OPINION | Private Equity in Indian Healthcare: A case for regulatory safeguards

Healthcare has emerged as an attractive financial asset class.

Private equity (PE) investment in India’s healthcare sector has accelerated sharply in recent years, with tens of thousands of crores committed by global and domestic investors. Large pools of patient capital—Temasek, Blackstone, Everstone, KKR, Ontario Teachers’ Pension Plan, among others—now hold significant stakes in healthcare delivery.

The investment logic is compelling. India offers scale, rising demand, under-penetrated insurance coverage, and a fragmented provider landscape ripe for consolidation. Hospitals, in particular, are viewed as long-life assets with relatively predictable cash flows. Healthcare has thus emerged as an attractive financial asset class.

Sahyadri Hospitals: A Case Study

Sahyadri Hospitals offers a telling illustration of this shift. In 2019, the founder-promoters sold the chain to Everstone for about ₹1,000 crores. Within a year, Everstone exited at roughly 2.5 times its investment, selling Sahyadri to Ontario Teachers’ Pension Plan for around ₹2,500 crores. In 2025, the Canadian pension fund exited by selling Sahyadri to Temasek-backed Manipal Hospitals for approximately ₹6,400 crores.

In just six years, the same hospital platform changed hands three times, each time at sharply higher valuations. This is not merely growth; it is rapid financialisation.

None of this is inherently problematic. India needs capital to expand capacity, invest in technology, improve management systems, and scale effective care models. The concern arises when financial ownership begins to shape clinical behaviour, pricing decisions, and access to essential services. On this, international experience—particularly from the United States—offers clear and cautionary lessons.

Rising Costs, Debt Burdens and Price Opacity

International evidence shows that when private equity controls healthcare providers, costs tend to rise. Multiple empirical studies find that PE-owned hospitals and physician practices exhibit higher prices, increased procedure volumes, and more aggressive billing than non-PE peers. Clinicians report pressure to maximise “revenue per patient”, often at the expense of professional autonomy. Efficiency gains, where they occur, rarely translate into lower prices for patients.

A second lesson concerns debt-driven acquisitions. PE investments frequently rely on leveraged buyouts, loading acquisition debt onto hospital balance sheets. In the US, this has had damaging consequences. As interest payments take priority, spending on staffing, maintenance, and patient services is squeezed. When margins tighten—due to policy shifts, payer resistance, or shocks such as Covid—hospitals cut services or shut down. Rural America has been particularly affected, with closures, understaffed emergency departments, and rising clinician burnout.

Third, price opacity enables predatory outcomes. In the absence of strict price transparency, US patients often discover the cost of care only after treatment, especially in emergencies. Surprise and balance billing became widespread, pushing families into financial distress. Healthcare markets cannot function when prices are unknown at the point of care.

India’s Greater Vulnerability

India’s exposure to these risks is arguably greater. Out-of-pocket expenditure remains high, insurance coverage is uneven, and there is no meaningful protection against medical bankruptcy. Consumer litigation is weak, and cultural reluctance to challenge doctors or hospitals persists. In such an environment, unchecked PE control risks turning healthcare into an extractive industry rather than a social service.

The answer, however, is not to reject private capital. That would be neither realistic nor desirable. The task is to discipline capital, not ban it.

Regulating Capital Without Rejecting It

First, India should prohibit leveraged buyouts in hospitals. Healthcare facilities should not be permitted to load acquisition debt onto operating entities or pledge hospital assets for purely financial returns. Hospitals are not real estate; leverage that compromises care delivery must be off-limits.

Second, India should mandate price bands for common procedures. Absolute price caps are blunt instruments, but published bands—within which hospitals must operate or justify deviations—would protect patients while preserving competition and choice.

Third, essential services must be ring-fenced. Emergency care, intensive care units, trauma services, and obstetrics are public goods. They require minimum staffing norms, limits on profit extraction, and explicit cross-subsidy obligations. The US learned too late that allowing financial optimisation of emergency care leads to systemic failure.

Fourth, PE ownership must be transparently disclosed. Patients and regulators should know who owns a hospital, its debt levels, and expected investor exit timelines. “PE-owned” status should be as visible as accreditation status. Transparency is not anti-market; it is the foundation of accountability.

India can also cap PE influence without choking investment. Soft ownership constraints—such as limits on voting control, mandatory clinician or trust representation on boards, and time-bound exits—can preserve capital inflows while preventing perpetual extraction. Equally important is separating capital from control; even where ownership is permitted, clinical decision-making must be insulated from financial management.

Lessons from the US

Finally, India must avoid the United States’ largest mistake—neglecting public hospitals. A strong public system is the single most effective regulator of private behaviour. Upgraded district hospitals and medical colleges provide a credible alternative and discipline private markets.

The policy question is no longer whether private equity should be allowed in healthcare. That ship has sailed. The real question is: on what terms, for how long, and under what discipline? The US experience is unambiguous. Unregulated financial ownership turns care into commerce and patients into balance sheets.

India still has time—and policy space—to get this right.

(Indu Bhushan is Senior Associate with Johns Hopkins University and was founding CEO of Ayushman Bharat.)

(Sunil Tandon is an infrastructure specialist and the Chairman of Thoth Infrastructure Private Limited.)

Views are personal, and do not represent the stand of this publication.