After decades of building St Thomas Hospital, in Malakkara in Pathanamthitta in Kerala, Dr Charlie Cherian has now expressed his fears that the next decade could undo all of it. He fears that the next decade will undo everything he has done. The recent surge in private equity interest in Kerala’s health care market is not due to any of his actions, but rather a group of new investors. Funds such as KKR and Blackstone have collectively invested over $1 billion to buy into hospitals in Kerala within the last three years. The funds are not stopping any time soon. According to sources familiar with the talks, as private equity-driven hospital consolidation gains momentum in India, these funds are proaching multiple multispecialty clinics in the state about potential acquisitions. This is the source of tension in a state renowned for its healthcare. Kerala’s healthcare system is being reshed by the wave of private equity funds. Global investment firms are investing in hospitals throughout the state. They are betting on the fact that chronic illness cases are increasing, and NRIs are spending more money. But the cital influx is also increasing pressure on Kerala’s independent, physician-run hospitals. They are now forced to compete against corporate chains who can spend aggressively on expansion, technology and specialist healthcare. The way private equity transforms Kerala can serve as both a model and a warning for India’s healthcare delivery and costs.

Diagnosis: Anxiety

Kerala occupies an unusual position in Indian healthcare. It is a state that has some of India’s best health outcomes, but also some of its highest medical bills. The National Sample Survey 2022-23’s 79th round shows that hospitalisation costs per household are nearly Rs 9,000 for rural regions and Rs 10000 in urban regions. This is more than twice the national median. Even though there is a large network of government-run hospitals, according to data from the state government, close to 63% of all hospitalisations and three-fourths outpatient care are still handled by private institutions. The need for more healthcare is unfortunately not going to dispear. The Kerala Medical Certification of Cause of Death Report 2024 reveals that cancer and diabetes are the leading causes of death medically certified. Circulatory diseases, or conditions that affect the heart and vessels of blood, are responsible for proximately 27% deaths. More than 41% of deaths hpen in people over 70. Dr Althaf Ali is a professor at Government Medical College Thiruvananthuram, and he says that PE funds pay attention to these numbers. Kerala’s high literacy rate and health awareness combined with a diaspora sending money back home to pay medical bills made it the obvious choice for a destination after the major metros. Rajan VP and MD at Veda Corporate Advisors says, “It’s all about the demand. As long as people will pay, it’s going to be a success.” Robin Alex Panicker a Kerala based entrepreneur says two things are driving PE Cital into the market: “Most of our patients are supported by NRIs.” “Kerala is becoming affluent and has more disposable income,” says Panicker. “There is a key element–the state has earned credibility through its handling of Covid.” The quality of healthcare has not been compromised, but the cost has. The logic was always simple: A large, underinsured populace, chronic underinvestment in public healthcare infrastructure, and an increasing middle class willing to pay more for quality care. The scale and speed of change has increased. In 1996, ollo Hospitals Enterprise pioneered Indian healthcare as a business. Private equity began to catch on in the late 2010s. Funds bought stakes in hospitals chains, Manipal Hospitals or Fortis. The stable cash flows attracted them and they were promised an exit through IPOs or strategic sales. According to the India PE Report 2020 by Bain and Company and Indian Venture and Alternate Cital Association, between 2015 and 2020, PE investments in India focused on healthcare, with transactions totaling several billion dollars. It was accelerated by the pandemic. The pandemic also revealed the hollowness in public health infrastructure. It drove patients to private facilities, and reminded investors of hospitals’ recession-proof status, even when they are facing a crisis. Cital poured in. KKR which manages $760 billion of assets worldwide, acquired a controlling interest in HCG Oncology by 2025. Blackstone is the world’s biggest alternative asset manager, managing more than $1 trillion. They have built a South Indian hospital portfolio, anchored at Quality Care India which operates CARE Hospitals & KIMSHEALTH. Panicker,
, says that the economics is simple: “Operational costs are rising for hospitals.” It doesn’t matter if the infrastructure costs are small or big, they all increase. This creates even more incentive to expand the market. The playbook: Buy, Expand, Exit

PE funds in Indian hospitals are now almost predictable. However, the people who execute them would prefer to call it value creation. Manish Matoo, the CEO of HCG (now owned by KKR), says, “They are looking for a demand/supply mismatch.” They move to fill the g.

There are many entry points. Some funds purchase majority stakes of mid-sized hospitals chains that have strong regional brands, but are limited in cital. Some funds take minority stakes in large networks to provide the necessary firepower for growth. What usually follows are aggressive bed expansions, investments in high-margin medical specialties such as oncology and cardiology, operational efficiency initiatives, and finally an exit through an IPO.

Earlier in the year, KKR made a further investment of about $210 millions into BMH. BMH has acquired a majority stake in Star Hospitals of Hyderabad. Last year, KG Alexander told a newsper in the area that BMH wanted to expand into South India covering Karnataka Andhra Pradesh Telangana. It is a vicious cycle. Once a hospital receives PE funding and expands, others are compelled by the example to do so too.

“It is like the surgical robots of today,” Mattoo says. “A hospital buys one and it’s suddenly a level playing field for all the others.” HCG’s immediate priority is to focus on internal growth. “We must generate cash internally first,” he says. “Improve cash generation, bring about efficiency and then invest this into expansion.” Ali claims that they don’t give a damn about people’s well-being. They are fund managers that invest to get higher returns. “They are fund managers who invest and expect higher returns. He refers to a JAMA 2023 study that examined the private equity purchases of US hospitals from 2009-2019. Study analysed insurance claims for 6.6 lakh hospitalisations from 51 PE-acquired hospital and compared it with data of 41.6 lakh hospitalisations from 259 non-PE-acquired hospital, based on data provided by the US insurance programme Medicare. Study found that hospital acquired conditions such as bloodstream infections and patient falls increased by 25.4% after PE acquisition. This was despite the fact that patient populations were younger and less disadvantaged. The former chief minister Pinarayi Vijayan expressed his concerns about medical inflation at private hospitals in the beginning of this year. Cherian brings up a less obvious concern. “The bigger hospital chains won’t accept government schemes,” says he. This g is important for patients who do not have NRI money. Ali says that we need to be honest about the amount of money that is spent by the government so that it doesn’t fall entirely on private hands. ET’s questions were not answered by Blackstone or KKR.

FIGHTING for the future
The conversation is more immediate for Cherian. The machines are becoming more expensive. Chains are becoming bigger. They are very well funded and they know exactly what they want. He has completely subsumed his life to his practice. He has never been on a holiday abroad, and his only trip was to Bengaluru for work. After watching him work night and day for decades, his children have decided not to pursue a career in medicine. Cherian, despite his personal struggles and corporate pressures, is still determined to resist the PE rush. St Thomas Hospital, which he believes is a passion-driven project, is not going away. “We’ll just have to figure it out.”

– Published May 25, 2026 11:29 AM (IST)

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