India's Healthcare Transformation: Report FDI has driven India's healthcare expansion, with USD 3.2 billion invested between 2022-2024 and total inflows reaching USD 11.19 billion since 2000. Sustaining growth requires diversified funding, including equity, debt financing, and public-private partnerships (PPPs).

India's healthcare sector is undergoing a transformative shift, driven by rising demand for quality medical services, increasing cases of chronic diseases, and rapid technological advancements. The industry has emerged as a key pillar of the country's economy, attracting strong investor interest and undergoing structural reforms to enhance efficiency, accessibility, and patient care. As healthcare delivery models evolve, funding and financing play a crucial role in sustaining the sector's growth and expansion.

From 2022 to 2024, India witnessed a surge in healthcare-related investments, with mergers, acquisitions, and private equity transactions surpassing USD 30 billion. Hospitals have been at the forefront of these investments, accounting for nearly 40% of the total deal value. In 2024 alone, the hospital segment dominated deal values with a 44% share, amounting to approximately USD 6.1 billion—marking an impressive year-on-year growth of nearly 24%.

Grant Thornton Bharat, in collaboration with the Association of Healthcare Providers India (AHPI), has released the report titled Vitals for Growth: Decoding Healthcare Financing and Funding in India. The report delves into the evolving financing landscape and investment trends shaping India's healthcare ecosystem.

It highlights how multispecialty hospitals continue to lead healthcare delivery, with recent consolidations focused on achieving operational efficiencies and expanding regional footprints. Meanwhile, single-specialty hospitals have garnered USD 1.4 billion in private equity investments over two years, signaling strong investor confidence in their scalability and cost efficiency.

According to the report, Foreign Direct Investment (FDI) has played a vital role in healthcare infrastructure expansion, with USD 3.2 billion flowing into the sector between 2022 and 2024. Since April 2000, cumulative FDI inflows into healthcare and diagnostics have reached USD 11.19 billion, predominantly directed toward hospital chains, diagnostic centers, and specialised care facilities. However, sustaining this momentum requires a diverse mix of funding solutions, including equity financing, debt financing, and public-private partnerships (PPPs).

Bhanu Prakash Kalmath S J, Partner and Healthcare Industry Leader at Grant Thornton Bharat, underscores the importance of value-based care models, operational efficiency, and digital transformation in driving sectoral growth. "India's healthcare landscape is being reshaped by shifting demographics and rising preventive care demand. Investor interest in efficiently run hospitals continues to grow, supported by strong market fundamentals and a favorable investment climate," he noted.

"To strengthen India's healthcare infrastructure, it is crucial to address the shortage of healthcare professionals, with a deficit of 1.54 million doctors and 2.4 million nurses. The urban-rural disparity remains a challenge, as 60% of hospital beds are concentrated in metro cities while 70% of the population resides in non-metro regions. The increasing cost of medical treatments and high out-of-pocket expenditures further necessitate innovative financing models. Addressing these concerns through enhanced medical training programs, incentives for rural healthcare expansion, and digital health adoption will be pivotal in ensuring equitable access to care across all regions of India," shared Dr Girdhar Gyani, Director General, AHPI.

As the sector evolves, hospitals remain the primary investment focus, benefiting from high valuation multiples ranging between 20x and 30x EBITDA in high-demand specialties like oncology, cardiology, and mother-and-child care. Expanding bed capacity, optimising operational efficiency, and leveraging digital health solutions will be key to sustaining growth.

"Hospitals that demonstrate long-term growth potential through digital adoption and strategic acquisitions will strengthen their market positioning and command premium valuations, reflecting investor confidence in scalable and high-performing healthcare models," added Darshana Kadakia, Partner, Grant Thornton Bharat.

The Vitals for Growth report provides a roadmap for stakeholders, offering insights to navigate India's dynamic healthcare financing landscape and drive long-term, sustainable development.