Why the Idea That “Good Healthcare Only Exists in Indian Big Cities” Is as Outdated as Landlines

India’s healthcare story has always been a tale of two worlds. On one side, gleaming hospitals in metro cities offered world-class treatment. On the other, millions in smaller towns and villages struggled with overcrowded government hospitals, long travel times, and limited access to specialists. But something has changed. Not with big policy shifts or billion-dollar infrastructure projects, but with something much quieter, something unfolding on phone screens, in local clinics, and through networks that didn’t exist a decade ago. A new breed of healthcare is taking root in Tier 2 and 3 cities, and it’s going to rewrite the investment playbook.

Healthcare has always been an expensive game. Hospitals in big cities attracted doctors, investors, and patients who could afford premium care. Smaller cities, in contrast, struggled with profitability. The costs of setting up hospitals, hiring specialists, and maintaining high standards were simply too high compared to what the local population could pay. So, healthcare investors did what was logical: they focused on urban centers. But logic changes when business models change. Today, it’s not about where the hospital is, it’s about where the patient is sitting when they get treated. And that shift is why the next big boom isn’t in Mumbai or Delhi. It’s happening in Indore, Raipur, Jodhpur, and hundreds of other cities where medical care is no longer dependent on a metro pin code.

A city like Bareilly or Coimbatore no longer needs a top-tier cardiologist on every street. It just needs a fast connection to one. Doctors in big hospitals now consult patients across the country through digital clinics set up in smaller cities. The screen in a clinic in Patiala can connect to an oncologist in Chennai, ensuring world-class advice without the patient traveling hundreds of kilometers. The local doctor still runs diagnostics and provides immediate care, but specialized consultation is now just a click away. Hospitals, once bound by geography, are expanding their reach without building expensive new facilities. This means Tier 2 and 3 cities are no longer an afterthought for premium healthcare, they are front and center in the expansion strategy.

For years, high-end diagnostics required expensive labs in major cities, leading to delays and added costs for patients outside metro areas. That model is vanishing fast. Portable diagnostic tools now allow local clinics to conduct advanced tests that once required a trip to a specialized center. A single device, connected to a cloud-based system, can process reports faster than traditional labs. Even imaging, which was historically limited to large hospitals, is becoming mobile—modern handheld ultrasound devices can do the work of machines that once needed an entire room. The result is a massive shift in where medical tests happen. Not in a few corporate hospitals, but in thousands of clinics spread across smaller cities. The waiting game for diagnostics is over.
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Investors often chase the obvious. In healthcare, the obvious has always been large metro-based hospital chains and urban diagnostics centers. But the quiet revolution in smaller cities is where the real numbers are starting to stack up. Over 60% of India’s population lives in smaller cities and rural areas, yet these regions have historically received less than 30% of total healthcare investment. That gap is now closing. Medical spending in Tier 2 and 3 cities is growing at nearly twice the rate of metro cities. As disposable incomes rise and awareness increases, the willingness to pay for better healthcare is skyrocketing. More than half of India’s teleconsultations now happen outside metro areas. Five years ago, this number was negligible.

The smart money is already making moves. Hospital chains that once built only in metro cities are now opening satellite centers in smaller towns, not as a social initiative, but because the demand is there. Diagnostics companies are doubling down on local partnerships. Insurance companies, traditionally hesitant about expanding in non-metro regions, are now integrating digital-first healthcare policies for smaller cities. And it’s not just the large players. A new wave of health-tech companies is catering specifically to Tier 2 and 3 cities, ensuring that diagnostics, consultations, and follow-up care don’t require a six-hour train journey anymore.

The idea that “good healthcare only exists in big cities” is about to be as outdated as landlines. The best hospitals may still be in Mumbai, but the best care doesn’t have to be. Smaller cities are no longer waiting for healthcare to come to them, they are bringing healthcare to themselves. For investors, ignoring this shift means missing out on what could be the most important healthcare expansion in decades. And unlike the usual boom-and-bust cycles, this one isn’t built on speculation. It’s built on something far more solid: real patients, in real cities, getting real treatment without needing a metro address. The next billion-dollar healthcare opportunity? It’s sitting quietly in a town you’ve never thought about. But it won’t stay quiet for long.

Source – EY The AIdea of India 2025 – How Much Productivity Can GenAI Unlock in India

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