Private equity reshaping Hyderabad’s corporate hospitals

Hyderabad’s healthcare landscape is shifting as private equity and venture capital firms take control of corporate hospitals. Once managed by doctors, these institutions are now profit-driven, raising concerns about rising treatment costs for middle-class families and the need for public alternatives

Hyderabad: Gone are the days when doctor-owned, family-run private hospitals, which were the first wave of corporate hospitals in Hyderabad, dominated tertiary healthcare.

Post the Covid pandemic, barring a few exceptions, all major corporate hospitals have undergone massive expansion, establishing state-of-the-art quaternary facilities in newer areas of Hyderabad, led by international Private Equity (PE) and Venture Capital (VC) funding.

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As a result of the PE funding, corporate hospitals which were earlier administered by senior doctors, are now being run by senior-level managers with B-school backgrounds. Another significant change that has taken place is the controlling stake of these private hospitals is now with internationally-run PE and VC funds.

“This trend is going to be the future of private healthcare sector in metro cities. PE firms have identified the demand-supply gap in healthcare infrastructure in tier-II and tier III cities and towns. There are government-run primary and secondary healthcare facilities, but there is also a huge demand for private facilities because of higher income and awareness,” a senior doctor, on condition of anonymity, said.

A senior public health specialist stated corporate hospitals attracting millions in investment, are now primarily driven by profit.

“Usually, PE firms invest money into hospitals by borrowing from somewhere else. As a result, they are always under pressure to show profits. Individual doctors and their families look at their hospital as a long-term investment. However, a PE firm is more inclined to invest for a window of 3 to 5 years and extract good returns,” he explains.

What happens to middle class and economically weaker sections?

Though PE funding boosts medical infrastructure and quality of healthcare in private hospitals, it’s primary goal to create profits has financial burden on the middle class.

“Today, it is not possible for middle class families to access quality healthcare without insurance. The cost in corporate hospitals is high. This is where the State governments should play an important role, instead of just focusing on primary healthcare. They must quickly establish TIMS-like institutions,” doctors said.

Private hospitals with PE investments:
* Care Hospitals: Blackstone
* Apollo Hospitals: Publicly listed in Bombay Stock Exchange
* Rainbow Hospitals: Publicly listed in BSE
* KIMS Hospitals: Publicly listed in BSE
* AIG Hospitals: BPEA EQT investments (South-East Asian-Sweden-based)
* Medicover Hospitals: Medicover multinational healthcare of Sweden
* Yashoda Hospitals: Family-owned
* Apollo HealthCo (subsidiary of Apollo Hospitals): Advent International
* Omega Cancer Hospital: Morgan Stanley
* Basavatarakam Cancer Hospital: Non-profit, trust-run hospital
* AINU (Asian Institute of Nephrology and Urology): Asian Healthcare Holdings