Battle for beds: Private hospital capacity rises, but demand keeps pace

India's large hospital chains are investing ₹40,000 crore to add beds, but the expansion will meet only a fraction of the country's healthcare needs

The sight of patients lining hospital corridors, waiting to be assigned a bed, is a common one in India. Yet, attempts to improve this very basic health infrastructure have moved at a snail’s pace.   

Now, India’s large private hospital chains are embarking on their biggest capacity expansion in recent years, investing heavily in oncology, cardiology, transplants and robotic surgery. Yet, the planned addition pales before the nation’s needs — early evidence suggests the new beds are quickly filling up. 

Eighteen large private hospital chains are expected to add more than 34,000 beds between FY26 and FY30, involving an investment of around ₹40,000 crore, according to the rating agency Icra. This would expand their combined capacity by 48-50 per cent from March 2025 levels. 

But Apollo Hospitals — one of the 18 — estimates India needs another 2.4 million high-quality hospital beds. By this measure, the entire five-year pipeline of the 18 large chains would meet only around 1.4 per cent of what is needed. 

Icra separately estimates these additions at only 2.3-2.5 per cent of India’s existing private hospital capacity, suggesting the expansion will increase organised hospital chains’ share without improving bed availability nationally. In other words, the additions are mostly in existing hospitals, rather in new ones being built. 

Falling short 

India currently has an estimated 1.3-1.4 million private hospital beds. There is no data on the total number of hospital beds that would include both private and public hospitals and other healthcare establishments. The expansion comes against a wider shortage of hospital infrastructure. India had an estimated 1.4 hospital beds per 1,000 people in 2020 — even this meagre figure fell to 0.6 when only government hospitals were considered, according to a PRS Legislative Research analysis of the Union health ministry’s demand for grants for 2026-27. The National Health Policy, 2017, recommends two beds per 1,000 people. 

The government is seeking to bridge some of the gap through public investment as well as greater use of private capacity. A total of 38,466 public and private hospitals, for instance, are empanelled under Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (PM-JAY), with the health assurance scheme having covered nearly 127 million hospitalisations worth 1.92 trillion as of June-end, according to government data. 

Not surprisingly, the new capacity is filling fast, showing high pent-up demand and a general shortage of beds. Icra’s sample of 

11 listed hospital companies recorded a healthy occupancy of 63.5 per cent in FY26 despite capacity expansion, and it expects aggregate occupancy to remain around 62-64 per cent through FY27. 

Anuj Sethi, senior director, Crisil Ratings, said, “Post-pandemic, healthcare demand has witnessed a structural shift, driven by the growing prevalence of non-communicable diseases, expanding health insurance penetration, and better affordability 

of quality healthcare services.”  

Hospital operators have consequently pushed capacity additions since FY23, particularly in metros and tier-I and tier-II cities where people’s paying capacity supports faster ramp-up. 

In Q1FY27, Max Healthcare reported 75 per cent occupancy despite a 13 per cent year-on-year increase in operational beds, 

followed by Apollo Hospitals at 70 per cent, Fortis Healthcare at 68.7 per cent and Manipal Health Enterprises at 65 per cent. 

The chains also entered the expansion cycle with relatively high utilisation. In FY26, Max reported occupancy of 76 per cent, Apollo 67 per cent and Fortis 68 per cent, while Manipal recorded pro-forma occupancy of 64.45 per cent. 

In some cases, occupied beds provide a clearer indication of demand. Fortis’ occupancy remained at 69 per cent in the June quarter, but its occupied-bed count rose 17 per cent year-on-year to 3,418 as capacity expanded. At Max Smart in Delhi and Nanavati Max, Mumbai, recently opened beds have already reached around 80 per cent occupancy.  

Manipal’s new Yelahanka and Kanakapura hospitals in Bengaluru achieved earnings before interest, taxes, depreciation, and amortisation (Ebitda) break-even within two and five months, respectively, while Aster’s Kasaragod greenfield hospital in Kerala broke even within nine months. 

