New Delhi – According to a report from brokerage firm Miare Asset Sharekhan, India’s hospital sector is poised to expand over the next decade due in part by structural demand, and a renewed investment cycle. After years of balanced-sheet repair, and measured growth, listed chain hospitals are now accelerating their cacity additions. This signals a shift away from ARPOB driven profitability to volume-driven expansion. The report stated that the industry will continue to attract cital long after FY30 due to the increasing private insurance penetration and the acute bed shortage. The report highlighted that the addressable markets are expanding in multiple directions.

Increased per cita income, increased insurance coverage, aging population, and chronic diseases are all factors that contribute to the growing burden of chronic diseases. India’s Hospital Market has grown from USD 75.3 Billion in FY18 to USD 193.4 Billion in FY25, at a CAGR of 14.4 %. It is expected to reach USD 364.6 Billion by 2034, at a CAGR of 7.2 %.

The Private Hospital segment is expected outpace with a Compound Annual Growth rate of 10.6 percent, fueled by a stronger payer mix and increasing Average Revenue per Occupied bed (ARPOBs). Sharekhan noted that cacity is still an issue for the sector. India has only 1.3 hospital beds for every 1,000 people, while the global average is 2.9. In countries such as Brazil or Vietnam, this figure is even higher at 2.5+. This underpenetration allows for the rid absorption of new beds without a drop in demand. The bed utilisation rate is now above 60% across all major chains, and ollo Hospitals are nearing 70%, which supports both margins as well as returns. The report also stated that payers are increasingly in favor of hospitals. Private Insurance now accounts for 30-43 percent of revenue, compared to 20-25 percent a few year ago. Meanwhile, out-of pocket expenses have been steadily declining. Ayushman Bharat and PM-JAY, two government schemes, are increasing market access and volume, especially in Tier-2 and Tier-3 cities. However, they also put pressure on margins because of fixed package pricing. Hospitals that are more than 65 to 70 per cent occupied can still maintain EBITDA for each bed. Those integrated with the National Health Claims Exchange will be better able to manage 60-120 day claim cycles. The cex cycles reflects this change. Hospitals focused on efficiency, speciality mix and reducing leverage between FY19 and ’24 after aggressive expansion before FY19 drove net debt/EBITDA up to 5.0x. In FY25, a new growth phase begins with significant increases in cex that point to a stronger balance sheet and a cycle driven by volume.

The opportunities lie in filling a 2-million-bed deficit, expanding to smaller towns with lower land and competition costs, and implementing technology such as AI diagnostics and Teleconsultations to improve efficiency. Medical tourism is a growing industry that brings in high-margin revenues.

The challenges persist. These include talent shortages as well as regulatory price cs and the delayed reimbursements of public schemes. Private players contribute 60% of the healthcare infrastructure, and insurance penetration is still only 3.7 percent of GDP compared to a global average of 6-7 percent. This means that there’s a lot of room for growth. India’s hospital industry offers investors and operators a unique combination of scale and necessity, as well as long-term structural advantages.

Published May 11, 2026 07:19 AM IST
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