium shopping environment more than a clinical one.

There is nothing inherently wrong with comfortable surroundings, and patients deserve dignity in the spaces where they are most vulnerable. What deserves scrutiny is the operating logic and excessive focus on short-term returns. Increasingly, large hospitals are run to optimise average length of stay and procedure mix. Diagnostics are cross-sold with consultations; consultant compensation is structured around revenue generation; international patient desks are staffed more attentively than out-patient queues.

It may not be wrong to say that a hospital’s leadership team that once measured itself by clinical outcomes is now deposing before investment committees that measure quarterly margin expansion and return on invested capital. The shift announces itself quietly, showing up in which specialties are expanded, which procedures are promoted, and which patients are prioritised. Over time, the hospital begins to behave less like an institution and more like an asset.

India’s healthcare sector requires investment to resolve its significant bed shortage. The key issue is understanding what type of capital is being invested in and its sustainability. Private equity typically operates within a four to six-year timeframe, aligned with fundraising and return schedules for limited partners. Meanwhile, a healthcare facility’s reputation generally takes 15 to 25 years to build but can decline rapidly, in just 18 months of cost-cutting, highlighting a misalignment between these timelines.

Indian hospitals would benefit from strategic partners whose core business is operating hospital operators that have built clinical systems across multiple geographies and carry institutional protocols, residency programmes, infection-control benchmarks, and governance structures that are auditable on metrics other than margin.

Several such operators have already taken meaningful stakes in Indian hospital chains and brought with them something more valuable than capital: an internalised understanding that reputation, once damaged, takes a decade to rebuild and that the cheapest way to preserve it is never to compromise it in the first place. Their decisions look different at the floor level; they invest in training when the quarterly Profit & Loss statement would advise against it, and they retain less profitable specialties because a hospital without them is a clinic with marketing.

The examples are not hard to find. IHH Healthcare, a multinational healthcare provider, is the promoter of Fortis Healthcare, which operates 36 healthcare facilities in India with around 7,900 doctors, 9,300 nurses, and over 28,000 employees, and roughly 6,100 operational beds as of 31 March 2026. Similarly, Apollo Hospitals remains under the founding Reddy family’s management control, while Narayana Health, built by cardiac surgeon Dr. Devi Shetty around an affordable, high-volume care model, is promoted by the Shetty family.

The case here runs beyond ethics into operating economics. Hospitals that build clinical depth attract better consultants, retain nursing talent for longer, and earn referral loyalty that no marketing budget can manufacture; they become destinations for complex cases, which carry stronger margins in any event.

For founders and boards weighing succession or growth capital, the choice of partner is among the most consequential decisions they will make in the coming decade, more consequential than the valuation at which the deal is signed. For policymakers, transparency of ownership, governance norms for hospital boards, and stricter disclosure of clinical outcomes would help patients distinguish institutions from assets.

And for patients themselves, who increasingly choose hospitals the way they choose hotels, the slow rebuilding of that discernment may be the most powerful market signal of all.

Medicine became a noble profession because someone chose to stay through the night, and accordingly, the capital behind it should be willing to do the same.

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