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How to Start a Hospital in India

Setting up a Hospital / Clinic in India is not as easy as it sounds, but we are here to give you some pointers about how to start a clinic / hospital in India, License & legal requirements for opening a Hospital.

How to Start a Hospital in India

Healthcare is the basic need and right of every citizen of our country. Hospitals, nursing homes, clinics, medical camps etc form the platform for this healthcare delivery, assisted by doctors, nurses and other medical staff. Unfortunately, India has a huge and growing population, but a less number of hospitals. India has one hospital bed for 879 people. This is far below the world average of 30 hospitals per 10,000 population.  According to the WHO, India needs 80,000 more hospital beds every year to meet the demands of its growing population. This highlights the need for more hospitals to be built at a faster pace.

Here, we consider the necessary steps & legal requirements to set up hospitals in India. Hospitals can primarily be of two types- government or private. Further, they can be general, speciality or multispecialty hospitals. Following are the pointers one needs to keep in mind and set in place for setting up a private hospital in India:

1. Location of the hospital

This has to be chosen well, because if there are already some hospitals in the locality, then it will be difficult to pool in patients. Also, the hospital needs to be set up in an area which has good transportation facility or is close to a railway station. Considering the cost of real estate, a huge financial investment is required.

2. Facilities your hospital offers

One has to be sure what set-up is planned and what infrastructure is required. A pediatric, orthopedic, gynecologic, oncology, pathology, imaging, etc facility in the hospital all require different facilities.

3. Permits for your hospital

  1. Land and construction
    Land allotted for agriculture cannot be used. To start building the hospital wing, several permissions from local authorities need to be taken. Numerous documents need to be approved, like land deed, architect’s plan, etc.
    An occupation certificate is obtained after clearing all formalities.
  2. Electricity and water
    As per the requirements of the hospital, permission has to be taken from the local governing body to obtain electric meters and water supply. Water requirement has to be calculated, which for any setup is approx 100 litres per day.
  3. Sewage
    Proper disposal of waste requires a well planned sewage and drainage system, which is done after permission is sought from the local board.
  4. Biomedical waste
    This is very vital aspect and permission of Municipal Corporation is required for installing incinerators required to dispose of medical waste and body parts.
  5. Fire and Health Licence
    A Fire licence is necessary to prove that the hospital will not cause any damage or loss of life and needs to be procured from the local municipal council.  Procuring a health licence is vital to provide health care to the patients.

4. Planning your hospital infrastructure

Take care of all these:

  1. Doctors, their qualifications and registration numbers recorded
  2. Nurses and working shifts discussed and set
  3. Medical equipment and instruments purchased
  4. Computers and other hardware devices set up
  5. Engineers and staff required for maintenance, plumbing, medical gas pipelines, air conditioning, etc. set

Multiple medical laws and ethics must be followed at every step. A set of guide lines and eligibility criteria have been put forth by our government for hospitals, which provide services to central government health scheme beneficiaries.

A tremendous amount of planning, large finances, approvals, certifications, licences and guide lines need to be followed while setting up a hospital in India. It might be well worth it at the end, but needs ample time and mammoth effort to pool together the resources in place.

Registration & Legal Requirements for Starting a Hospital / Clinic in India

Setting up a hospital / Clinic in India isn’t a smooth sail. The complex course of regulatory approvals and associated paperwork is undoubtedly cumbersome to deal with; however, more daunting is the cost constraint. Not only establishing a health care facility but its on-going maintenance demands full-fledged financial planning for hospital set-up.

Registration under the clinical establishment act, 2017

Registration under the clinical establishment act, 2017 This act was enacted by the central government and is being adopted by states of India. It needs a one-time registration for a premise towards being operated as a hospital. The registration must be done by the respective state government that has adopted this act

Registration under companies’ Act, 2013

This act is applicable when the hospital established it under the ownership of a corporation. The act needs that the corporation is registered and fulfills the requirement of incorporation like memorandum of association, articles of association, capital structure formation, securities allotment, account audits, etc.

Director Index No (DIN NO) for each director

This comes under the Ministry of Corporate Affairs, Government of India. It is a compulsory registration required for each director who wants to be a part of a corporation. It is a onetime registration for directors.

Registration under societies registration act, 2001

In case the hospital is being established under the ownership of society, the society registration act is required.

