Financial products for the healthcare industry

Healthcare has become one of India’s largest sectors in terms of revenue and employment. It consists of hospitals, diagnostic centres, individual medical practitioners, clinics, and nursing homes.

Healthcare centres need to keep their techniques up-to-date and use advanced equipment. But it is not easy to sustain this growth and provide valuable services to the public without much-needed resources.

Thanks to financial institutions like HDFC Bank, healthcare players have easy access to products and services focused on helping them grow their medical business. Hospitals and other healthcare providers can use these financial services to buy equipment or expand infrastructure. They can also use it to fund day-to-day operational requirements.

Here are different types of loans available for healthcare institutions and their uses:

  1. Working capital finance

    As financial pressures on medical institutions increase, managing working capital needs becomes important. Hospitals need to manage their assets and liabilities to ensure continued service and profitability. With a working capital financing option, hospitals can enjoy cash credits, overdrafts, and demand loans to meet daily operational requirements. These needs include payment of salaries, maintenance, and repair, buying consumables, and more.

  2. Medical equipment or asset finance

    As the name suggests, this type of loan enables healthcare organisations to procure different types of assets and medical equipment. This may include sonography machines, X-ray machines, CT scanners, MRI machines, and colour dopplers. Owning the latest equipment is crucial in today’s age of advanced technology to provide quality services to patients.

  3. Infrastructure loan

    Healthcare businesses need funds to expand their network and strengthen coverage. The infrastructure loan comes in handy to fulfil this goal and establish new premises. It can be nursing homes, diagnostic centres, or hospitals. This type of loan can also be used to expand an existing centre. Additionally, the infrastructure loan can be used for the balance transfer of working capital or current term loans.

  4. Merchant establishment - Overdraft (ME-OD) service

    This financing service allows healthcare institutions to make use of overdraft limits for working capital needs against the number of times you swipe your Credit Card in a month.

Apart from different types of loans, financial institutions offer:

  • Project finance

  • Equipment finance

  • Bank Guarantee

  • FCNR funding

  • Letter of Credit

  • Working Capital limit

  • Buyer's Credit

For instance, Bank Guarantee is a financial service wherein the lender ensures that the liabilities of the debtor will be met. Thus, if the healthcare institution is unable to settle a debt, the bank will cover it. The hospital or diagnostic centre can use Bank Guarantee to buy goods, equipment, machinery, and consumables. Using such services, you can build world-class healthcare facilities.

Letter of credit (LC) also has a similar purpose. If there is a heavy investment, like upgrading equipment or adding beds, you can quickly secure a Letter of Credit to meet essential needs. It can also be used for introducing a new wing at the hospital or launching a healthcare service. An LC also holds value in payment collection. It ensures that sellers receive payment on time, which results in an additional cash boost in the short term. Borrowers or healthcare institutions must understand the Letter of Credit meaning and terms before applying for the same to reap the maximum benefits from it. It is a highly customisable service, allowing the buyer and the seller to set mutually acceptable payment terms for a specific transaction.

The need for financing solutions for the healthcare industry

The healthcare market faces challenges, such as being fragmented and underpenetrated. Inefficiencies and inadequacies in infrastructure lead to the inaccessibility of quality medical services. One of the best ways to grow this sector is by offering the right kind of assistance at every stage.

Many healthcare start-ups, private banks, and fintech companies are working together to eliminate the barriers to healthcare financing in India. Financial services created with the industry in mind can help bridge gaps in access, cost, and quality of healthcare services. For this reason, financial institutions like HDFC Bank now offer a range of finance solutions to hospitals, nursing homes, diagnostic centres, and individual healthcare providers. By setting up well-equipped medical institutions, healthcare facilities can be provided to more people across the country.

To get more details, visit your closest HDFC Bank branch to know more!

Read more about how you can use financial products to grow your medical business by clicking here.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Loans at the sole discretion of HDFC Bank Limited. Loan disbursal is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.