Paras Healthcare

India's hospital infrastructure remains unevenly distributed, creating a substantial gap between demand for advanced healthcare and the availability of operational hospital beds. According to CRISIL Intelligence, selected North and East Indian states had approximately 750,000 to 760,000 hospital beds for a combined population of 592.0 million in FY22. Applying the National Health Policy benchmark of 20 beds per 10,000 people implies a requirement of approximately 1.2 million beds. This infrastructure shortage creates potential opportunities for organised multispecialty hospitals, particularly those offering advanced diagnostics, intensive care, oncology and other specialised treatments.

The key drivers are:

• Regional Disparities in Bed Availability: North India had approximately 14 to 15 beds per 10,000 people, compared with 29 to 30 in South India. This disparity highlights unequal healthcare access and significant unmet infrastructure requirements in northern markets

• Gap Between Existing and Required Capacity: Selected North and East Indian states faced an estimated shortage of approximately 425,000 operational hospital beds against the National Health Policy benchmark in FY22. This indicates substantial infrastructure requirements, particularly outside established metropolitan healthcare centres

• Limited Availability of Specialised Treatment Facilities: Advanced specialties such as oncology, cardiology, neurology and critical care require expensive equipment, trained specialists and multidisciplinary support. These requirements restrict the ability of smaller hospitals to offer complex treatment services

• Projected Growth in Northern Healthcare Markets: CRISIL projects North India's healthcare delivery market to reach approximately ₹3.6 trillion to ₹3.8 trillion by FY30. However, converting this market opportunity into hospital revenue will depend on affordability, specialist availability and sustained patient occupancy

Increasing health insurance coverage is improving access to organised healthcare services and gradually reducing dependence on direct patient payments. According to CRISIL Intelligence, approximately 580.0 million people had health insurance coverage in FY25, compared with 288.0 million in FY15. Insurance penetration increased from 35.0% in FY19 to 41.0% in FY25, supported by private insurance adoption, employer-sponsored policies and government healthcare schemes. The expansion of cashless treatment facilities can encourage patients to undergo planned surgeries, specialised treatment and hospitalisation that might otherwise be postponed due to affordability constraints, thereby supporting demand for private healthcare services.

The key drivers are:

• Expansion of the Insured Population: The number of people covered by health insurance approximately doubled between FY15 and FY25. This expanding insured population increases the potential patient base for private hospitals, particularly for elective surgeries and high-value treatments

• Government Schemes Improving Healthcare Accessibility: AB-PMJAY and various state-sponsored insurance programmes provide eligible beneficiaries with access to defined inpatient treatment packages. These schemes can increase hospital utilisation in underserved regions where affordability has historically restricted access to private healthcare

• Cashless Hospitalisation Supporting Patient Volumes: Cashless insurance arrangements reduce the requirement for patients to arrange substantial upfront funds before treatment. This can encourage greater utilisation of planned surgeries, diagnostic procedures and specialist services, particularly among middle-income households

• Increasing Institutional Participation in Healthcare Financing: Greater insurance adoption strengthens the role of insurers, employers and third-party administrators in hospital payments. These arrangements can support patient acquisition and treatment access, although negotiated tariffs and reimbursement conditions influence realised hospital revenue

India's changing demographic profile and increasing incidence of chronic diseases are expected to create sustained demand for hospital-based medical services. According to CRISIL Intelligence, the proportion of India's population aged 60 years and above is projected to increase from 10.5% in 2023 to 12.6% by 2030. Age-related conditions, including cardiovascular diseases, cancer, diabetes and orthopaedic disorders, often require repeated consultations, diagnostic testing, surgical interventions and long-term medical supervision. Consequently, demand is expected to increase across outpatient departments, specialised treatment centres, critical care facilities and inpatient services, supporting the expansion of organised hospital networks.

