Flywire’s OnPlan Acquisition Ups The Healthcare, Tuition Payments Game

What do the health care and education segments have in common?

They both have customers who must make large payments prior to receiving services, such as taking classes at a college or visiting a doctor's office or hospital for medical treatment.

When those payments are cross-border, the lack of transparency around exchange rates and transfer times created uncertainty for the parents, students or patients sending the funds. There was also the concern of whether the receiving institution would accurately match the payment to the responsible party.

When those payments happen domestically, problems often arise when students can’t pay in a single payment for incidental costs, like books – or when medical patients are unable to come up with a lump sum to satisfy a deductible or the balance that health insurance does not cover – and the receiving institution is ill-equipped to offer payment plans that divide the cost into more manageable chunks.

Since 2009, Flywire's focus has been solving those problems for international students and patients, working with institutions to manage receivables by enabling cross-border payments for their students and patients.

And solving those problems for domestic students and patients has been a focus of OnPlan Holdings since 2014, as the company helps U.S. institutions stay on top of their receivables by enabling payment services for their students and patients.

It’s why today's announcement of Flywire’s acquisition of OnPlan Holdings LLC – parent company of OnPlanU and OnPlan Health – makes so much sense, as Flywire's EVP of education and health care, Sharon Butler, told Karen Webster.

“The technology that they bring to the table is very innovative,” Butler noted, adding that each company built their business on the basis of wanting to create a more transparent, intuitive and cost-efficient solution for both sides of the payment transaction.

“Our services are just really complementary," Butler offered.

OnPlan CEO John Talaga, said that both firms share the common challenge of serving the complicated – and massive – worlds of health care and education, at a time when out-of-pocket costs are on the rise.

“The issues in health care and higher education are very similar,” Talaga said. “For both, out-of-pocket costs for the consumer become more frequent and higher, particularly in the health care sector, where with higher deductible health plans, individual payments are just going up.”

Thus far, Flywire has focused on moving those increasingly common and large payments around the world, while OnPlan has focused on helping institutions help their patients or students pay for balances that they have trouble affording.

As a result of the acquisition, the combined capabilities allow the two firms to offer an end-to-end solution that serves all stakeholders – domestic and cross-border – through invoicing, secure payment processing, consumer engagement, recurring payments, automated payment plans, payment tracking, reconciliation and mitigation of past due payments.

A Better Tool

Consumers in both health care and education, Talaga said, face the problem of having a very large lump sum of cash due at one time. And in health care, most patients have the usual additional disadvantage of that cost coming as a surprise.

The inability to solve those problems comes with terrible consequences to the consumer, noted Talaga. Students may not be able to finish their education, or patients' accounts could go into collection and leave their credit tainted. Those consequences are undesirable to everyone involved, since hospitals want to treat people and make them better, schools want to educate people and, of course, patients and students want and need their services.

Talaga also pointed out that these difficult payment situations aren’t experienced only by indigent customers, but rather employed people who must absorb higher out-of-pocket costs. Financial aid is flat, he observed, but tuition is going up; high-deductible plans are now the rule and not the exception.

Instead, Talaga noted, these are customers who can pay over time, and hospitals and educational institutions often have funds in place to make that possible. What they lack, he said, is the payments expertise or the proprietary technology that would enable them to evaluate the individual patient or student, and then generate a monthly payment plan.

“Every single hospital has reserves to cover payments arrangements overtime. They just aren’t very good at setting them up,” Talaga explained. “We do analytics on the front end and, based on ability to pay, provide an automated way to make payments that are within the institution’s guidelines.”

Building a Better Suite of Alternatives

Customers, particularly international ones, Flywire’s Butler noted, are simply in need of options in this space. Many of today's customers end up using cobbled-together solutions that may get the job done, but are expensive and time-consuming.

The Flywire payments platform, now with the added capabilities of OnPlan, offers both consumers and institutions better options for making and moving their payments domestically or globally – all conducted through the institution they already know and trust.

“We are now a fully integrated, one-stop solution for the people [hospitals and higher ed] serve," she said.

Talaga and OnPlan CTO David King will both join the Flywire leadership team. Talaga will head up Flywire’s health care segment, and King will lead the company’s education and health care-focused product and development teams. Current OnPlan employees will also join the Flywire team, based in OnPlan’s existing headquarters outside Chicago.

Going forward, Butler noted, the combined firms will be able to bring OnPlan’s services to the extensive list of global markets that Flywire already serves. This is an important step forward, as in many of the regions Butler visits regularly, there are no similar players – leaving customers to string together clumsy and expensive solutions involving “banks and credit cards.”

“Together, we can improve people’s experiences by giving them options, saving them money and giving them peace of mind,” Butler emphasized, “while giving the institutions the tools they need to make those options available.”

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