Hospitals' Profit Strategies In India

India's healthcare sector is experiencing significant growth, with hospitals adopting new technologies and policies to improve access to healthcare services. The market is expected to reach US$132.90 billion in 2025, with a projected annual growth rate of 5.07% from 2025 to 2029, resulting in a projected market volume of US$162 billion by 2029. This growth is driven by factors such as rising incomes, increasing healthcare awareness, and a growing population, and the rise of medical tourism. Private hospitals in India are expected to witness double-digit revenue growth, with an anticipated 11-12% increase in FY25, fuelled by factors like healthy occupancy levels and a rise in average revenue per occupied bed. The Indian healthcare sector is categorized into public and private systems, with the private sector providing most secondary, tertiary, and quaternary care institutions.

Private hospitals' revenue growth

India's healthcare sector is experiencing significant growth, with hospitals adopting telemedicine technology to improve access to healthcare and reach patients in remote areas. The private healthcare sector in India is growing due to rising incomes, increasing healthcare awareness, and a growing population. Private hospitals offer higher-quality care and better facilities compared to public hospitals, leading to increased demand.

The revenue of private hospitals in India is expected to grow by 11-12% in the fiscal year 2025, following an estimated 14% growth in 2024. This growth is driven by healthy occupancy levels and a consistent rise in average revenue per occupied bed (ARPOB). Medical tourism, which accounts for 10-12% of revenue for some hospitals, is expected to grow at almost twice the overall rate in the near to medium term. Lower treatment costs, world-class facilities, and skilled medical personnel will drive the inflow of medical tourists, particularly from Southeast Asia and the Middle East.

The sustainability of high occupancy levels and the potential impact of regulations on private hospitals are important factors to consider. However, the growing revenue and healthy operating margins will ensure strong cash accrual, funding a significant portion of the planned capital expenditures of private hospitals.

The Indian Hospitals market is projected to achieve remarkable revenue of US$132.90 billion in 2025, with an annual growth rate of 5.07% expected from 2025 to 2029, resulting in a market volume of US$162 billion by 2029. The market revenues include spending by consumers (B2C), enterprises (B2B), and governments (B2G). In FY2022, Max Healthcare Group (MHIL) generated the highest revenue per occupied bed, at 60,000 Indian rupees, while Narayana Hrudayalaya hospitals generated the lowest revenue of over 23,000 rupees per occupied bed.

Rising medical tourism

India's hospitals market is experiencing significant growth, and one of the major trends in this market is the rise of medical tourism. India has long been a captivating destination for its cultural richness and historical grandeur, but it is also increasingly recognised as a premier medical tourism destination. Hundreds of thousands of medical tourists visit India each year, attracted by its advancements in healthcare, which include the adoption of telemedicine technology to reach patients in remote areas.

The country offers a combination of cutting-edge technology, highly qualified healthcare professionals, and affordable treatments. Indian hospitals are at the forefront of medical innovation, with state-of-the-art facilities and medical equipment now standard in many hospitals. This includes advancements in robotic surgeries and pioneering techniques in cardiology and oncology. India's historical commitment to medical research and surgery is exemplified by figures like Susruta, an ancient Indian physician often dubbed the "Father of Surgery". Modern Indian healthcare builds on this rich history, blending traditional practices with contemporary medical science.

Indian hospitals have won national and international awards for excellence in healthcare delivery and patient safety, and the country upholds high standards in medical practices, often on par with Western countries like the United States and the United Kingdom. The cost of medical procedures in India is about 60-90% lower than in the United States, without compromising on quality. For example, a heart bypass surgery that costs upwards of $100,000 in the US could cost as low as $5,000 in India.

The Indian government has actively promoted the growth of the healthcare sector and taken steps to encourage medical tourism. In February 2019, the government expanded its e-tourism visa regime to ease the travel process for medical tourists. The maximum duration of stay under this visa is six months, and foreigners can receive any medical treatment in India with the exception of organ transplants without a medical visa. The government has also removed visa restrictions on tourist visas that required a two-month gap between consecutive visits for people from Gulf countries, further boosting medical tourism.

Average revenue per occupied bed

The average revenue per occupied bed (ARPOB) is a key metric for hospitals in India. Major hospital chains in India have reported an increase in their ARPOB for the nine months of the 2023-24 financial year (FY24). The ARPOB for this period was around Rs 50,000 per bed per day, compared to Rs 45,800 per bed per day in the same period of the previous financial year (2022-23, or FY23). This represents a notable increase of 10.35 per cent.

The rise in ARPOB can be attributed to several factors, including improving specialty and case mix, a better payor mix, and annual price revisions to offset cost inflation. Additionally, hospitals have been adding more beds, with ICRA's sample set of companies adding 545 beds in 2021-22 and 1,043 beds in FY23. For the full FY24, ICRA estimates a growth of 8-10 per cent, resulting in an ARPOB of Rs 49,708 per bed per day.

