Private equity growth must not undermine patient care in Indian healthcare

Private equity (PE) money has been flowing into India’s healthcare sector for the past few years. The sector has been attracting around $5-6 billion annually post-COVID versus pre-pandemic levels of $3-4 billion. Global PE giants Blackstone, Temasek, and Kohlberg Kravis Roberts (KKR) aggressively acquire Indian hospital chains and medical devices firms—a much-needed investment to upgrade the country’s healthcare as the public healthcare infrastructure struggles with underfunding and mismanagement. PE firms capitalize on this gap, driving consolidation to achieve economies of scale and operational efficiencies. While this investment serves as a lifeline to an underserved healthcare system, it raises concerns about balancing profitability with patient-centered care.

Exhibit 1: PE healthcare acquisitions are shifting toward larger, high-value deals

Source: Venture Intelligence, HFS research, 2024

PE is leveraging India’s booming healthcare market to maximize the impact

Indian healthcare is one of the fastest growing markets globally, driven by the increasing demand for quality services, rising income levels, and the prevalence of lifestyle diseases such as diabetes. The pandemic accelerated this trend, exposing gaps in infrastructure that PE could fill. As healthcare providers in Tier 2 and Tier 3 cities expand their reach, PE firms have shifted their focus from smaller, fragmented deals to large acquisitions that promise scalability and operational efficiencies. For example, Blackstone’s acquisition of CARE Hospitals and Temasek’s controlling stake in Manipal Hospitals underscore the strategic shift toward consolidating healthcare networks. Exhibit 2 shows some recent hospital investments by PE firms.

Exhibit 2: Indian healthcare growth is backed by global investments

Note: *Investments are combined with other PE firms
Source: HFS Research, 2024

However, PE investment in hospitals comes at its own cost, as illustrated in
Exhibit 3.

Exhibit 3: The grass is not always greener; the same applies to PE investments

Source: HFS Research, 2024

Indian hospitals should learn from the pitfalls the US PE model went through to build a patient-centric healthcare model

Although the PE model in healthcare is new to India, the US has been using it for a long time. Initially praised for bringing PE-driven consolidation, the US healthcare sector has faced serious problems—unsustainable debt, lower quality of care, limited access in rural areas, and rising costs—as PE firms prioritized quick profits over lasting solutions. PE investments in US healthcare mainly focus on high-cost therapies such as oncology, neurology, and orthopedics while neglecting essential services such as primary care. This trend is detrimental to public health.

To avoid such mistakes, Indian policymakers and healthcare providers must address these risks and use PE investments to enhance access to care and improve treatment quality. Exhibit 4 highlights essential lessons from the US experience and suggests steps for India.

Exhibit 4: India must learn from and avoid US PE healthcare mistakes

Source: HFS Research, 2024

The Bottom Line: PE can be profitable while improving public health.

Private equity can revolutionize India’s healthcare sector by bridging infrastructure gaps. However, India’s ability to craft innovative regulatory frameworks that align private interests with public health outcomes will be the real game changer. The region risks replicating the pitfalls of over-commercialization in other markets without tying profits to patient-centric care. The true potential of PE lies in transforming healthcare not just as a business but as a service that delivers sustainable, equitable value.