Sunil Jose (name changed), an employee of a private company in Kozhikode, recently took his daughter to a corporate-run hospital in the city after she complained of fever, cold and headache. The doctor suggested several medical tests to diagnose his condition.
Jose tried to find out the provisional bill amount. He says, “Without blinking, the staff said the cost could be around ₹10,000! I managed to escape from there by making some flimsy excuse.”
Jose then went to another health care institution in the cooperative area, where the total bill for treatment did not exceed ₹1,000. Clinical trials were also less.
The episode reflects some of the contradictions of the much-touted Kerala model of health care – people associated with the health care sector say that a large number of people depend on private hospitals or hospitals offering specialized treatment even for minor ailments and spend heavily out of their own pockets on health.
Additionally, global private equity companies are investing heavily in private hospitals, both big and small, in the state, raising concerns about the way forward. Parallelly, a large number of small private hospitals, which used to provide affordable health care, especially in rural areas, have been closing or reducing their operations over the past few years.
The Competition Commission of India (CCI) on March 17, 2026, approved a proposal by Singapore-based company Bentley Asia Holdings II Pte Ltd to acquire additional stake in Baby Memorial Hospital (BMH), Kozhikode, controlled by US-based global private equity firm Kohlberg Kravis Roberts & Co. (KKR). Along with this, CCI also approved the acquisition of certain shareholding by BMH in Unimed Health Care Pvt. Ltd. Ltd., which operates two multi-specialty hospitals in Hyderabad under the Star Hospitals brand name through secondary purchase.
In September 2025, it was reported that BMH had acquired a majority stake in Mitra Hospital in Kozhikode. In July 2024, KKR had invested around ₹2,500 crore to secure 70% shares in BMH. Earlier it had taken over the 350-bed Chazhikattu Multi-Specialty Hospital in Thodupuzha, Idukki for an undisclosed amount.
In 2023, Quality Care India, backed by another US firm, Blackstone, invested about ₹3,300 crore to pick up more than 80% shares of KIMS Health. In 2024, Aster DM Healthcare’s Indian operations merged with Quality Care, creating one of the largest hospital chains in India.
PK Sasidharan, former head of the department of general medicine at the Government Medical College, Kozhikode, says it is natural for “business giants” to invest money in what he calls the “sick care industry” in Kerala because people here have the ability to pay for their medical treatment.
Per capita private health expenditure in Kerala has increased from ₹7,636 in 2013-14 to ₹13,343 in 2021-22, the National Health Accounts report said. The report also shows that 59.1% of the total health expenditure in the state in 2021-22 was private in nature and 32.5% was borne by the government. The corresponding figures for 2013–14 were 76% and 24% respectively.
A Althuff, professor, community medicine, Government Medical College, Thiruvananthapuram, says the state can achieve higher life expectancy, cheaper medical costs and lower infant and maternal mortality rates due to better awareness of health and hygiene, comprehensive health care facilities and availability of nutritious food among other factors, which are the hallmarks of the Kerala model of health care.
“Recently, we are facing challenges like high disease burden. Diabetes, blood pressure, cancer, mental health issues and other lifestyle-related problems are on the rise. Along with this, more road accidents are also coming up. The elderly population in the state is increasing in both size and proportion. Hence, the cost of health care will obviously increase,” he believes. Dr. Althuff points out that the large number of people seeking medical treatment and their willingness to pay is driving large private equity firms to Kerala.
Small hospitals are closing
Meanwhile, Indian Medical Association (IMA) Kerala branch state secretary, Roy R. Chandran claims that although the number of corporate hospitals with 500 or more beds has increased by at least 65% in the last 10 years, small private hospitals with around 20 beds in rural areas or small towns have closed during this period.
According to data available with the IMA, a total of 1,306 institutions providing outpatient (OP) services and 444 institutions providing inpatient (IP) services were closed in the last five years in Kerala. A total of 148 OP clinics and 262 IP institutions were closed between 2016 and 2021.
On the other hand, the number of beds and private hospitals has also increased across the state. IMA officials say that between 2021 and 2026, the number of hospitals will increase from 3,677 to 5,402 and the number of beds will increase from 80,267 to 82,557.
