CHENNAI: Post-pandemic in towns such as Kanniyakumari, Tirunelveli, Tenkasi and Thoothukudi, a quiet healthcare boom is underway, as easy credit, rising insurance coverage and lower costs redraw the country’s hospital map.
A sector once shunned by banks is now among their most aggressive lending bets, and the impact is playing out far from India’s metros. “Pre-Covid, healthcare was a grey area for lenders. Exposure was minimal and largely cautious,” said BG Menon of Acme Consulting. “Today, banks are far more comfortable, and that shift is unlocking growth in places that were never considered viable earlier.”
Dr A Ramamurthy, chairman and MD, BG Hospital, Tiruchendur, a healthcare veteran who runs a 50-bed facility in the temple town, concurs “without security, preference or priority lending of about Rs 3 crore is provided to doctor-run hospitals, where the money is to support the purchase of medical equipment and other infra aids.”
For decades, India’s healthcare ecosystem was deeply fragmented. Less than 5 per cent of hospitals were part of the organised corporate sector, with the rest comprising standalone, 50-100 bed facilities run by individual doctors. Professional management was limited, and operations were often family-led, with spouses doubling up as administrators or the next generation stepping in to manage the business.
“There was very little accountability. Promoters were highly leveraged, sometimes 20-25 times, but without the kind of transparency lenders typically expect,” Menon told DT Next.
But it was the pandemic that altered the equation. As hospitals grappled with fluctuating occupancy levels, often operating below prescribed norms, the government stepped in with a strong financial push.
Public sector banks were nudged to step up lending, backed by a Rs 2 lakh crore emergency credit line, followed by an additional Rs 1 lakh crore tranche.
“In a short span, banks like Indian Bank, Canara Bank and SBI became far more active in healthcare lending, particularly across TN and Karnataka,” Menon noted.
“Importantly, the hospital itself became the collateral, rather than personal assets of doctors,” BG Menon of Acme Consulting said.
The influx of institutional capital triggered a broader shift. Systems and processes improved, governance standards tightened, and the sector began attracting private equity interest. Large hospital chains such as Fortis, Max and Aster expanded their footprint, accelerating consolidation and bringing in professional management practices. A key outcome of this transition has been the sharp rise in quality benchmarks of the National Accreditation Board for Hospitals (NABH).
“NABH accreditation has seen a significant jump. From less than 5 per cent earlier to nearly 28-30 per cent now. That reflects a clear move towards standardisation and better patient care,” Menon said.
Yet, even as metros continue to see capacity additions, the more pronounced growth is now visible beyond big cities. Much like FMCG and automobiles, healthcare too is witnessing a demand shift into tier II, III and even IV locations.
“Tenkasi and Tirunelveli are good examples of emerging healthcare hubs. At the same time, cities like Vijayawada and Cuddapah are seeing strong traction, driven by affordability and insurance penetration,” R Venkatnathan, GM, Projects, Acme, said, noting that expansion too has been taking place in such locations. These include Seyad Group and Kauvery Group of Hospitals in Tirunelveli, Meeran Hospital in Tenkasi and Ravi Hospital in Sankaran Koil.
For instance, the 30-bed Meeran Hospital, is currently looking to set up a multi-speciality greenfield project of 80-100 bed hospital in Tenkasi, confirmed Dr M Meeran. The Kauvery Group of Hospitals, which entered Tirunelveli in 2022 following the takeover of 100-bed Galaxy Hospital, had spelt out its plans to expand to a 400-bed healthcare facility. The 50-bed Ravi Hospital is doubling up capacity while the Seyad Group is foraying into healthcare with a 150-bed not-for-profit hospital. Chennai-based Sooriya Hospital has also entered Tirunelveli about six months ago, after it acquired the defunct Getwell Hospital.
Nagercoil, even before the agrarian Tirunelveli district, considered to have a robust healthcare ecosystem, is upgrading itself to offer super-specialities too as the people of this region typically either go to Madurai or Tirunelveli to meet their complex and tertiary care needs. “Being the gateway for southern TN and well-connected, it is easy to go to these two places for healthcare needs,” he added.
Insurance has, in fact, also become a critical growth driver. Coverage has expanded from 12-14 per cent in 2008 to over 65 per cent today, aided by private players as well as government schemes such as Ayushman Bharat and state-led initiatives in TN and Karnataka. Focused interventions in segments like maternal and paediatric care have further strengthened demand.
On the supply side, the economics favour smaller cities. The cost of setting up a hospital bed in metros such as Chennai, Bengaluru or Mumbai can go up to Rs 1 crore, compared to Rs 70-80 lakh in tier 1 and 2 locations, and as low as Rs 30-60 lakh in tier 3 and 4 markets. This cost arbitrage is reshaping expansion strategies.
“We typically advise clients to acquire a few acres, start with 50-75 beds and scale up in phases. Build the structure with future expansion in mind,” Menon said. “Specialist doctors can be flown in for scheduled procedures, which makes the model viable even in smaller towns.”
For instance, Rela Hospitals in Chennai, has been tying up with hospitals for offering services that include monthly consultations and scheduled surgeries.
As capital, insurance, and quality benchmarks converge, India’s healthcare sector appears to be shedding its fragmented past for a more organised, scalable future, one hospital bed at a time.