Control or be controlled: Why owning hospitals will be non-negotiable for India's healthtech startups

When Onco shut down operations in early 2025, the cancer-care platform, it offered a lesson for India's healthtech sector: connecting patients to hospitals isn't enough. You need to own the hospitals.

The Bengaluru-based startup had raised over $7 million from Accel and other prominent investors, building technology to streamline cancer treatment bookings and referrals. But hospitals held the pricing power and showed little interest in sharing margins. Unable to control its unit economics, Onco became the latest casualty in healthtech's reckoning with a hard truth, in India's fragmented healthcare market, the real money flows to those who own the beds, labs, and operating rooms.

That realization is remaking the sector. Across India, healthtech startups are abandoning the asset-light, marketplace model that dominated the industry's first wave and instead buying or building clinics, diagnostic labs, surgical centers, and even full-scale hospitals. The shift marks a decisive break from Silicon Valley orthodoxy, where software platforms were supposed to intermediate healthcare without the burden of physical infrastructure.

"The platform model worked for discovery, but we had no leverage over the care itself," said a founder at a diagnostic startup who declined to be named discussing competitive strategy. "The moment a patient walked into a partner facility, we became irrelevant to the economics."

The numbers tell the story. PharmEasy's acquisition of Thyrocare in 2021, a $600 million deal that gave the epharmacy giant control over one of India's largest diagnostic networks, signaled that even digital-first companies recognized the need for physical assets. This has also become a core part of PharmEasy's business model.

Pristyn Care, which began as a lead-generation platform for surgeries, now operates its own network of clinics and has embedded clinical staff inside partner hospitals to control patient journeys from consultation through recovery.

Redcliffe Labs and Healthians have poured capital into their own laboratory infrastructure and collection centers rather than coordinate testing through third parties. Even Healthcare, a subscription-based managed care provider, has moved to own and operate hospitals in urban markets, betting that cost control requires delivery control.

The reversal reflects harsh realities about India's healthcare economics. Digital platforms discovered they could generate demand but remained price-takers once care moved offline. In high-margin specialties like oncology, orthopedics, and cardiology, hospitals dictated terms. Platforms that stopped at the digital layer found themselves structurally subordinate to providers who owned capacity.

Investors are adapting. Where venture capitalists once dismissed asset-heavy healthcare models as capital-intensive and slow-scaling, they now see vertical integration as essential to sustainable margins. Recent funding rounds have backed companies with explicit plans to own infrastructure, not just coordinate it.

The strategy carries execution risks. Operating hospitals and labs demands expertise in regulatory compliance, clinical quality control, and workforce management, domains where software founders often lack experience. Capital requirements are steep. And the model's success depends on achieving utilization rates that many startups have yet to prove at scale.

Hospital chains and diagnostic incumbents are also moving to close the technology gap, building their own digital interfaces and reducing the advantage that startups once held in patient acquisition. The question is whether tech-native companies can master healthcare operations before healthcare operators master technology.

But proponents argue the trade-off is unavoidable. Software adds value primarily when the company deploying it also controls the environment where care is delivered. Scheduling systems, clinical decision support tools, and utilization management software deliver returns when integrated into owned facilities, not when layered atop partner networks with misaligned incentives.

The path ahead

The trajectory suggests India's healthtech sector will increasingly resemble the U.S. managed care industry, where companies like Kaiser Permanente have long integrated insurance, technology, and care delivery. Analysts expect consolidation to accelerate through 2027 as platforms acquire healthcare assets and traditional providers absorb smaller digital competitors.

New entrants are already designing businesses with physical infrastructure at their core. Rather than launching as marketplaces and pivoting later, founders are raising larger seed rounds to fund clinic networks from inception. The next wave of healthtech unicorns will likely be operator-led, tech-enabled healthcare companies, not pure software plays.

Internationally, the pattern isn't unique to India. China's healthtech sector underwent a similar evolution, with platforms like Ping An Good Doctor and WeDoctor moving into clinic operations after discovering the limits of pure digital models. Brazil and Southeast Asian markets are showing early signs of the same trajectory.

The economics are becoming clearer: in markets where healthcare delivery is fragmented and quality is inconsistent, vertical integration isn't a luxury, it's a prerequisite for sustainable margins. For India's healthtech startups, the choice is no longer between growth and profitability. It's between controlling healthcare delivery or being controlled by it.

The sector's second generation of winners won't be the companies that scaled fastest. They'll be the ones willing to absorb operational complexity in exchange for pricing power and margin durability. In healthcare, it turns out, software needs bricks after all.