Mid-tier hospitals make expansion bets as large rivals consolidate

Mid-tier chains are investing in new space opportunities and expansion of existing hospitals, supported by internal accruals and debt, increasing demand for private healthcare and increasing insurance penetration. In some cases, expensive and complex acquisitions are part of the strategy.

of india The private hospital sector is largely unorganized, with large areas in tier 1, tier 2 and tier 3 cities remaining poorly penetrated by organized corporate chains. “The share of the top 20 organized players in the healthcare delivery market is less than 15%, indicating a significant gap for expansion by regional players,” said Ram Panda, managing director, healthcare and life sciences, at consultancy Alvarez & Marsal India. Mint.

Here’s a summary of expansion across different mid-tier corporate hospital chains:

• Jupiter Life Line Hospitals is expanding its presence in Maharashtra in the cities of Pune and Thane. It plans to add about 1,440 beds in the next three to four years, bringing its total capacity to 2,500. The firm planned its total capital expenditure ₹1,400 crore was mentioned in the 2FY26 investor presentation.
• IPO-linked Paras Hospitals, headquartered in Gurugram, is increasing its presence in tier-2 and tier-3 cities in north India with new units planned in Gurgaon, Ludhiana and Panchkula.
• Telangana’s KIMS, better known as Krishna Institute of Medical Sciences, is recently expanding with a 300-bed hospital in Thane and a 450-bed hospital in Bengaluru. The chain announced a bed expansion of over 1,600 beds, with a capital expenditure of approximately 1,600. ₹1,060 crore in new and existing facilities, according to the last investor presentation in November.

These follow other expansions announced in the last two years:

• Artemis Hospitals has increased capacity to 700 beds in Gurgaon, announced plans for a 300-bed super specialty hospital in Raipur and a 550-bed hospital in south Delhi.
• Tamil Nadu chain Kauvery Hospitals says it plans to add 3,500 beds to its south India spend ₹Capex is 3,000 crore.

And those following the merger and acquisition (M&A) route are:

• New Delhi-based Ujala Cygnus bought a stake in Punjab hospital chain Amandeep Hospitals for an undisclosed sum in April, increasing its bed capacity from 2,000 to 2,800 beds.
• Chennai’s MGM Healthcare is expanding its footprint in south India with the acquisition of SevenHills Hospital in Visakhapatnam and intercity hospital Fortis Malar in 2024.

Private healthcare in India has traditionally been a regional play, with brands and models in specific geographies. Mid-tier hospital chains are strengthening their existing assets and expanding concentrically beyond them, experts said.

Health services are grossly underserved

This comes as the best chains Apollo Hospitals, Manipal Hospitals and Max Healthcare are also embarking on an aggressive expansion with the aim of becoming pan-India players. Apollo is investing ₹8,000 crore over the next four years to add 4,300 beds in Pune, Kolkata, Hyderabad and Bengaluru.

The sector also attracts investors’ attention with its high-value investments and ongoing mergers and acquisitions. In the last quarter alone, the hospitals sector saw 19 deals worth $264 million, according to a report by Grant Thornton Bharat, another consultancy.

Temasek-backed Manipal recently acquired Pune-based Sahyadri Hospitals for approx. ₹6,000 crore, strengthening its dominance in western India. The merger of Kerala-based Aster DM with Blackstone-backed Quality Care India a year ago made the combined entity one of the top three chains in India, with more than 10,000 beds.

The share of the top 20 organized players in the healthcare market is less than 15%, indicating a significant gap for regional players to expand. — Ram Panda, managing director, healthcare and life sciences, Alvarez & Marsal India

Among regional chains, smaller ones expand mostly organically, financed by internal accruals and debt. However, Panda said regional players are also actively considering fundraising campaigns.

“The critical thing is that access to healthcare in the country is still minimal. Healthcare is also very much a local or regional game, so the actual availability of healthcare, even if you look at cities like Mumbai or Delhi, there’s a lot.” [room] Mayur Sirdesai, partner at private equity firm Somerset Indus Capital Partners, said: Mint.

With rising per capita income and increased insurance penetration, Sirdesai added that there is greater focus on inpatient and outpatient services and demand for better treatments. Different models will evolve as players try to build a profitable business based on the region’s payer base, disease burden, and competition, among other factors.

Familiarity breeds comfort

Chains like Jupiter and Paras prefer to stick to existing regions where the market is known. Jupiter’s joint managing director and CEO, Dr. Ankit Thakker said, “We already have a presence and power in the West. We want to focus and concentrate more on a single geography instead of distributing our resources far away.”

“The concentration of geography will expand in concentric circles. We will gradually expand the geography of the network as we move forward,” he added.

Paras, II in North India. and III. He sees an untapped market in tier-1 cities. Vineet Aggarwal, Group CEO, stated that Tier 1 cities are increasingly finding multi-specialty hospitals, from small to large. “…when it comes to Level II [cities]People are being forced to come to Tier I cities for health treatments beyond government medical colleges in whatever shape or form. So we want to get into Tier II,” said group COO Vineet Aggarwal.

However, these chains are cautious about acquisitions. Jupiter’s Thakker described it as a breakthrough between time on the one hand and building to fit the model perfectly. “The only concession I have to make on the new model is speed. I have to wait another three years,” he said. Purchasing an asset carries the risk of compromising location, design, technology and people.

President and MD of Hyderabad-based Rainbow Children’s Hospital, Dr. Ramesh Kancharla had a different view: Finding a suitable asset may be difficult, but it can strengthen inorganic growth. In August, Rainbow announced the acquisition of Guwahati-based Pratiksha Hospital, marking its entry into the northeast. “If there were such children’s hospitals, of course, we would definitely consider it,” said Dr Kancharla, turning his chained eyes to Delhi-NCR and the Northeast beyond the bastion of South India.

Stage set assembly

Expansion among mid-tier private hospital chains could pay dividends for major national players expanding their presence in India, an expert said.

“Today, even mid-tier chains see potential for expansion. So they will expand. They may be acquired by a company at some point. [larger chain]” said Sirdesai. “It’s easier to buy a model that’s available in these markets because it’s a very different model from what they do.”

Additionally, as the scale of mid-tier chains grows, Alvarez & Marsal’s Panda said there is private equity and strategic interest in them.