New Delhi [India], May 10(ANI): The Indian hospital sector is poised for a sustained expansion over the next decade, driven by structural demand and a fresh investment cycle, according to a research report by brokerage firm Miare Asset Sharekhan.
After years of balance-sheet repair and measured growth, listed chains are now accelerating capacity additions, signalling a shift from ARPOB-led profitability to volume-driven growth.
With private insurance penetration rising and an acute bed shortage persisting, the industry is set to attract long-term capital even beyond FY30, the report said.
The report noted that the addressable market is widening on multiple fronts.
Higher per-capita income, greater insurance coverage, an ageing population and a rising burden of chronic disease. India’s hospital market has grown to USD 193.4 billion in FY25 at a 14.4 per cent CAGR from USD 75.3 billion in FY18 and is projected to reach USD 364.6 billion by 2034 at a 7.2 per cent CAGR.
The private hospital segment is expected to outpace at a 10.6 per cent Compound Annual Growth Rate, fuelled by stronger payer mixes and rising Average Revenue Per Occupied Bed (ARPOBs).
Sharekhan said that capacity remains as a critical gap in the sector. India has just 1.3 hospital beds per 1,000 people compared to the global median of 2.9 and 2.5+ in countries like Brazil and Vietnam. This underpenetration ensures that new beds are absorbed without demand slackening.
Bed utilisation across major chains now consistently exceeds 60 per cent, with Apollo Hospitals nearing 70 per cent, supporting both margins and returns.
The report added that the payer mix is shifting in favour of hospitals with Private insurance now accounting for 30-43 per cent of revenue for chains like Apollo and Max Healthcare, up from 20-25 per cent a few years ago, while out-of-pocket expenses are gradually declining. Government schemes such as Ayushman Bharat PM-JAY are expanding volume and market access, particularly in tier-2 and tier-3 cities, though they pressure margins due to fixed package pricing.
Hospitals with more than 65-70 per cent occupancy can still sustain EBITDA per bed, and those integrated with the National Health Claims Exchange are better placed to manage the 60-120-day claim cycles.
The capex cycle reflects this evolution. After aggressive expansion pre-FY19 pushed net debt/EBITDA to 5.0x, hospitals focused on efficiency and speciality mix between FY19 and FY24, cutting leverage to 1.0x. FY25 marks the start of a new growth phase, with meaningful capex increases pointing to a more volume-driven cycle backed by stronger balance sheets.
Opportunities lie in filling the 2-million-bed shortage, expanding into smaller towns where competition and land costs are lower, and adopting technology like AI diagnostics and teleconsultation to improve efficiency. Medical tourism remains a bright spot, bringing in higher-margin revenue.
Challenges persist, including talent shortages, regulatory price caps and delayed reimbursements under public schemes. Yet with private players contributing 60 per cent of healthcare infrastructure and insurance penetration still at 3.7 per cent of GDP versus a 6-7 per cent global average, the runway for growth is substantial. For investors and operators alike, India’s hospital sector offers a rare combination of scale, necessity and long-term structural tailwinds. (ANI)
