A recent study by LoEstro Advisors in cooperation with leading healthcare consultant Medium Healthcare, titled “Hospitals for Bharat,” has highlighted significant challenges alongside potential opportunities within India’s healthcare delivery.
The report sheds light on the troubling situation: while small and medium enterprise (SME) hospitals are responsible for 60% of healthcare services and house over 90% of all hospital beds in India, they are experiencing increasing difficulties that threaten their continued operation. This is compounded by India’s currently low healthcare expenditure, which stands at 2.4% of its GDP, placing the country at 174th worldwide.
“SME hospitals are the backbone of healthcare in India, particularly in the smaller cities and towns,” explains Rakesh Gupta, managing partner at LoEstro Advisors. “However, they earn 40% less per bed compared to large hospital conglomerates, and have to deal with extended patient stays and higher costs. Our report offers practical guidance to help these hospitals tackle the obstacles they face.”
Medium Healthcare’s managing director, Ratan Jalan, notes, “The dual pressure from upscale hospital chains and specialized clinics isn’t just a business hurdle—it spells a brewing crisis in accessible healthcare. Major chains are centered in metropolitan hubs, rendering SME hospitals vital for affordable, local care to millions relying on proximate quality healthcare.”
The report’s findings were derived from extensive primary research, incorporating comprehensive surveys and interviews with hospital leaders, medical staff, and patients to better grasp operational hurdles and patient insights. Interviews with key stakeholders in hospital management and investors shed light on financial strategies and market operations, while secondary research reflected a thorough analysis of academic studies, industry data, and healthcare legislation to position findings coherently.
SME hospitals, characterized as those with fewer than 200 beds, contribute to 60% of India’s healthcare services and over 90% of the hospital bed capacity, thriving predominantly on private ownership, which controls 69% of revenue. These institutions are experiencing a growth rate of 12.9% annually, outpacing the general hospital sector’s growth of 11.3%, stimulated by preferences for local treatments, demand for niche medical specialties, and affordability initiatives such as Ayushman Bharat.
The study proposes viable interventions including pricing strategies through service bundles, collective purchasing agreements to boost vendor negotiations, and enhancing patient satisfaction via staff development and infrastructure improvements.
Embracing digital solutions for patient-centered care can harness proactive data use, eliminate redundancies, and enable patients to make informed decisions through accessible information. The introduction of smart ICUs can significantly elevate patient care quality, ensuring continuous care across various hospitals and ICUs, thereby improving clinical results and operating effectiveness at a large scale. The potential of teleradiology lies in bridging urban and rural healthcare service gaps through remote expert imaging services, while emphasizing accreditation will guide patients toward certified medical facilities.