Rent vs Own: The Hidden Costs of Running a Hospital for Doctors
A ₹5 crore decision every doctor must evaluate carefully
For many doctors, running a hospital or clinic is a dream.
But as your practice grows, one question inevitably surfaces:
“Should I buy my own hospital property or continue renting?”
It feels like a financial choice, but it’s far deeper — it impacts cash flow, expansion plans, taxes, and even your legacy.
Case 1: The Pride of Ownership
A doctor couple in Chennai has been running their hospital on rented premises for 7 years.
With a steady patient base, they’re tempted to buy a ₹4.5 crore building nearby.
With a steady patient base, they’re tempted to buy a ₹4.5 crore building nearby.
Upside:
- No landlord pressure, no sudden evictions
- Land in medical hubs often appreciates faster than inflation
- EMIs eventually end, rent never does
- Property can be collateral for future expansion loans
Hidden costs:
- Blocks ₹3–5 crore in a non-income-generating asset
- High EMIs can choke working capital needed for staff, equipment, and emergencies
- Hospitals constantly need upgrades — tying up liquidity in walls can starve technology
Case 2: The Freedom of Renting
Continuing on rent keeps things agile:
- Flexibility to shift or expand as patient volumes grow
- Lower upfront cost → capital can go into equipment, marketing, or high-return investments
- Rent is fully tax-deductible as a business expense
But:
- Lease renewals every 3–5 years bring uncertainty
- Renovations rarely get compensated
- Landlord disputes over parking, sub-leases, or forced exits can destabilise operations
The DocWealth Diagnostic
When advising doctors, we look at five decision drivers:
1. Cash Flow Cushion
Do EMIs leave ≥25% surplus after all expenses?
2. Return on Capital
Would ₹3–5 crore in property earn more wealth if invested elsewhere — equities, equipment, or a second location?
3. Tax Advantage
Rent = 100% deductible; EMI = only interest deductible.
4. Exit Flexibility
If practice scales, can the property be sold or leased easily?
5. Personal Goals
Children’s MBBS/PG costs (₹50L–₹2Cr+), retirement corpus, vacations —all compete for the same cash.
Questions to Ask Before Deciding
- Is my patient inflow location-locked or will patients follow me anywhere?
- Am I building a legacy hospital or do I need operational flexibility?
- Will buying impact my ability to invest in new tech or talent?
- Can I blend models — own OPD blocks but lease surgical facilities?
Smarter Middle Paths
- Lease-to-Own Models → Start as tenant, gradually acquire ownership
- Separate Entity Ownership → Buy via LLP or Pvt Ltd, then lease to your own hospital for tax efficiency
- Diversify Property Risk → Instead of one ₹5Cr property, own smaller OPD setups + rent inpatient tie-ups
Takeaway
Buying hospital property isn’t always the “next logical step.”
For some, it builds legacy.
For others, it traps liquidity.
For some, it builds legacy.
For others, it traps liquidity.
Walls don’t heal patients. Doctors do.
Choose ownership only if it strengthens — not strains — your practice.
Choose ownership only if it strengthens — not strains — your practice.
Connect with us today to evaluate whether buying or renting is right for your hospital →
