Narayana Health plans to export high-volume, low-cost care model to UK and beyond

Viren Shetty

Narayana Health, India’s low-cost healthcare pioneer, is taking its assembly-line model for cardiac surgeries global, with a bold bet on Britain’s strained National Health Service (NHS).

The Bengaluru-based hospital chain has shelled out Rs 2,200 crore to acquire Practice Plus Group, the UK’s fifth-largest private hospital services provider in October, in a move aimed at easing surgical backlogs and creating a new growth engine beyond India.

The acquisition gives Narayana a foothold in a market where 93 percent of Practice Plus’ revenue comes from NHS contracts, offering predictable cash flows but also a challenge: how to inject efficiency into a system notorious for long waiting lists.

“We’ve built the world’s most efficient healthcare model in India. Now we want to apply that in markets where everyone is insured and cost-cutting is critical,” Vice Chairman Viren Shetty said in an interview to Moneycontrol on December 18.

Narayana’s playbook follows high-volume surgeries at low cost without compromising quality. In India, this model made it a leader in cardiac care, performing thousands of procedures at prices a fraction of global norms. The company believes the same principles—digitisation, standardised protocols, and tight control over clinical processes—can transform UK operations, where elective surgeries often face month-long delays.

“We state this entire acquisition on the theory that we can do very high-volume work in the UK without compromising on quality. We believe we can. There’s no reason to believe that we can’t do it,” Shetty said, adding that the next 2-3 years will be about “discovering the gap between what we believe we can deliver and what is practically achievable.”

The UK transaction, valued at GBP 190 million, is financed through GBP 150 million in structured debt serviced by the target and GBP 40 million equity from Narayana’s Cayman arm. At 9.2x EV/EBITDA, the deal is priced well below Indian valuations, which hover around 30x, making overseas expansion more attractive.

The management expects to pay off the debt in 5-6 years, aided by operational efficiencies and a gradual increase in private-pay patients—a segment that commands 20–35 percent higher tariffs than NHS rates.

Factory model goes global

Shetty sees resonance for Narayana’s model beyond the UK. “Wherever efficiency is highly valued and services are delivered physically in person, Indian operators can thrive,” he said, pointing to ageing European societies struggling with healthcare costs.

“Just like Indian IT companies became world leaders, Indian healthcare companies can do the same.”

On acquisitions, Shetty said: “There are at least 20 opportunities to acquire. We take the one, prove we can turn it around—double the performance, improve occupancy, margins, pay off debt—and then build a model that can scale.”

Shetty says asset prices in Western markets, including the UK and in the rest of Europe, are significantly lower than in India.

“Valuations in India are high because they encapsulate future earnings. So you trade at a growth multiple. Western economies, barring the US, are stagnant. GDP growth and population growth are flat there. So valuations reflect that,” Shetty explained.

He throws a word of caution, saying that buying a cheaper asset overseas isn’t automatically a win.

“Even if you can buy something at 10x in the UK or Europe, and it costs you 30x in India, it doesn’t mean you buy the 10x asset. The question is whether I can turn that 10x acquisition multiple into a sustainable model, finance it through debt, and pay it off in time. In India, no 30x acquisition can be financed through debt — it has to be done through equity.”

Why UK, not India?

Shetty didn’t mince words about the limitations of India’s healthcare economics. “Even though we are the lowest-cost provider of healthcare services anywhere in the world, only about 10 percent of people can afford it,” he said. “Anyone else who is adding beds and dancing around in Tier 1 cities is catering to an affluent demographic and possibly an over-serving demographic. Our market has always been the mass market.”

Narayana is stitching together an integrated healthcare ecosystem. Its insurance arm, Narayana Health Insurance, offers plans starting at Rs 10,000 per year, targeting gig workers who typically lack coverage. Unlike traditional insurers, Narayana promises a “high-touch” model focused on prevention and wellness, aiming to reduce claims by keeping customers healthy.

The group is also scaling up primary care clinics, which serve as entry points for families and feed into its hospital network. Ten clinics are operational, with plans to roll out 10–20 per city in core markets like Bengaluru and Kolkata. “We want multiple touchpoints—hospitals, clinics, diagnostics, pharmacies—all tied together with insurance,” Shetty said.

He expressed frustration with the payor-provider model in India, where insurers, hospitals, and patients are locked in disputes. “It’s a three-way standoff between insurance, patients, and the hospital. It’s not practical. We want to align everyone’s incentive. We are both the provider and the insurer. From our perspective, we will work with patients, make sure they’re healthy, and if they have a problem, we treat them—no questions asked.”

Shetty said the Group, which is running the clinic business through a separate subsidiary, decided to demerge it from that subsidiary and roll it up into the main company so that it can continue to invest a lot more money.

"The patients who come... they come for very basic conditions but it’s much closer to their home. They don’t need to come to the hospital for a lot of the work. It’s the place for them to come and build up that relationship with Narayana and get to know us as a company. Not just for heart and cancer—we want to be the healthcare provider for the whole family at any stage of your life. So the clinic is a way for us to achieve that,” Shetty added.

Capacity expansion

Narayana’s ambitions in India remain tempered. “We wanted to be at 30,000 beds by now. We are not even one-sixth of that,” Shetty admitted. As of September 2025, the group operates 5,789 beds across 40 facilities, including 19 hospitals and two heart centres. A Rs 3,000-crore capex plan over the next three years aims to add 2,000 beds through greenfield and brownfield projects in Bengaluru, Kolkata, and Raipur. Two major greenfield hospitals—350 beds in Kolkata and 220 beds in Bengaluru—are slated for FY2029.

“Beyond a point, scale is a disadvantage in a service industry,” Shetty said, explaining why Narayana avoids aggressive expansion like rivals. “You don’t achieve cash breakeven in any new project in less than 10 years.”

Narayana Group's consolidated revenue stood at Rs 5,483 crore in FY25, with a profit after tax (PAT) of Rs 790 crore and an EBITDA margin of 25 percent.