Blended finance is an approach toward financing where catalytic funding (e.g. grants and concessional capital) from public and philanthropic sources is utilised to mobilise additional private sector investment to realise social goals and outcomes. It uses development finance and philanthropic funds to attract private capital into deals, and the private investors receive financial returns which are in line with market expectations. In doing so, it not only helps reduce the dependency of start-ups on government debt but also accelerates the building of commercially viable social impact projects.

AMPH Co 2022 students Dr. Vijender Jeph and Sameera Shaik invited experts and industry leaders to share their opinions and insights on “Blended finance in healthcare” in the AMPH Discussion Circle hosted by the Max Institute of Healthcare Management.

Key insights from the discussion 

  1. Blended finance is a promising proposition to increase investment in the health sector, which can be used to unlock new pools of capital focusing on all three aspects: return, impact and leverage.
  2. Blended finance transaction in the healthcare sector requires more attention and a different approach since the objective of the investments differ among the parties involved. Healthcare needs Public, Private, Philanthropic and Community (P3C) Participation. Innovative financing methods like strategic funding from Private and Philanthropic organisations will provide a viable proposition for sustainable healthcare. Contracts and agreements should be crafted carefully as well as expectations should be set for blended finance to work in the healthcare space.
  3. Impact funds that do blended financing on projects aiming for high social impact can greatly help startups overcome cash flow issues.
  4. Through the blended finance approach, startups can avail catalytic support, in the forms of risk mitigation and credit enhancement, which would make them a better fit and relatively less risky for commercial investors to invest and participate in.
  5. In India, blended finance is picking up pace and is now expected to see larger adoption. The Government of India recently announced taking a blended finance approach, but the action or the implementation is awaited. For this to happen, change should come from philanthropic donors, mostly HNIs, and a committee at the Niti Aayog level with participation from the agencies could help in developing a holistic model with a structured framework. Along with this, a change in CSR policies to accommodate these structures could help in getting more funds.
  6. The Government of Andhra Pradesh has used a blended finance model to develop its school infrastructure across 17,000 schools in the state under the Nadu-Nedu (before-after) scheme by augmenting CSR funds. Another ₹16,500 crores is required to spruce up the health infra right from the wellness centres to the establishment of medical colleges. Funds from NABARD, Banks loans and external agencies like World Bank have been roped in to blend the finances with the revenue returns model for a win-win approach.
  7. Educating and building credibility by (a) demonstrating examples of success (like Samridh, Aceli) and (b) allaying genuine concerns around market distortions that concessionality in a financing structure can lead to the success of blended finance structures.
  8. Since blended finance attracts commercial capital towards projects that contribute to sustainable development while providing financial returns to investors, this also helps invest in PPP projects especially related to primary care where margins are low.
  9. The use of blended finance in the social sector brings transparency, cost and output efficiency to achieve more with limited fund availability and also focuses on maximising outreach with minimal investment and moving towards sustainability and scalability. It also helps to scale up operations in the remotest parts of India, where the market for private providers is low.
  10. Blended finance is a good approach not only for healthcare but the sunrise sectors. It adds as a catalyst capital providing the much-needed support to focus on growth as well as diversity. Though at a nascent stage, it has the potential to unlock capital that can turn around the sector.
  11. The intermediaries in blended finance are the organizations that work towards bringing all the stakeholders together like Convergence, SAMRIDH Health, and ASHA Health. Initially, the focus was on banks, healthcare providers, and insurers, but the focus shifted to philanthropic organizations, HNIs, incubators, and consulting organizations. There are healthcare providers on one end and financial institutions, philanthropic organizations, and insurers on another end. These organisations bring them together. The blended finance approach uses credit enhancement techniques to get the best for each stakeholder.
  12. Apart from the healthcare sector, blended finance can be also focused on agriculture, health research, primary education, climate change & environment, education and livelihood, agriculture, and financial inclusion. Thus, mobilising the unutilised, commercial, non-concessional financing towards SDGs.
  13. The accountability for blended finance is higher than the traditional grants. Blended finance is a structuring approach or syndication of capital from different varieties of stakeholders, each playing a different role e.g., a philanthropic funder may be de-risking the commercial investor by providing a guarantee and thus improving the risk-return profile of the enterprises being funded under this structure.
  14. Blended finance has the potential to increase the social and environmental impacts by accessing a varied pool of capital from investors with different levels of risk. This innovative approach helps to expand the resource envelope in developing countries and enables them to fill their SDG financing gaps.
  15. While the idea of blended finance is very exciting, a worry is that it will encourage the giving of conditional grants for meeting targets by indicators that can be achieved easily, that meet market expectations and will ignore those that are required to improve health in the long run.
  16. Deploying blended finance on financially unsustainable healthcare delivery models is like ‘throwing good money after bad.’ Many of these models have enormous social value but are pressurised to include “financial sustainability” in their pitch.

In conclusion, we predict more organisations will start leveraging blended finance toward building resilient and sustainable healthcare systems for India. This financing model will help fast-track India’s response to pandemics and support the immediate deployment of high-impact healthcare solutions. Blended financial structure is the way forward for the healthcare delivery systems, be it diagnostics, hospitals or rehabs.


Moderated by the students of AMPH Co 2022, the Max Institute of Healthcare Management hosts the AMPH Discussion Circle on the third Sunday of every month on its LinkedIn page. Click here to go to this discussion thread.