It’s a concept in need of a catchy name, but the healthcare financing innovation from Health Payment Systems/PayMedix is in some ways a new form of buy now, pay later (BNPL) that may upend the apple cart of how people access healthcare — even if they can’t pay for it.
Discussing the company’s late January fundraise of $25 million, HPS/PayMedix CEO Tom Policelli told PYMNTS’ Karen Webster that PayMedix is just “better” than any other available form of healthcare BNPL financing. Based on his explanation, it may not be an overstatement.
“We offer credit to all consumers at a given employer regardless of their credit history,” he said. “We’ll go all the way up to the out-of-pocket amount. Basically, all the money a consumer could owe at that employer, we will pay the provider on their behalf.”
Consolidated, universal, revolving, buy now pay later is how Policelli describes the product —
“CURBNPL” — which he admits is a terrible name, has the potential to do for healthcare what regular BNPL has done for apparel, durable goods, business-to-business (B2B), and any number of other industries.
Except he doesn’t “want to be anywhere near” the notion of BNPL because as a pure-play concept, he says it’s not a good business model fit for healthcare in its common forms.
“To say to someone, ‘We’re going to underwrite each time you interact with healthcare as a separate little buy now, pay later,’ That’s crazy. That’s not how consumers get care. So now I’m going to have 33 different payment plans over how many months? That’s just nuts,” he said.
With the frequency of transactions in healthcare making standard installments impossibly unwieldy — which PayMedix is designed to solve — it’s also about access for all. Standard financing is only available to those with the credit score to qualify. This model ignores that.
“What we’re also solving for employers, for providers, and obviously consumers too, is health equity. We’re not saying that the person who has a credit rating of X can get all the healthcare they need, but the 70% of people who don’t have an X [score] can’t.”
The potentially multibillion-dollar question is: How are they able to underwrite like this?
“We can determine right away that we don’t think they can pay, and just write it off,” he said.
Rather than smother patients who can’t pay with invoices, he added, “It’s kind of funny, but one of the key parts of what we do is we just give up quicker. We don’t waste an enormous amount of money that the healthcare system does today trying to badger this poor, sick guy.”
Equipped with years of deep data on the physical and financial health of applicants, Policelli said HPS starts by underwriting every single applicant regardless of those factors.
“We don’t take action on it, but we do that so that we create a score for every single individual that says how likely they are to repay us over what period,” he said.
Calling it more of a health insurance approach than healthcare financing, PayMedix uses the group dynamic in which some people are healthy, others are not. Some people have the means to pay for care, some do not. Underwriting occurs at scale across an entire user population.
By using data and underwriting at the group level, he said, “the pricing is rock solid.” Users with the means to pay may pay a bit more, and for those who can’t pay, their debt is wiped clean.
“One source of revenue that we don’t use is the consumer,” Policelli said.
“We don’t charge interest with fees or any of that. We do underwrite the employers. We do charge the providers because we’re getting them out of the banking and billing business. Our fees to the providers are much more of our revenue than the employers. Employers are really a small part compared to the provider side.”
Back to the idea of writing off bad debt, as consumers are endlessly blasted with explanations of benefits and invoices they can’t pay, he said, “At the end of the day, we, the healthcare system, are training people to ignore us because we’re sending them so much junk.”
PayMedix goes the other way, rolling all care into one statement, putting those who can’t pay upfront on payment plans of whatever they can afford. If the system identifies a user who simply cannot pay, there are no collection efforts after that decision is reached.
‘Do Less Work, Get Paid More Money, Faster’
Policelli said, “The problem is that all those little point solutions, all those little optimizations of a subroutine, while logical in their own little column, are making the entire process more of a mess.”
On the other hand, he said selling PayMedix to a hospital or employer CFO comes down to one palatable pitch: Do less work, get paid more money, faster.
Without providing specific numbers on how much debt gets written off, he said, “It varies enormously. It moves. If someone suddenly gets very sick, then what used to be a great score is going to plummet, and the opposite for someone going the other direction. We track people going up and down constantly. But we do underwrite on the employer level.”
Doing away with disjointed healthcare billing is a PayMedix superpower and helps put the concept over for employers who understand that a few tweaks to their current health offering can lower the employer price while guaranteeing care for all employees, even if they can’t pay.
“Most employers, when you put that in front of them say sure, I’d like my people to understand more, and I’d like to pay less. It’s a pretty easy sale,” he said.
“We started doing that a year ago, and over a quarter of our employers right now are paying nothing because they’ve made the simple changes that we’ve outlined for them.”