It is worth noting that there are variations in ARPOB among different hospital groups. For instance, in the fiscal year 2022, Max Healthcare Group (MHIL) generated the highest revenue per occupied bed, with approximately 60,000 Indian rupees. On the other hand, Narayana Hrudayalaya hospitals had the lowest revenue, with over 23,000 rupees per occupied bed. This disparity in ARPOB is also observed in the 9MFY24 period, with Max Healthcare reporting an ARPOB of Rs 74,500 per bed per day, while Apollo Hospitals Enterprise reached Rs 56,823.

The overall hospitals market in India is experiencing significant growth, driven by factors such as rising incomes, increasing healthcare awareness, a growing population, and the adoption of technology. The market is projected to achieve a revenue of US$132.90 billion in 2025, with an expected annual growth rate of 5.07 per cent from 2025 to 2029, resulting in a market volume of US$162.00 billion by 2029.

Demand for healthcare services

The demand for healthcare services in India is driven by several factors, including rising incomes, increasing healthcare awareness, and a growing population. Indian consumers are becoming increasingly health-conscious, leading to a greater demand for healthcare services. There is also a growing preference for private healthcare services, which offer higher-quality care and better facilities compared to public hospitals. This has resulted in a surge in demand for private hospitals and clinics in India.

The Indian healthcare sector is growing rapidly due to strengthening coverage, improving services, and increasing expenditure by both public and private players. The government has also taken steps to promote the growth of the healthcare sector, including introducing new policies and initiatives aimed at improving healthcare infrastructure and increasing access to healthcare services.

The adoption of telemedicine technology by hospitals in India is helping to improve access to healthcare for patients in remote areas. Additionally, medical tourism is contributing significantly to the growth of the healthcare market in India. India is among the global leader destinations for international patients seeking advanced treatment, with around 634,561 foreign tourists visiting for medical treatment in 2023, generating US$ 5-6 billion in revenue.

The rising demand for healthcare services in India is expected to drive double-digit revenue growth for private hospitals in the country. This growth is fuelled by factors such as healthy occupancy levels, an increasing share of specialised surgeries, and a consistent rise in average revenue per occupied bed (ARPOB). The sustainability of high occupancy levels and the impact of regulations on private hospitals are, however, aspects that need to be monitored closely.

The Indian healthcare sector is expected to achieve remarkable revenues in the coming years. The market is projected to reach US$132.90 billion in 2025 and exhibit an annual growth rate of 5.07% from 2025 to 2029, resulting in a market volume of US$162.00 billion by 2029. This growth trajectory underscores the robust demand for healthcare services in India.

Public vs private healthcare systems

India's healthcare system is a complex mix of public and private sectors, each with its strengths and challenges. The public healthcare system, largely funded and operated by the government, aims to provide affordable or free healthcare services to all citizens. It is easily accessible and focuses on primary care, offering preventive and curative services. However, it often faces challenges such as overcrowding, long waiting times, and limited access to specialised care, especially in rural areas. On the other hand, the private healthcare sector has witnessed significant growth, offering a wide range of services from primary to specialised treatments. Private facilities are known for their modern infrastructure and advanced technology, but the cost of care can be substantial, making it unaffordable for many.

Public Healthcare System

The public healthcare system in India is primarily funded and managed by the government, with the goal of providing affordable or free healthcare to the entire population. This system is easily accessible to all, with a focus on primary care and preventive medicine. However, it struggles with issues like overcrowding, long wait times, and a shortage of specialised care options, particularly in rural regions. India's public healthcare system has been characterised by inadequate infrastructure and a lack of trust among citizens, leading many to opt for private healthcare services.

Private Healthcare System

The private healthcare sector in India has experienced substantial growth and now constitutes 62% of the country's total health infrastructure. Private healthcare providers offer a comprehensive range of services, from primary care to highly specialised treatments. They are known for their modern facilities, equipped with state-of-the-art technology. However, the cost of private healthcare is often high, making it inaccessible to a large portion of the population. There are also concerns about transparency in pricing and the consistency of care quality within the private sector. Despite these concerns, the private healthcare sector in India has flourished due to the limitations of the public system and the increasing demand for quality healthcare.

Improving Healthcare in India

Enhancing India's healthcare system is a complex task requiring the involvement of multiple stakeholders. The government has a crucial role in increasing funding for public healthcare and implementing policies to improve access and quality. The private sector can contribute by investing in affordable and accessible infrastructure and services. Additionally, the insurance sector can play a pivotal role in advocating for healthcare reform and providing financial protection. India's healthcare sector is projected to grow, with an expected revenue of US$132.90 billion in 2025 and an annual growth rate of 5.07% from 2025 to 2029.

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