See the reference below for different health care services/ speciality and the license under relevant laws:


Registration under societies registration act, 2001

The other important license required is:

  1. Regulations Building Permit and Licenses (From the Municipality)
  2. No objection certificate from the Chief Fire Officer "License under Bio z-Medical Management and Handling Rules, 1998.
  3. No objection certificate under the Pollution Control Act.
  4. Narcotics and Psychotropic substances Act, 1985
  5. Vehicle Registration Certificates (For all hospital vehicles.)
  6. Atomic energy regulatory body approvals (For the structural facility of radiology dept, TLD badges, etc)
  7. Boilers Act, 1923(If applicable)
  8. MTP Act, 1971 (MTP stands for Medical termination of pregnancy. To be displayed in the Gynaec and Obs department)
  9. License for the Blood Bank (To be displayed in the Blood Bank)
  10. Transplantation of Human Organs Act 1994(If applicable)
  11. PNDT Act, 1996 (PNDT stands for Prenatal diagnostics test. To be displayed in the Radiology department that this is followed. )
  12. Dentist Regulations, 1976
  13. Drugs & Cosmetics Act, 1940
  14. Electricity Act, 1998
  15. ESI Act, 1948 (For contract employees)
  16. Environment Protection Act, 1986
  17. Fatal Accidents Act of 1855
  18. Guardians and Wards Act, 1890
  19. Indian Lunacy Act, 1912 (Applicable only if a Psychiatry dept is there in the hospital)
  20. Indian Nursing Council Act 1947 (Whether nurses are registered with NCI).
  21. Also one must check whether pharmacists are registered with the a Pharmacy Council of India.)
  22. Insecticides Act, 1968
  23. Lepers Act Maternity Benefit Act, 1961
  24. Minimum wages act, 1948 (For contract employees)
  25. Pharmacy Act, 1948
  26. SC and ST Act, 1989
  27. Protection of Human Rights Act, 1993
  28. Registration of Births and Deaths Act, 1969
  29. Urban Land Act, 1976
  30. Right to Information Act 2005

How much does it Cost to Setup a Hospital in India

The cost to set up a hospital in India depends on two per-determinants:

  1. The intended capacity of the health care facility.
  2. The level of health care the facility intends to offers.

The land and construction cumulatively require 50-60% of the total capital cost. Once you’re sorted with finances for the land or construction project, the entire set-up that follows to get the health care facility fully functional comes down to roughly one half of what’s already spent in acquiring or building the premises from the facility.

The medical equipment, consumables, and ambulatory services though doesn’t claim the lion’s share in Setting up a small hospital in India, it’s a recurrent cost.

Implementing cost-effective procurement is an indispensable long-term benefit to the organization and best to be also the part of initial financial planning for hospital set-up.

Basic cost-layout for Setting up a small hospital in India

In General, the following needs to be in the layout of a basic healthcare facility and we’ve put together an approximate cost-capping in setting up and making the concerned department fully-functional in delivering competent health care to the masses.


Source & References

  1. License Required to Start a Hospital in India.
    Source:-http://www.legalserviceindia.com/legal/
    article-1225-what-license-required-to-open-a-hospital-in-india-and-their-procedure.html
  2. How much does it Cost to Setup a Hospital in India
    Source:-https://www.blog.zepnurhealth.com/post/
    the-pecuniary-plan-how-much-does-it-really-cost-to-set-up-a-hospital-in-india
  3. Avantika Ghosh. Healthcare woes :India has got 1 govt hospital bed for 879 people. New Delhi, Sat Aug 24 2013, 12:26 hrs.
  4. Cygnus research. Pre-feasiblity report on Speciality and Multi- Speciality hospitals in India. July 2009.Region India. 205 pages.ID:1071214.
  5. Research Foundation of Hospital and healthcare administration.
    http://www.rfhha.org/index.php?option=com_content
    &view=article&id=1&Itemid=67
  6. Central Government of India. Central Government Health Scheme, Nirman Bhavan. New Delhi.
    http://msotransparent.nic.in/writereaddata/
    cghsdata/mainlinkfile/File576.pdf
  7. https://doctors.practo.com/setting-up-hospital-in-india-guide/

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About the Author: Mr I A Mokashi

Head-Sales, Marketing (Indian Operation)

Mr I A Mokashi

A Certified Healthcare Digital Marketer, Healthcare Administrator, and a Healthcare Consultant having Profound Expertise in Developing Startups and De-Growing Hospitals into Dominant Leaders. He is also the Meditwitt Healthcare Blogger and a Professional Healthcare Speaker.

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