Regional healthcare hubs emerge as new investment hotspots

Bengaluru: Hospitals in regional hubs such as Jaipur, Amritsar, Jalandhar, Vadodara and Coimbatore are seeing a rise in investment and acquisition activity as investors look beyond major metros for growth opportunities.

Deals in multispecialty hospitals across these and other regional hubs have been worth Rs 8,768 crore since 2024, with deal value rising nearly 25% between 2024 and 2025, from Rs 3,625 crore to Rs 4,517 crore, as per the data shared by Grant Thorton.

The increase comes as Indian healthcare has emerged as a major investment destination for marquee investors, including KKR and Blackstone.


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“Mid-market private equity’s (PEs), or smaller PEs, are looking to take positions in these regions because most of tier one is highly competitive, or they have already been taken in some form of action,” Abhay Anand, partner at Grant Thornton, told ET.

The shift comes as hospitals expand into tier two and tier three cities to tap a large underserved market with rising disposable incomes and lower operating costs.

The growth of health insurance is also supporting healthcare consumption in regional hubs. According to the latest report by Policybazaar, tier two and tier three markets accounted for 47% of life and health insurance premiums in FY25, up from 44% in FY23.

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Mid-sized private equity firms such as Somerset Partners and Quadria Capital, as well as healthcare platform Asia Healthcare Holdings, expect investment activity in regional hubs to gather pace as these markets remain largely untapped.

Deals to rise

Tier two and tier three markets are no longer viewed merely as regional markets but as growth drivers, said Vishal Bali, executive chairman of Asia Healthcare Holdings.

“The initial stages of this shift were around 2012, but the pandemic accelerated it further. There was a need for accessible healthcare closer to home. Organised healthcare players like us also wanted to move closer to our patient’s source markets,” he said.

Deals in regional hubs are expected to nearly double over the next 18 months, said Anand of Grant Thornton.

The activity is also spreading beyond established regional markets, especially in Southern and Eastern regions. Punjab has seen significant deal activity, while Nagpur and other parts of central India are attracting investors. Deals are now moving towards Bhubaneswar and other markets in eastern India, Anand said.

"Investors favour regional hospital brands that can scale through clusters, strengthening brand recognition and referral networks while enabling shared clinical talent, procurement efficiencies and higher asset utilisation. This improves unit economics, accelerates ramp-up and makes expansion more capital-efficient,"said Sunil Thakur, partner at Quadria Capital.

One of the largest deals in the space was KKR’s acquisition of Medicover Hospitals in India for $1.4 billion last month. A majority of Medicover’s presence in India is in tier two and tier three markets, including Vizag, Nashik, Warangal and Kurnool, as well as tier three markets such as Srikakulam in Andhra Pradesh and Karimnagar in Telangana.

Similarly, Max Healthcare acquired a 58.4% controlling stake in Bhubaneswar-based Kalinga Hospital for approximately Rs 300 crore, marking their entry into Odisha and eastern India.

The consolidation is also being driven by succession issues among standalone hospital operators.

“In healthcare, the biggest problem today is the lack of succession planning. A lot of existing doctors don't have the next generation participating in their ventures. So, a lot of single-asset owners are looking for opportunities to exit,” said Ramesh Kannan is a Partner at Somerset Indus Capital Partners

Single-specialty push

Deal activity in these regions is also being driven by the rise of single-specialty healthcare segments such as IVF, mother and childcare and oncology.

According to Grant Thornton, investments in mother-and-child and IVF businesses stood at Rs 5046 crore till August 2026, nearly 13 times the Rs 381 crore reported in 2025.

For instance, at Nova IVF Fertility, at least 70% of newly opened centres are now in tier two and tier three markets, including Jaipur, Amritsar and Jammu.

“Historically, patients seeking quality fertility care would travel to metro cities. Today, Nova IVF Fertility has more than 130 clinics across 75 regions,” said Bali.

The broader rise in healthcare consumption is also creating opportunities in retail-focused segments such as diagnostics, eye care and dialysis.

“Healthcare utilisation is rising across patient segments. Higher-income, self-paying patients are increasing their per-capita consumption of diagnostics, procedures and elective care, while previously underserved populations are gaining access through government-funded insurance schemes,” said Thakur.