Private Hospitals Invest Rs 11,500 Cr for 4,000 Beds

New Delhi, Feb 28 (PTI) Private hospital chains plan to invest around Rs 11,500 crore to add 4,000 beds in the next financial year, according to Crisil Ratings.

An analysis of 91 private hospitals with a combined revenue of about Rs 64,000 crore last fiscal, indicates about 4,000-bed addition, the agency said in a statement.

The healthcare providers added around 6,000 beds in the ongoing fiscal.

The bed addition in just these two fiscals will equal those added between fiscals 2020 and 2024, it noted.

"With occupancy close to the peak of 65-70 per cent and continued demand for quality healthcare, private hospitals are investing Rs 25,000 crore this fiscal and the next, nearly 80 per cent higher than the average annual investment in the previous four fiscals," Crisil Ratings Senior Director Anuj Sethi said.

About three-fourths of the capex will be funded through internal accruals, he added.

"Plus, healthy return metrics have attracted a substantial investment of Rs 55,000-60,000 crore from private equity and equity markets since fiscal 2022," Sethi stated.

Half of the new beds will come from greenfield expansions, highlighting significant investment in new healthcare infrastructure, Crisil Ratings said.

About 40 per cent will comprise brownfield development, focusing on modernising and optimising existing facilities, it added.

The remaining 10 per cent will result from large players taking over under-construction hospitals and small and mid-sized hospitals, reinforcing organic growth efforts, according to the report.

Private hospitals account for 63 per cent of the sectoral revenue in India.

Over fiscals 2020-2024, private hospitals clocked a compound annual growth rate of 18 per cent in revenue and healthy operating profitability of 18 per cent, ensuring strong cash flow.

Their strong performance and the relatively low bed capacity per person in India vis-a-vis developed and developing nations has spurred substantial investments through private equity and initial public offerings (IPOs), Crisil Ratings noted.

This has strengthened balance sheets and enabled hospitals to pursue ambitious bed additions without materially impacting their credit profiles, it said.