India’s organised healthcare sector is entering a new phase of rapid expansion, with leading hospital chains increasing capacity, entering new markets and strengthening existing networks despite temporary pressure on profitability, according to EY’s Healthcare Newsletter: Q4FY26 and FY26 Update.
The report highlights that hospitals and diagnostic companies delivered strong revenue growth during FY26, driven by higher patient footfall, improved occupancy levels and increasing demand for specialised treatments. At the same time, healthcare providers are investing aggressively in new hospitals, brownfield expansions and strategic acquisitions, reflecting long-term confidence in the country’s growing healthcare demand.
Specialised Care Fuels Revenue Growth
Unlike previous years, where price increases played a major role, revenue growth is now being driven primarily by rising patient volumes and a higher share of complex medical procedures.
Apollo Hospitals and Max Healthcare each reported around 16% revenue growth in FY26, while Fortis Healthcare, KIMS Hospitals and Medanta also posted double-digit gains.
The report notes a significant rise in high-value treatments across specialties such as oncology, cardiology, neurosciences and organ transplantation, which generate substantially higher revenue per occupied bed compared to routine healthcare services.
Aster DM Healthcare reported that cardiology and oncology together contributed nearly one-fourth of its total revenue after recording annual growth of 25% and 23%, respectively.
Healthy Occupancy Supports Growth
Most major hospital chains maintained occupancy levels between 60% and 75% during FY26, enabling them to efficiently absorb fixed operating costs while retaining room for future capacity expansion.
- Max Healthcare: 76%
- Fortis Healthcare: 68%
- Apollo Hospitals: 67%
- Medanta: 62%
Major Capacity Expansion Underway
Leading healthcare providers have announced ambitious expansion plans over the coming years.
- Apollo Hospitals plans to add around 3,400 beds between FY27 and FY30.
- Medanta aims to add nearly 2,700 beds over the next three to four years.
- Fortis Healthcare plans to increase capacity by 1,800 beds.
- The combined Aster DM Healthcare Quality Care platform targets approximately 4,445 additional beds.
- Max Healthcare is expanding across cities including Lucknow, Pune, Dwarka and Dehradun.
- KIMS Hospitals is developing new facilities across southern India.
According to EY, healthcare companies are increasingly relying on brownfield expansions, operations and management (O&M) agreements, and acquisitions to accelerate growth while optimising capital expenditure. Brownfield projects, in particular, allow hospitals to expand existing campuses at lower cost and achieve faster returns.
New Hospitals Temporarily Weigh on Margins
While expansion is strengthening long-term growth prospects, the report notes that newly commissioned hospitals are putting short-term pressure on profitability as they typically take time to reach optimal occupancy.
Apollo Hospitals reported a slight decline in margins due to pre-operating expenses from four new hospitals. Similar trends were observed at KIMS Hospitals following new facility launches across Maharashtra, Karnataka and Kerala. Medanta’s profitability was impacted by the ramp-up of its Noida hospital, while GPT Healthcare and Jupiter Life Line Hospitals also reported start-up costs associated with newly operational facilities.
Diagnostics Segment Maintains Strong Momentum
India’s diagnostics industry also continued to record healthy growth during FY26, supported by increasing test volumes, preventive health packages and rising demand for specialised diagnostics.
- Metropolis Healthcare recorded 24% revenue growth.
- Thyrocare Technologies grew by 21%.
- Vijaya Diagnostics reported nearly 19% growth.
- Dr Lal PathLabs posted around 12% revenue growth while maintaining an EBITDA margin of approximately 28%.
The report notes that diagnostic companies are increasingly expanding beyond conventional pathology services into preventive healthcare, genomics, wellness screening and specialised testing, which offer stronger margins.
Network expansion also remains robust. Metropolis now operates more than 5,000 collection centres across 750 towns, while other major players continue expanding their laboratory networks into Tier-II and Tier-III cities.
Investor Confidence Remains Strong
Despite global economic uncertainties, EY says investor interest in India’s healthcare sector remains positive. Private equity activity continues to be healthy, and several healthcare companies are preparing for initial public offerings (IPOs).
Although deal activity moderated during the fourth quarter of FY26, EY expects investment momentum to strengthen in the first half of FY27, with healthcare continuing to be viewed as a resilient and defensive sector.
Growth Beyond Metro Cities
The report concludes that India’s organised healthcare industry is transitioning from a phase of consolidation to one of expansion. Hospital operators are steadily increasing their presence in Tier-II and Tier-III cities while simultaneously strengthening existing regional networks through acquisitions and brownfield developments.
While aggressive expansion is likely to keep margins under pressure in the near term, EY believes sustained growth in patient demand could enable these investments to drive the next decade of healthcare expansion in India.
