Bedding In Well

A Deep Dive into the Indian hospital industry

Starting quite a way back.

Back in the 1980s and 1990s the Indian hospital system looked like a patchwork quilt that had skipped a few stitches. Government hospitals carried most of the load, trusts tried to plug the gaps, and a few brave private players tested specialty care in big cities. Beds were short, insurance was thinner than hospital coffee, and plenty of patients either paid out of pocket or waited and hoped.

Corporate chains moved beyond a couple of metro hubs, picked up smaller facilities, and learned which parts of the map could actually support scale. Insurance rules matured and capital followed the signals. New ventures and experiments sounded glamorous, but then brownfields quietly won the numbers game with fast increases in production and fewer headaches. That’s the way the early 2000s years changed the scope.

The 2010s brought some kind of discipline and playbooks. Networks doubled down on metros and the bigger Tier 2 cities. Centres of excellence took root in cardiac, oncology, neuro, and other such fields. Operators started treating occupancy, average length of stay, and theatre utilisation like athletes treat heart rate variability. Medical tourism and digital tools added a steady external flow and began to stitch together the journey from triage to pharmacy without making nurses learn five different log-ins and by the late 2010s, this looked less like a collection of standalone buildings and more like a scaled services business.

The pandemic slammed the brakes and then floored the accelerator. Case complexity pushed revenues higher, and for a while Average Revenue Per Occupied Bed, or for short, ARPOB, the most important metric for hospitals, looked like it had discovered compound interest. That ship has sailed. Today occupancy rate sits in the low sixties, ARPOB growth is back to single digits, and margins hold because case mix and cost control are doing their job. Studies suggest revenues can keep compounding at a healthy double-digit percent as volumes stay steady and pricing normalises. Translation for investors and operators who enjoy sleep at night. The recovery phase is over, the compounding phase is on.

Government schemes, employer coverage, and retail insurance turned long standing need into serviceable demand. Ayushman Bharat widened the funnel for price sensitive patients. Payers made this possible. Metros continued to support higher acuity work that sustains ARPOB and attracts talent.

Policies like NPPA maintained ceilings on key devices. For example, knee implant caps are extended through 15 September 2025. Coronary stents get periodic resets tied to wholesale price trends. Those controls cap certain procedure realisations even when volumes climb, which nudges operators to win on efficiency, mix, and scale rather than price alone. If hospitals were airlines, this is the part where you stop charging for legroom and start flying fuller planes.

So what is the operating playbook now?

Adding capacity through brownfield projects with faster payback and protecting ARPOB with centres of excellence and smarter case mix seems to be the way to go for these large institutions. Coupled with deepening partnerships with insurers to stabilise volumes and cash flows and digitising the experience to squeeze working capital and improving the patient and clinician experience also are pivotal. Staffing inflation, regulatory surprises, and capex overruns have not retired. The good news is that most large networks now fund growth primarily from internal accruals, which raises the floor when cycles wobble.

In the coming few days, I am going company by company to see how the theory shows up in numbers. I will look at four listed leaders, one deep dive per day. I start with Apollo Hospitals, the benchmark on scale, brownfield execution, and case mix depth. Next up will be Max Healthcare, Narayana Hrudayalaya, and Fortis. Each day I will bring the latest financials and materials, run a clean debt review that covers leverage, interest cover, liquidity, and capex funding, and then build the equity view through EV over EBITDA cross checks and an intrinsic read where it helps. At the end of the week, I will roll it all up into a comparative pack with ARPOB, occupancy, bed additions, ROCE, capex per bed, EV over EBITDA, and net leverage, plus a few simple scenarios to show how sector sensitivities move the numbers.

If you enjoy charts, ratios, and the occasional hospital pun, you are in the right ward.