EVERNILE
Rising Healthcare Consolidation
in Tier 2+ Cities
Should standalone hospitals should explore M&A?
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The Consolidation Wave: Implications for Standalone Hospitals Beyond Metros
India’s healthcare delivery sector is undergoing a rapid transformation, fueled by strong demand
fundamentals and a wave of aggressive consolidation. In FY23, the sector accounted for over
50% of the country’s USD 216 billion healthcare ecosystem and is projected to grow at a CAGR of
18%. This growth is fueled by rising life expectancy, increasing burden of chronic illness, higher
insurance penetration, growing health awareness and India’s growing global reputation for
delivering cost-effective, complex medical procedures.. These factors together are pushing
demand for better healthcare services, especially in Tier II+ cities, which have now started to
emerge as the next major growth frontier.
This surge in demand has also led to a sharp rise in consolidation across the Indian hospital
sector. Between FY20 and FY24, the market capitalization of the Hospital sector surged ~9x from
USD 4.5 billion to USD 42 billion. A key driver behind this surge has been the rise in M&A
transactions.. As large corporate hospital networks actively expand their footprints. In 2024
alone, the sector witnessed deals worth USD 6.1 billion, marking a 24% Y-o-Y growth. Between
2022 and 2024, total M&A value stood at USD 6.76 billion, alongside cumulative private equity
inflow of USD 5 billion. The Foreign Direct Investment (FDI) in healthcare and diagnostics
touched ~USD 3.2 billion during the same period — a clear signal of rising global investor
interest in India’s fast-evolving healthcare landscape.
Before delving deeper into the M&A consolidation trend, let’s take a look at some of the
notable transactions that happened in the Indian Healthcare Market in the past few years.
Strategic Acquisitions by Leading Hospital Chains
Target - Bed Capacity Location Date of Acquisition Deal Amt. (INR Cr) Acquirer
Sahara Hospital - 550 Lucknow Dec, 2023 940 Max Healthcare
Alexis Multi-Speciality Nagpur Feb, 2024 412 Max Healthcare
Hospital - 340
CHL Hospital- 225 Indore July, 2022 400 CARE Hospitals
Kingsway Hospital- 300 Nagpur Aug, 2022 80 KIMS Hospitals
Asian Fiedelis Hospital
Faridabad Feb, 2024 175 Yatharth Hospital
- 175
Sanar International Delhi NCR Jan, 2024 102 Shalby Hospitals
Hospital - 130
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Private Equity Based Investments
Name of Chain Total Operating Beds Date of Acquisition Deal Amt. (INR Cr) % Stake Acquired Acquirer
Ujala Cygnus
General
Healthcare ~2,500 2023 70% 1,600
Atlantic
Services
Norwest
Regency
~1,000 2023 40% 600 Venture
Healthcare
Partners
ClearMedi Morgan
~350+ 2023 ~50% 285
Healthcare Stanley
Why Tier II+ Cities Are Becoming the Next Healthcare Hotspots
The hospital sector is undergoing a paradigm shift, with corporate chains increasingly targeting
Tier II and Tier III Cities for expansion. Once considered peripheral, these geographies are now
emerging as high-potential zones for sustainable growth and long-term dominance. This shift is
not incidental yet a calculated response to the favourable conditions that smaller cities now offer.
Key factors fueling this strategic shift:
Demand-Supply Gap in Quality Healthcare: Tier II+ cities lack access to advanced medical
infrastructure despite growing population and rising disease burden. This underserved demand
creates a ripe opportunity for organised players to step in and bridge this critical gap.
Cost Advantage and Easier Scalability: Lower real estate costs and affordable workforce and
reduced operational expenses make it financially viable for large chains to scale faster in these
regions compared to saturated metropolitan markets.
Limited Competition & First Mover Advantage: Tier I cities are already mature, now the focus has
shifted towards Tier II cities and the consolidation has already started at a faster pace. These
smaller cities offer the chance for the hospital chains to establish brand loyalty early to dominate
the local healthcare ecosystem with minimal resistance.
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Standalone Hospitals at a Crossroads: Navigating Challenges and Opportunities
The ongoing wave of consolidation in the country is creating a new reality, where access to
capital, scale of operations and network strength will begin to outweigh traditional advantages
like legacy or local dominance. For standalone facilities, especially in Tier II+ cities, the emerging
landscape presents a tough question: Adapt, Compete, Partner — or Exit?
While some of the independent facilities may thrive through specialisation or local dominance,
others may find it increasingly difficult to match the pace of corporate entrants armed with
capital, systems and strategic intent.
Rising Consolidation: What It Means for Independent Players
As corporate chains expand to Tier II+ cities, their combined scale, branding and deep financial
strength reshape the whole landscape. For standalone hospitals, this consolidation directly
threatens core areas like capital access, talent retention, patient loyalty and long term valuation.
With the entry of larger players in the market, the bar sets higher, putting the smaller facilities at
risk unless they choose to adapt quickly. Here’s a breakdown of the key emerging threats that the
standalone facilities may face.
Factors Potential Emerging Threats
Capital & Infra Inability to match large scale investments in tech, infra and services quality
Might face loss of top consultants and staffs to better paying, professionally
Talent Retention
managed hospital chains
Shift of insured and affluent patients towards branded chains with broader
Patient Reference
empanelments and facilities
Increasing clinical and financial compliance burden without institutional
Regulatory Pressure
processes or tech support
Risk of lower exit valuation or distress sales if performance and relevance
Exit Value Risk
deteriorate over time
Staying Competitive: Strategic Levers Promoters Can Pull
Even when the competition gets extremely one sided, the promoters of the standalone facilities
do have few levers to pull to hold their ground and strengthen their value proposition before
taking any structural calls.
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Focus Area Levers to Withstand Competitive Pressure
Infrastructure Pursue upgrades via capital infusion, public schemes, or alliances with
regional chains
Retain key talent through promoter trust, flexible models, or profit-sharing
Clinical Ecosystem
mechanisms
Carve out niche specialities like Maternity, Ortho, or Onco where depth can
Care positioning
outplay scale
Initiate early discussions with potential partners while still in a position of
Proactive Dialogue
strength
The Way Forward: Evolving with Intent Amidst Consolidation
For promoters of standalone hospitals, the industry stands at a critical inflection point. This isn’t a
call to sell — it’s a call to strategically reassess your position.
Are you gaining or losing market share?
Are patient footfalls likely to decline or hold steady amid rising consolidation?
Can you retain your key consultants and care teams?
Do you have strong specialty verticals you can anchor your growth on?
Are you prepared to face intensifying competition?
With the hospital sector experiencing consolidation at such a pace it’s time to shape up and be
prepared for dealing with the scenario smartly. For standalone hospitals, the road ahead isn’t
binary. It’s not just about resisting or surrendering to consolidation, it;s about evolving with
intent. Whether by strengthening core operations, forming strategic partnerships, or proactively
exploring consolidation from a position of strength. The key lies in moving deliberately, not
reactively. As the market shifts rapidly, those who stay agile, pragmatic, and strategic won’t just
survive — they’ll lead in their niche.
At Evernile, our experienced leadership team is dedicated to guiding hospital promoters through
M&A and growth strategy decisions. If you’re exploring strategic partnerships or evaluating your
next move in the healthcare space, we invite you to start a conversation with us at
www.evernile.com or reach out directly at contact@evernile.com.
Authored by:
Sudhir Arya, Analyst
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