The money trail 

However, the expansion is not evenly distributed across the spectrum of hospital care. Investment is increasingly flowing into specialties such as cardiac sciences, oncology, neurosciences, gastroenterology and orthopaedics — collectively referred to by Crisil Ratings as Congo specialties. 

These specialties now account for around 65 per cent of hospitals’ revenues, up from about 59 per cent before the pandemic, according to Crisil. Oncology alone has increased its share from around 12 per cent to 18 per cent. 

Sethi said the shift reflected both a shortage of specialised oncology capacity and a move towards higher revenue potential. Oncology generates revenue across diagnostics, surgery, radiation therapy, chemotherapy and followup care, he said. 

The changing case-mix is helping hospitals generate more  revenue from existing capacity. “This strategic shift has enabled hospitals to maintain strong occupancy levels despite ongoing capacity additions, while simultaneously driving higher Average Revenue Per Occupied Bed (ARPOB) through a more favourable case-mix,” Sethi said. 

Aster DM Quality Care plans to add 4,170 beds over three to four years, taking capacity to around 15,000 beds, with about 53 per cent of the expansion coming through brownfield projects. The group has identified oncology as a major opportunity, alongside cardiac sciences, transplants and robotic procedures. 

“India today is a metro-tier oncology country. We are the ones who are challenging that (by expanding to small towns),” Varun Khanna, managing director and group chief executive officer, Aster DM Quality Care, said in the Q1FY27 earnings call. 

Oncology would account for a substantial part of its brownfield investment, he added.  

Aster’s robotic surgery volumes increased 80 per cent year-on-year (Y-o-Y) during the June quarter, joint replacements 39 per cent and transplants 19 per cent. 

Manipal Health Enterprises is similarly strengthening oncology, cardiac sciences, neurology, gastroenterology, orthopaedics and renal sciences. These centres of excellence contributed around 65 per cent of Q1FY27 revenue, with inpatient revenue from these specialties rising 45 per cent. 

“We would want to remain a specialty provider... really leading in clinical outcomes in these complex procedures,” Managing Director and Chief Executive Officer Dilip Jose said. The company plans around ₹4,000 crore of capital expenditure to add approximately 3,000 beds over the next three to four years. 

Apollo Hospitals plans to increase its beds to 14,100 by FY31. 

Max Healthcare’s operational capacity increased 13 per cent year-on-year to 5,379 beds in the June quarter, while occupancy remained at 75 per cent. Around half of the new 400-bed tower at Max Smart in Delhi has opened, with the operationalised beds already at approximately 80 per cent occupancy. Recently added beds at Nanavati Max have reached similar utilisation.

Fortis added 100 brownfield beds during the quarter and plans to operationalise another 400 during FY27. 

New capacity nevertheless weighs on profitability before the case and payer mix improves.  

Apollo’s recently commissioned hospitals reported an Ebitda loss of ₹38 crore during the June quarter.  

Max also said its margins were affected by newly commissioned brownfield beds and the acquisition of Kalinga Hospital. 

“First, you ramp up occupancy… and as you ramp up, you start improving your ARPOBs,” Max Healthcare Chairman and Managing Director Abhay Soi said. Profitability generally begins accelerating after occupancy and revenue stabilise, typically by the second or third quarter of operations, he added. 

Economics of expansion 

The combination of stronger occupancy and a richer specialty mix has also changed the economics of expansion.  

According to Crisil, operating margins for the sector have risen from around 14-15 per cent before the pandemic to nearly 20-21 per cent currently. 

Sethi said healthy occupancy and stronger returns were allowing hospital operators to continue investing in capacity, particularly in high-end specialties. 

At the same time it’s hard to estimate the demand for general surgery and other admissions.  

Icra expects aggregate occupancy among its sample of listed hospital companies to remain around 62-64 per cent despite the expansion.  

However, the concentration of investment in high-end specialties suggests that while the bed-building cycle should strengthen organised hospital networks, it may do considerably less to close India’s wider shortage of affordable, general hospital capacity.