Private Hospitals Set to Invest ₹40,000 Crore in India’s Healthcare Growth Amid Mounting Profitability Challenges

Summary:
India’s private hospital sector is expected to invest nearly ₹40,000 crore to add over 38,000 beds by 2030, driven by rising healthcare demand, an ageing population, and expanding insurance coverage, according to a Bajaj Broking Prive report. The expansion, largely through brownfield projects, is expected to boost capacity, improve revenue, and support growth in tier-II and tier-III cities. The report remains optimistic about Apollo Hospitals, Narayana Health, and Rainbow Children’s Medicare due to their expansion plans, while cautioning that low public healthcare spending, rising costs, regulatory changes, and slower ramp-up of new facilities could impact profitability despite the sector’s strong long-term outlook. 

India’s major private hospital operators are expected to invest nearly ₹40,000 crore to create more than 38,000 additional hospital beds by 2030, responding to increasing healthcare demand driven by an ageing population, the rising incidence of chronic illnesses, and broader health insurance coverage, according to a report by Bajaj Broking Prive.

The report estimates that the industry’s capital expenditure programme will significantly expand capacity, with private hospital networks planning to increase their bed count by around 54% over the coming years. It also projects that India’s healthcare market will exceed $372 billion by 2027.

According to the report, the sector’s growth will be supported by higher insurance penetration, increasing medical tourism, wider adoption of digital healthcare services, and expansion into tier-II and tier-III cities.

Despite these investments, India continues to face a substantial infrastructure gap, with only 1.3 hospital beds per 1,000 people, considerably lower than the global average. This highlights the continued need for capacity expansion across the healthcare system.

The report notes that hospital operators are increasingly favouring brownfield expansion projects, with nearly 63% of the upcoming bed additions expected to come from upgrading existing facilities. This strategy enables quicker project execution, lower capital requirements, and faster returns compared to building entirely new hospitals.

It also expects average revenue per occupied bed (ARPOB) to rise by almost 45%, supported by hospitals placing greater emphasis on specialised and high-value medical services.

Healthcare demand is forecast to grow more rapidly in non-metro regions. The report estimates annual growth of 16–18% in tier-II and tier-III cities, compared with 12–14% in metropolitan areas. It further notes that more than 70% of hospitals empanelled under the Ayushman Bharat scheme are located in smaller cities and towns, providing private hospital chains with a consistent patient base.

Among listed healthcare companies, the brokerage maintains a positive outlook on Apollo Hospitals Enterprise, Narayana Health, and Rainbow Children’s Medicare, citing their expansion strategies and long-term earnings potential.

Apollo Hospitals plans to invest approximately ₹8,000 crore to add nearly 4,400 beds by FY30. Narayana Health has announced a domestic capital expenditure plan of around ₹3,000 crore, which includes six new projects expected to contribute about 2,000 beds over the next three years. Meanwhile, Rainbow Children’s Medicare is developing more than 900 beds as it expands its presence in northern and central India.

The report states that Apollo Hospitals is well positioned to benefit from growing domestic healthcare demand as well as medical tourism. With its large expansion programme and completed business restructuring focused on core healthcare operations, the company is expected to sustain healthy long-term growth.

For Narayana Health, the report highlights strong growth prospects supported by international expansion, solid domestic operational performance, and structural improvements in higher-margin clinical services.

Rainbow Children’s Medicare, meanwhile, is expected to move from a phase of heavy capital investment to one focused on earnings growth, allowing it to benefit from stronger operating leverage as its expansion projects mature.

Bajaj Broking Prive expects the ongoing expansion cycle to support healthy financial performance across the sector over the medium term. It forecasts FY27 revenue growth of 18.5% for Apollo Hospitals, 33.1% for Narayana Health, and 17.7% for Rainbow Children’s Medicare, while anticipating improved profitability as new hospitals achieve higher occupancy levels.

At the same time, the report cautions that several challenges could affect the industry’s outlook. Public healthcare spending remains at around 2% of GDP, among the lowest levels within G20 nations, leaving a significant portion of healthcare costs dependent on private spending. It also warns that rising operating expenses, stricter regulations, pricing controls, and slower-than-expected ramp-up of newly commissioned hospitals could place pressure on profitability despite the sector’s favourable long-term growth prospects.