Walk into almost any midsized private hospital in India and you will see polished lobbies, beautiful MRI suites, and posters that trumpet NABH accreditation. Scratch the surface and a very different picture emerges: beds sit idle while patients wait in hallways, supplies expire in storage rooms, and billing offices juggle stacks of paper that should have been digitised a decade ago. Below are five of the biggest, yet fixable, sources of inefficiency I have observed while working with hospital finance teams since 2017.
1. Bed utilisation stuck below 60%
Indian tertiary hospitals advertise 80-90% occupancy, but internal MIS reports often reveal a truer figure closer to 55-60% once you strip out beds reserved for “VIP” or isolation use. The culprits are predictable:
- Uneven admission patterns – Surgeons cluster elective procedures early in the week, leaving Fridays half empty.
- Discharge delays – Final bills take four to six hours to compile, so patients occupy beds long after they are medically ready to go.
- Poor cross‑department coordination – ICU step‑down requests arrive by phone instead of through an integrated HIS, so vacancy information lags by hours.
Every five‑point improvement in effective occupancy adds roughly 40 to 50 basis points to EBITDA margins, with zero new construction.
2. Revenue leakage in the pharmacy
Hospital pharmacies are meant to be profit centres, yet they routinely lose five to ten % of inventory value each year through expiration and pilferage. Problems include:
- Manual stock counts only once a month – discrepancies go unnoticed for weeks.
- Non‑standardised formularies – consultants demand brand A one week and brand B the next, bloating SKU lists.
- No barcoding at point of care – nurses mark medication in paper charts and data entry happens later, allowing silent shrinkage.
Deploying a barcoded unit dose system costs about INR 35 lakh for a 300‑bed setup and typically pays for itself inside eighteen months.
3. Billing still powered by paper
A 2019 FICCI survey found that 70% of Indian hospitals rely on manual abstraction when coding procedures for insurers. The knock‑on effects:
- Claim denial rates above 18% in orthopaedics and oncology.
- Average days‑in‑accounts receivable at 58 versus a recommended target of 35.
- Hidden compliance risk – handwritten notes make it nearly impossible to defend against audit claw‑backs.
Simple fixes include integrating clinical notes directly with the billing engine and running pre‑submission denial‑risk checks. One Delhi hospital cut DSOs by 17 days within a single quarter after installing rule‑based denial analytics on top of their HIS.
4. Procurement that ignores data
Most hospitals negotiate drug and device contracts once a year using last year’s consumption numbers. Yet case mix shifts fast: a cardiac programme ramps up, an oncology centre slows, and the material management team is the last to know. The result is surplus stents in one store and stock‑outs in another, forcing costly emergency purchases.
A live dashboard that pulls usage from OT and ward systems lets procurement managers reforecast weekly, not annually. Among three hospitals I benchmarked, moving from annual tenders to rolling quarterly mini‑bids saved 4 to 6% on consumables without hurting vendor relationships.
5. IT stuck at the pilot stage
Indian hospital CIOs love pilots: predictive infection models, AI image triage, IoT asset tags. Yet most initiatives stall in proof‑of‑concept limbo because there is no structured change‑management path. Finance sees capex, clinicians fear workflow disruption, and the pilot dies.
The fix is surprisingly mundane: an internal steering committee with hard ROI gates and a single accountable owner. When a Bengaluru chain set a rule that any tech pilot must breakeven within twelve months or be shut down, their adoption rate actually went up because vendors arrived prepared to share risk.
The capital cost of standing still
Hospitals borrow at 11 to 14%. Every rupee trapped in unbilled services or excess inventory drags on return on invested capital far more than a new PET‑CT will add to top line. The irony is that most inefficiencies highlighted above require process discipline, not high tech. Barcode scanners, integrated discharge checklists, rolling tenders, and tight pilot governance are boring fixes, yet they outperform headline‑grabbing expansions in pure financial terms.
For investors, a management team that tackles these operational leaks signals maturity and creates true leverage: improve margins today, then scale capacity tomorrow with cash the hospital has freed up internally. That is the kind of story that travels well in boardrooms from Mumbai to Singapore.