FinTechs ease healthcare practices’ payer pain
Medical groups and hospitals struggle as third-party payers squeeze reimbursements. Medicare has increased the number of reimbursement denials. Self-insured companies want to cut costs, and health care is an easy target.
While healthcare is a profession, even a vocation, it is fundamentally a business like any other. So healthcare is looking for creative ways to enable patients to pay for care.
As a rigid healthcare system reinvents itself in the wake of a crisis that exposed multiple weaknesses, paying for care is the most conspicuous and where innovation is focused.
As networks narrower and fewer treatments and procedures are considered medically necessary, patients face more out-of-pocket expenses. Medical practices and other providers looking to smooth out cash flow—and make the perpetual payer claims/reimbursement process a little less burdensome for everyone involved—have had to think outside their traditional boxes of sending bills that may never be paid or requiring debit or credit cards at the time of service. And they have turned to FinTechs for help.
The pandemic revealed a growing medical debt problem, and few medical practices have prioritized payment options and flexibility. That is changing as more lenders offer new forms of installment agreements that have long been available but often end in default.
Disrupting healthcare payments is a bit like diverting the ocean — easier said than done at best — but a growing number of companies are bringing popular options like buy-now, pay-later (BNPL) installments to the healthcare space, allowing medical practices to offer patients flexible options at the same time as the cash flow is managed better.
In “The Payment Cure: How Improving Billing Experiences Impacts Patient Loyalty,” a PYMNTS report with research sponsored by CareCredit, 33% of patients surveyed said they were not getting the health care they needed, mostly citing an inability to pay.
Get the study: The Payment Cure: How Improved Billing Experiences Impact Patient Loyalty
According to the study, 41% of users of alternative healthcare payment plans said they “helped them manage their other bills or expenses. Interest in alternative payment methods among consumers is significant: 45% of all patients would be interested in using this type of payment in the future, and 26% report that they are “very” or “extremely” interested in these options.”
CareCredit offers a consumer credit product that is not BNPL but provides a line of credit to pay for medical expenses which is then paid off like any other credit card.
Other FinTech companies are also entering the fray.
Startup Walnut announced a $110 million Series A funding round led by Gradient Ventures.
“Being able to provide a valuable service without acting as an inflationary force on healthcare costs is a core part of our offering,” the company said in a statement. “We typically describe this as ‘buy now, pay later’ for healthcare. By enabling patients to pay in monthly installments, we ease the financial burden on our patients to help them afford and access the care they need.”
“On the flip side, we help healthcare providers capture more revenue by removing price as a barrier for their patients,” Walnut added in the release. “We also increase their revenue cycle and increase their collection rate, while increasing patient satisfaction.”
Read more: Healthcare BNPL Firm Walnut Raises $110 Mn
Also this year, payment platform Alchemy introduced a fully automated “treat now, pay later” solution specifically to handle elective and cosmetic surgeries that have been down throughout the pandemic.
Zeroing in on situations where “financing options are sometimes unavailable due to an ineligible patient credit score to lenders or banks,” Alchemy said in a press release that it has developed “a system specifically for these cases.”
“Our system features an onboarding application, sophisticated decision-making that creates risk-based offers, as well as mechanisms to collect payments from patients at the time of the procedure through the end of the payment plan,” Alchemy said in the release.
As economic conditions tighten, the demand for medical services is likely to remain constant. Look for healthcare to continue to adopt ways to enable stretched patient creative financing solutions, creating opportunities for FinTechs to pivot away from other consumer sectors.
NEW PYMNTS SURVEY FINDS 3 IN 4 CONSUMERS WITH STRONG DEMAND FOR SUPER APPS
About: The findings of PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy”, a collaboration with PayPal, analyzed the responses of 9,904 consumers in Australia, Germany, the UK and the US and showed strong demand for a single multi-functional super app instead of using dozens of individuals.
