Steps to Attract Private Equity Firms to Invest in Indian Healthcare Sector

India’s growing healthcare services demand larger partnerships between the public and private sectors to build sound infrastructure and crucial resources needed to provide quality healthcare services to its people. The last few years have seen significant private sector funding by Private Equity Firms in the Indian healthcare industry but mainly in big cities and met with a mixed bag of commercial success. Given the fact the traditional means of private funding, there is a need for innovative modes of funding. This innovative private funding is asking viable business models that are relevant to today’s population’s needs and demands.

Given the notable gap; it is evident that Indian Healthcare is poise to attract investments from the private sector both from within and outside of India. But to accelerate the investment in the healthcare sector, robust and conducive policy and regulatory mechanisms need to be in the place that will enable a shift in investment mindset.

The key factors for this sector-specific growth have been improved healthcare consumption and insurance penetration, growing investment from private equity (PE) investors, etc.

The Indian healthcare system is dominated by private players. Given the size of capital needs and limited public funding, there is a vital need for private capital to bridge the funding gap. Quadria Capital is now coming from different sources including international strategic players and Private Equity Firms in India.

The government’s plan of improving government-funded primary care delivery, secondary and tertiary healthcare for the lower section, and building an infrastructure to develop and up skill resources augurs well for private investment. But the success of attracting private investment will hinge on how flexible is the government’s approach to these factors.

·         First and foremost, to strengthen government-funded primary care, adequate resources, and up skilling of manpower is needed along with the availability of other resources such as medication and the right care path.

·         Secondly, the government should sponsor secondary and tertiary healthcare which needs quality and robust management systems.

·         There is an immediate need to create infrastructure for building and up skilling resources. 

If these components are put together, there will be significant interest from private sector investors. A step in the right direction would be for the government to work in tandem with the private sector to create models of success.