The IMA blames the closure of small private hospitals on strict enforcement of certain provisions of the Clinical Establishments (Registration and Regulation) Act 2018.
Dr Chandran says some of the equity firms that are on the acquisition spree do not have any previous experience in the health care sector, although some of them have interest in the insurance industry.
consequences of corporatization
The background paper at the United Nations University-International Institute for Global Health symposium held in Kuala Lumpur, Malaysia in April 2025 claims that the corporatization of health care in India has introduced a layer of managerial oversight driven by commercial principles, which often limits the professional autonomy of doctors.
In corporate hospitals, specialist doctors are offered higher salaries but are expected to meet revenue-linked targets, including quotas for admissions, diagnostic tests and therapeutic procedures. It is also affecting small and medium-sized private and charitable hospitals, many of which are now taking loans, hiring specialist consultants and investing in expensive medical equipment to remain competitive. As a result, health care costs have increased rapidly, reducing or denying access to care to economically disadvantaged patients, and contributing to financial hardship for those seeking treatment. The newspaper says corporatization has also strained doctor-patient relationships, leading to a breakdown in trust and increased incidents of violence against doctors and hospital staff.
Focus on making profits
Dr. Sasidharan claims that the dominance of private enterprises in the health care sector can have far-reaching consequences. “They mainly focus on making profits from patients who can either pay through health insurance schemes or cover their expenses. This has resulted in Kerala having state-of-the-art five-star hospitals in the private sector and tertiary care hospitals in the government sector. Along with this, profit-making avenues are being promoted in the AYUSH sector in the name of welfare,” he says.
Government’s stance
Chief Minister Pinarayi Vijayan recently laid the foundation stone of the Kerala Institute of Organ and Tissue Transplantation in Kozhikode, highlighting the state government’s concerns over rising health care costs in the private sector. Mr Vijayan said a large number of private hospitals were charging high rates for medical treatment and they also varied from one institution to another.
Meanwhile, Health Minister Veena George says the department is focusing on improving treatment options in government hospitals, including developing infrastructure and launching new and advanced methods. She says, “Treatment is either free or provided at subsidized rates. According to a report by the National Statistical Office, the cost of treatment is coming down significantly in Kerala due to government intervention. However, now deliberate efforts are being made to divert patients coming to government hospitals to corporate-owned hospitals. This needs to be opposed.”
‘Adaptation, not commercialization’
However, Harish Maniyan, group chief executive officer of BMH, says “consolidation” of institutions and pumping of “private investment” has been happening in Kerala’s health care sector for more than a decade. He says this should not be seen as “professionalization”, but as “adaptation” to a more complex care environment.
In an email response, Mannion explained that it is important to distinguish between health care cost inflation and price increases.
“Costs are rising across India due to advanced diagnostics, modern infrastructure, specialist manpower, digital systems and quality standards. Responsible private investment often improves governance, procurement capacity and long-term planning. Scale can drive sustainability rather than pricing. In a market like Kerala, where patients are highly informed and cost conscious, irrational pricing is neither viable nor sustainable,” he says.
According to Manian, the average revenue per bed in Kerala is the lowest in the country. He says this shows that private equity investment in the market has not resulted in higher treatment costs.
Mannion claims that the future cannot depend primarily on out-of-pocket spending and that protection from financial risk is necessary. “It would be wrong to assume that insurance participation leads to an ‘insurance-only’ model. Health care financing will remain hybrid – combining government schemes, programs like MediSep, corporate coverage, private insurance and self-payment segments,” he says.
He believes that Kerala’s strength has always been a balanced partnership between public health leadership and responsible private participation and the real determinant is governance and ethical leadership, not the source of capital.
Dr. Sasidharan believes that health care is an issue that should be handled only by governments. “Family doctors or general practitioners are the most important doctors in the community to provide primary care with public health concerns. However, they have been sidelined,” he says.
Reiterating his opinion, Dr. Althaf says that public health mechanisms should be strengthened to address people’s fears, while disease prevention should be a priority area.