The key drivers are:

• Growth in the Elderly Population: The rising proportion of elderly individuals is expected to increase hospital visits, chronic disease management and demand for geriatric care. Older patients frequently require multiple consultations, diagnostic procedures and periodic hospitalisation

• Increasing Requirement for Chronic Disease Management: Conditions such as diabetes, hypertension, cardiovascular diseases and cancer require continuous medical monitoring and specialised treatment. This creates recurring demand for diagnostic services, outpatient consultations, medication management and inpatient interventions

• Higher Revenue Contribution from Inpatient Services: Inpatient services accounted for approximately 71.0% to 72.0% of India's healthcare delivery market in FY25. Increasing demand for complex procedures and hospitalisation can therefore materially influence healthcare industry revenue growth

• Growing Demand for Advanced Diagnostics and Specialised Procedures: Increased detection of lifestyle-related diseases supports demand for MRI, CT scans, pathology, cardiac interventions and cancer treatment. Hospitals offering integrated diagnostic and treatment services can address multiple stages of patient care

The Indian healthcare delivery industry faces significant financial and operational challenges arising from regulated treatment pricing, shortages of specialised medical professionals, high infrastructure costs and increasing regulatory requirements. According to CRISIL Intelligence, approximately 44.0% of healthcare expenditure is financed directly by patients, highlighting persistent affordability constraints. Hospitals also face delayed reimbursements from government schemes and insurers, which can weaken cash flows despite increasing patient volumes. Additionally, the capital-intensive nature of hospital operations, combined with clinical liability and cybersecurity risks, can adversely affect profitability, capacity utilisation and long-term financial sustainability.
The key risks are:

• Government Price Controls and Delayed Reimbursements: Government schemes such as CGHS, ECHS and AB-PMJAY prescribe treatment reimbursement rates that may not keep pace with rising operating costs. Delayed insurance claims and government payments further increase receivables, weakening hospital liquidity.

• Shortage of Specialised Medical Professionals: Limited availability of experienced doctors, nurses and technicians, particularly outside metropolitan cities, restricts hospital capacity utilisation and specialised treatment offerings. Competition for medical talent also increases remuneration expenses, recruitment costs and employee attrition.

• High Capital Intensity and Prolonged Hospital Stabilisation: Establishing multispecialty hospitals requires substantial upfront investment in infrastructure, medical equipment and clinical personnel. Newly commissioned facilities may experience prolonged operating losses when patient occupancy remains insufficient to absorb fixed expenses and financing costs.

• Clinical, Regulatory and Cybersecurity Risks: Hospitals face exposure to medical negligence claims, infection-control failures, licensing requirements and patient safety incidents. Increasing reliance on electronic medical records and connected equipment also creates cybersecurity vulnerabilities, potential data breaches and operational disruption risks.

Government programmes and regulations affect both access to care and the way hospitals are reimbursed. National and state health insurance schemes can bring previously underserved patients into organised care, while digital health initiatives can improve record portability and administrative coordination. The government also encourages capacity and quality improvement through healthcare infrastructure schemes and public-private partnerships. These sector-wide measures do not guarantee Paras any specific tariff, subsidy, contract or timely collection. Investors must assess eligibility and the company’s actual scheme exposure rather than treating general public support as issuer revenue.

The key policies are:

• AB-PMJAY. Ayushman Bharat Pradhan Mantri Jan Arogya Yojana increases access to covered inpatient services for eligible beneficiaries, but empanelled providers face scheme-specific package rates and claim controls

• CGHS and ECHS. Central Government Health Scheme and Ex-Servicemen Contributory Health Scheme are material reimbursement frameworks. Revised CGHS package rates became effective in October 2025, but delayed settlement can still impair cash conversion

• Ayushman Bharat Digital Mission. Digital health records and technology standards can support interoperability, subject to implementation, cybersecurity and patient-consent requirements

• National health infrastructure investment. Policy attention to district-level healthcare, tertiary care and infrastructure gaps supports medium-term sector demand, although private providers must independently fund and operate their facilities