Medical groups and hospitals are struggling as third-party payers squeeze reimbursements. Medicare has been increasing the number of denials of reimbursement. Self-insured corporations are looking to cut expenses, and healthcare is an easy target.
While healthcare is a profession, even a calling, it is fundamentally a business like any other. So healthcare businesses are 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 manifold weaknesses, paying for care is the most glaring and where innovation is focused.
As networks narrow and fewer treatments and procedures are deemed medically necessary, patients face more out-of-pocket expenses. Medical practices and other providers looking to even out cash flow — and make the eternal payer claims/reimbursement process a bit less onerous for everyone involved — have had to think outside their traditional boxes of sending bills that may never be paid or demanding a debit or credit card at the time of service. And they’ve turned to FinTechs for help.
The pandemic revealed a spiraling medical debt problem, and few medical practices have prioritized payment options and flexibility. That’s changing as more lenders offer novel forms of installment agreements that have long been available but often end in default.
Disrupting healthcare payments is a bit like rerouting the ocean — easier said than done at best — but a growing number of companies are bringing popular alternatives like buy now, pay later (BNPL) installments to the health space, allowing medical practices to offer patients flexible options while better managing cash flow.
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 did not get needed healthcare, mostly citing the inability to pay.
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 options among consumers is significant: 45% of all patients would be interested in using these kinds of payments in the future and 26% report that they are ‘very’ or ‘extremely’ interested in these options.”
CareCredit offers a consumer credit product that isn’t BNPL but does provide a line of credit to pay for medical costs that is then paid off as one would any other credit card.
Other FinTech companies are also getting into the fray.
Startup Walnut announced a $110 million Series A financing led by Gradient Ventures.
“Being able to provide a valuable service without acting as an inflationary force on the cost of healthcare 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 alleviate the financial burden for 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 speed up their revenue cycle and increase collection rates, all while increasing patient satisfaction.”
Read more: Healthcare BNPL Firm Walnut Raises $110M
Also this year, payments platform Alchemy introduced a fully automated “care now, pay later” solution specifically to address elective and cosmetic surgeries that have been down precipitously throughout the pandemic.
Zeroing in on situations where “financing options are sometimes unavailable due to an ineligible patient credit score for lenders or banks,” Alchemy said in a press release that it has designed “a system specifically for these instances.”
“Our system has an onboarding application, sophisticated decisioning process 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 schedule,” Alchemy said in the release.
As economic conditions tighten, the demand for medical services is likely to remain constant. Look for healthcare businesses to continue to adopt ways to enable stretched patients’ creative financing solutions, creating opportunities for FinTechs pivoting away from other consumer sectors.