‘Buying to sell’ is not so bad
India’s health care sector has been undergoing a change of DNA for years. It is a change that speeded up once private equity (PE) began to flow in
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Sep 02, 2025, 12:41 IST3 min
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The other day, a founder told me his startup was working on getting a doctor to people’s homes in 10 minutes. It wouldn’t be a specialist. But if you were running a fever or grappling with tummy trouble, a general physician could visit you at home and check you up—within 10 minutes or so of asking.
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My knee-jerk reaction to this founder was that he would probably bring down the social status of doctors by making them as quickly available as cooking oil or curd. As a child growing up in the boondocks of Bihar, I saw doctors being revered a notch or two above some of the minor deities. In a state where doctors were the most affluent lot (alongside lawyers), and lived in the largest houses in town, patients had to join the queue, get a number, and wait for days before their turn came for the darshan. Some doctors were part of the folklore for being evil tempered. The truly good ones were expected to shout at the patient at least once during the examination.
From that to having a doctor visit you at home in just a few minutes is the stuff health care dreams are made of. But it is not a straight jump from deity doctor to convenient-as-curd. India’s health care sector has been undergoing a change of DNA for years. It is a change that speeded up once private equity (PE) began to flow in.
Now, PE firms have always evoked a mix of admiration and fear. As the term indicates, these are firms that buy equity in companies that are not publicly traded. What the term does not make explicit is that PE firms “buy to sell”; they do not buy to keep. Which means that during the time they are holding on to this equity, they will move heaven and earth to improve its valuation. Which can be done by making the company better in the eyes of potential buyers. As an article in the Harvard Business Review from September 2007 says, the fundamental reason behind private equity’s growth and high rates of return is “something that has received little attention, perhaps because it is so obvious: The firms’ standard practice of buying businesses and then, after steering them through a transition of rapid performance improvement, selling them. That strategy, which embodies a combination of business and investment-portfolio management, is at the core of private equity’s success”.
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That is exactly what has been happening with some of India’s hospitals, which have been riding along their PE partners to not only scale up but also clean up and become more accountable and oriented towards outcomes. That would be much needed in a country like ours where, only about 1,500 hospitals, out of an estimated 70,000, are accredited with the National Accreditation Board for Hospitals and Healthcare Providers—India’s benchmark for hospital standards.
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But is that all good? As Naini Thaker’s story points out, there are hospital founders, usually doctors whose own personal reputation drove the rise of their hospital in the early years, who occasionally wonder whether they should have stayed small and focussed to serve the cause better.
Venture capital is also a type of private equity, except that it comes with higher risks because it gets ploughed into fledgling companies that are yet to find their feet. The founders here have little reason to wonder what could have been. They are riding the wave of modern technologies to plug the gaps they spotted in health care, usually from personal experience, which sometimes was as mundane as hearing people at a family gathering discuss their blood sugar levels like cricket scores.
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Read on for a better diagnosis.
Suveen SinhaEditor, Forbes IndiaEmail: suveen.sinha@nw18.comX ID: @suveensinha
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