Private equity investments could raise healthcare costs, warns KPMG executive

KPMG executive De Negri has warned that private equity investment in healthcare could raise costs either for public payers or for patients, unless a clear collaborative model is established. He noted that private equity investors expect a return on their capital and need a defined exit, typically within five years, along with additional upside at exit. For that reason they favor businesses with predictable revenues and a stable operating environment, which he said is reflected in their interest in hospitals and established networks that can serve as platforms for further acquisitions. He said this consolidation strategy is visible in India and other markets where regulatory requirements and long-term operating conditions are predictable.

Beyond hospitals, De Negri identified diagnostic imaging, laboratories and medical devices as promising segments. He said a similar consolidation trend is developing in diagnostics, where larger centralised processing facilities can support networks of smaller collection centres. Diagnostic imaging, nursing homes and dental care are also attracting investor attention globally. By contrast, private equity interest has been more limited in newer models linking hospitals with community and home healthcare, which he attributed to less established business models and regulatory frameworks.

De Negri cautioned against encouraging excessive competition between public and private providers, arguing that healthcare demand responds differently to competition than other industries. He warned that competition could increase the number of procedures without improving patient outcomes. He advocated a regulatory approach in which private providers contribute capital, efficiency and technology while governments retain oversight of how public and private systems cooperate. For India, he said clear regulatory conditions would help investors assess the operating environment and limit the risk of higher patient costs.

De Negri also urged India to invest beyond hospitals in primary care, community services and home-based treatment, drawing on lessons from Europe after Covid-19. On technology, he said AI, digital health records and telemedicine can improve efficiency, but that technology alone will not deliver better outcomes without changes in how care is delivered. He identified administrative automation, AI-assisted documentation and remote consultations as promising applications. He declined to assess the implementation progress of India's Ayushman Bharat Digital Mission, saying he was not sufficiently familiar with it.