The escalating influx of private equity (PE) capital into India's healthcare sector could lead to higher treatment costs for patients if not managed by robust regulations and a clear framework for public-private collaboration. This caution comes from Alberto De Negri, Head of Advisory for Healthcare for Europe, the Middle East and Africa (EMA) at KPMG.
De Negri emphasized that while hospitals, diagnostic imaging centers, and laboratories present significant investment opportunities, the expectation of short-term returns (typically within five years) by PE investors could jeopardize healthcare affordability. He stated, “They are expecting a return for the investments they are making. The risk of increasing costs either on the public side or for the patients, the consumers, however we want to see them, can be limited. But in principle, it can be a risk unless there is a clear collaborative model.”
Investment Hotspots and Emerging Trends
Beyond traditional hospital investments, De Negri identified diagnostic imaging and laboratory services as highly promising segments. Medical devices also offer substantial opportunities on the supply side of healthcare. Globally, investor interest extends to nursing homes and dental care. A noticeable trend is the consolidation strategy, where investors acquire established networks to serve as platforms for further expansion, a pattern evident in India and other mature healthcare markets.
However, newer care models connecting hospitals with community-based and home healthcare services have seen more limited private equity engagement. This is primarily due to less established business models and regulatory frameworks, making such investments harder to evaluate and predict.
The Pitfalls of Unchecked Competition in Healthcare
De Negri cautioned against fostering excessive competition between public and private healthcare providers, explaining that healthcare markets do not always behave like other industries. “Competition in healthcare can be difficult and dangerous, especially between the private and the public sector, because we all know that in healthcare supply can generate demand,” he noted.
He warned that increased competition might lead to a rise in medical procedures without necessarily improving patient outcomes. Instead, he advocates for a regulatory approach where the private sector contributes capital, efficiency, and technological advancements, while governments maintain critical oversight of healthcare delivery.
India's Healthcare Investment Priorities
For India, the crucial challenge lies in attracting private investment while simultaneously ensuring that the expansion of healthcare infrastructure does not compromise affordability. Clear regulatory conditions are vital to help investors assess the operating environment and mitigate the risk of elevated costs for patients.
De Negri also stressed the importance of strengthening primary healthcare, community services, and home-based treatment alongside hospital expansion. Drawing parallels with Europe's post-pandemic experience, he highlighted the need to address weaknesses in managing patients outside hospitals. He advised against an exclusive focus on increasing hospital capacity, urging parallel investment in community and primary care.
Regarding India's relatively low healthcare expenditure as a proportion of GDP, De Negri recommended directing additional public spending toward interventions that deliver measurable improvements in health outcomes, rather than simply increasing overall spending. He also championed greater investment in preventive healthcare, particularly nutrition, to reduce reliance on hospitals for treatable illnesses.
Technology Alone Is Not a Panacea
While artificial intelligence, digital health records, and telemedicine offer significant potential for improving healthcare efficiency, De Negri warned that technology investments alone would not guarantee better patient outcomes. He emphasized that the benefits hinge on healthcare providers adapting their service delivery models.
He identified administrative automation, AI-assisted medical documentation, virtual health assistance, and preliminary emergency triage as applications that could alleviate pressure on healthcare professionals. However, he observed that healthcare providers often change clinical practices slower than technology developers introduce new tools. The real challenge, he said, is to rethink how and where patients receive care, including greater use of remote consultations and home-based services.
Global Interest in India's Healthcare Workforce
Beyond infrastructure and diagnostics, De Negri noted international interest in India's medical education, professional training, and specialized hospital services. Global healthcare systems face workforce shortages, creating opportunities for India to forge partnerships involving doctors, nurses, and medical training institutions.
Looking ahead, De Negri believes the next significant innovation in healthcare may stem more from organizational restructuring to optimize the use of scarce medical professionals than from new technologies, with the exception of advancements in pharmaceuticals and medical devices. He specifically pointed to cancer vaccines as a potentially revolutionary development in medicine, set to transform cancer care entirely.