PayZen Raises $232 Million for AI-Powered Healthcare Payments

PayZen has raised $232 million for its AI-powered healthcare affordability program.

The Series B funding, led by NEA and announced Tuesday (Aug. 13), came in the form of $32 million in equity and a $200 million credit warehouse.

“This latest round is the next step in our journey to remove financial barriers to care for patients,” Itzik Cohen, PayZen’s co-founder and CEO, said in a news release. “We are honored to have found partners in both our investors and our health systems network that share the same vision for the future. This milestone, marked by a highly competitive and oversubscribed round, positions us to continue perfecting our platform and bridge healthcare’s financial gap for good.”

According to the release, PayZen uses technology such as artificial intelligence (AI) and machine learning to simplify the patient payment process for health systems while making it easier for patients to access and afford their care.

The company said it has achieved a six-fold year-over-year growth across the last two years, with 100% customer retention and 132% net retention. PayZen also raised another $200 million in the fall of 2022.

In connection with the funding, Mohamad Makhzoumi, co-CEO, NEA, will join PayZen’s board. Makhzoumi has more than two decades of experience at NEA, working with healthcare startups across all stages of company-building.

“Healthcare affordability is an enormous pain point for patients and providers in the U.S.,” Makhzoumi said. “We believe PayZen’s AI-enabled platform is a category leader, as evidenced by the company’s explosive traction in the past year and ability to disrupt a market that’s been historically difficult to address.”

PayZen’s funding arrived at a time when AI is “set to change the health insurance industry, potentially slashing costs and boosting revenues for payers grappling with economic pressures,” PYMNTS wrote last month.

With insurers facing increasing medical service utilization and provider costs and tightening Medicare Advantage reimbursements, AI and automation technologies show the way toward a possible solution to improve efficiency and profitability.

And for a growing number of doctors, AI chatbots that compose letters to insurers in seconds are reportedly speeding the fight to approve costly claims, achieving in minutes what years of advocacy have not.

“This technological shift comes as significant insurance companies face class-action lawsuits for allegedly using their technology to deny large batches of claims swiftly,” PYMNTS wrote. “Experts warn this could lead to an AI-driven ‘arms race’ in the prior authorization process, where bots battle bots over insurance coverage.”