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New Delhi, Feb 28 (IANS) – Private hospitals in India have significantly expanded their capacity, adding around 6,000 new beds in the current fiscal year, with plans to add another 4,000 beds by the next fiscal, according to a report released on Friday by Crisil Ratings.
The analysis, based on 91 private hospitals, revealed that the planned 10,000-bed addition matches the total expansion between fiscals 2020 and 2024. This expansion comes at a substantial investment of Rs 11,500 crore, highlighting the sector’s strong growth trajectory.
“With occupancy levels nearing their peak at 65-70 per cent and a sustained demand for quality healthcare, private hospitals are investing approximately Rs 25,000 crore over this fiscal and the next. This is nearly 80 per cent higher than the average annual investment observed in the previous four fiscals,” said Anuj Sethi, Senior Director, Crisil Ratings.
Robust Investment and Financial Stability
According to the report, nearly three-fourths of this capital expenditure will be financed through internal accruals. The sector has also witnessed strong investor confidence, attracting substantial investments of Rs 55,000-60,000 crore from private equity and the equity markets since fiscal 2022.
Private hospitals currently contribute about 63 per cent of the healthcare sector’s revenue in India. From fiscal 2020 to 2024, these hospitals reported a compound annual growth rate (CAGR) of approximately 18 per cent in revenue and healthy operating profitability of around 18 per cent. This financial stability has enabled hospitals to sustain strong cash flows and pursue aggressive expansion strategies.
Expansion Plans and Challenges
A significant portion of the upcoming bed expansion—about 50 per cent—will stem from greenfield projects, underlining the sector’s investment in new healthcare infrastructure. Another 40 per cent will be from brownfield developments aimed at modernizing existing facilities, while the remaining 10 per cent will result from acquisitions of under-construction hospitals and small to mid-sized establishments.
“The substantial greenfield expansion does pose risks related to project completion timelines and occupancy ramp-up. However, around 70 per cent of these projects are located in metropolitan and Tier-1 cities, where hospitals generally reach optimal occupancy and break-even within 12-15 months. This should help mitigate profitability pressures,” said Naren Kartic K., Associate Director, Crisil Ratings.
The report further indicated that the sector’s debt protection metrics are expected to remain stable, with an interest coverage ratio of around 8.0 times and a total debt-to-EBITDA ratio of approximately 1.2 times, mirroring last year’s performance. This reflects strong financial resilience and credit stability.
Future Outlook
The continued demand for quality healthcare is expected to sustain high occupancy rates despite the addition of new beds. However, hospitals will need to focus on maintaining their operational profitability while adapting to potential regulatory changes that may impact the sector in the future.
Disclaimer:
This report is based on the analysis provided by Crisil Ratings and reflects market trends as of the date of publication. The information is for informational purposes only and should not be construed as financial or investment advice. Readers are advised to conduct their own research or consult professionals before making any financial decisions related to the healthcare sector.
