Healthcare accounted for 15% of India's private credit deal value in the second half of 2025, making it the second largest sector after real estate — according to EY India private credit data. The reason is structural: India has 1.3 hospital beds per 1,000 people against the WHO norm of 3, and bridging that gap requires private hospitals, diagnostic chains, and specialty care operators to expand at a pace that conventional bank lending alone cannot finance. Private credit has filled the gap that banks and NBFCs either cannot or will not fill.
For healthcare operators planning significant expansion, acquisition, or equipment upgrades, private credit is not an alternative to bank debt — it is often the primary route.
Why banks struggle with healthcare lending
Healthcare is an operationally complex sector for bank credit officers to underwrite. Revenue is driven by bed occupancy, patient mix, payer mix (cash vs insurance vs government), and the clinical specialties offered — none of which fit neatly into standard bank credit assessment frameworks designed for manufacturing or trading businesses.
Hospital construction is capital-intensive upfront and generates returns only after a 24-36 month ramp-up period. Most banks require debt service coverage from existing operations — which means a hospital with strong existing operations can borrow, but a hospital expanding into a new facility cannot borrow against the new facility's future cash flows. This creates a structural gap exactly where expansion capital is most needed.
NBFCs have greater flexibility, but their cost of capital and tenure constraints mean that hospital groups often find the terms too expensive for long-gestation projects. The result is that mid-sized hospital groups — with annual revenues of ₹50-200 crore and genuine expansion plans — regularly find that their bank and NBFC relationships cannot provide the capital they need at terms that work.
What private credit provides that banks cannot
Category II AIFs lending to healthcare operators offer three structural advantages over bank credit in this context.
First, they can underwrite against projected cash flows from a new facility — not just existing operations. An AIF that has underwritten hospital credit before understands bed occupancy ramp curves, specialty mix revenue assumptions, and the time it takes for a new facility to reach operating profitability. They can structure a facility with a moratorium period during construction and ramp-up, with debt service beginning only when the facility has reached a defined operational threshold.
Second, they offer longer tenures. Hospital infrastructure has a useful life of 15-20 years. A 3-5 year bank loan forces aggressive repayment from early cash flows, constraining the operator's ability to reinvest. A 7-10 year structured facility aligned with the asset life makes significantly more financial sense.
Third, they can accommodate acquisition financing — buying another hospital, acquiring a diagnostic chain — where the combined entity's cash flows support the debt but no single existing entity can service it alone.
The diagnostic chain opportunity
Diagnostic chains represent a specific private credit opportunity that is structurally distinct from hospital lending. The asset-light model — centres that require equipment, trained staff, and technology rather than large constructed facilities — means the capital requirement per centre is lower and the ramp-up period is shorter.
Equipment financing for diagnostic centres — MRI machines, CT scanners, PET-CT, advanced pathology equipment — is an active segment. Equipment costs have increased significantly as diagnostic technology has become more sophisticated. A single MRI system now costs ₹3-8 crore depending on specification. A fully equipped radiology suite in a major diagnostic centre can represent ₹15-25 crore in equipment alone. This is exactly the ticket size where NCD structuring and private placement provide the most efficient route to capital.
Who is lending to healthcare in India
The active lenders in India's healthcare private credit space fall into three categories. Domestic Category II AIFs with healthcare sector expertise — able to underwrite clinical business models and structure appropriate security packages. NBFCs with healthcare specialisation that have built the operational expertise to monitor healthcare credit through the business cycle. And family offices, particularly those with existing healthcare business interests, that deploy credit alongside strategic relationships with healthcare operators.
Accessing this lender pool requires either direct relationships or an advisor with active placement relationships across all three categories.
Eone Capital arranges private credit of ₹30 crore and above for hospital groups, diagnostic chains, and specialty care operators across India.
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