From Klarna to Nelly: CEO Says Process Innovation Can Scale Digital Health Across Europe

If you’re looking for a training ground in payments and the digital economy, you could do worse than the buy now, pay later (BNPL) space.

It’s a baptism by fire for payments, regulations, the customer experience and process innovation.

It’s no surprise then that before founding a FinTech that aims to create a new digital operating system for European healthcare practices, Nelly co-founder and CEO Niklas Radner held several executive positions with Klarna.

“What we learned at Klarna is that if you want to crack a market as a FinTech, it’s by process innovation,” Radner told Karen Webster in an interview, with a nod to his own tenure and that of his co-founders.

Nowhere might there be more of a need for innovation of workflows than in healthcare, including everything from patient care to back-office functions and payment. In healthcare, the paper trail is voluminous, from billing statements to patient records to paper checks.

Nelly offers a Patient Experience Platform and Financial Operating System that serves healthcare firms in Germany and has made inroads into Italy. Radner said the foundation has been laid to give rise to digital healthcare, without requiring that practices modernize their operations by replacing their own systems.

Charting a New Path

“We started with this process innovation because we understood that if we do this in the right way and we collect data at the right point in time, we can build better financial products,” Radner said of Nelly, which is based in Berlin.

Nelly started with its software that allows doctors to digitize the patient onboarding and data collection processes. Then, the firm built its FinTech solution that allows it to embed financial products into the workflows. The consumer-facing interactions (such as booking appointments) are also streamlined and brought online through the Nelly app. Nelly card readers, installed onsite at practices, act as a conduit for direct payments from patients.

The B2B2C model works because Nelly was launched during the pandemic, a moment of “good timing,” according to Radner, where “patients got very comfortable with scanning a QR code and using digital onboarding products.”

Germany offers a market for bringing digital advantages to administrative tasks, particularly payments, Radner said. When it comes to payments in the country (and elsewhere in Europe), the issue is not about grappling with defaults; the pain points are concentrated in the manual and inefficient tasks tied to getting the payments in the first place.

“There’s a lot of admin work that needs to be done [in healthcare] because it’s so regulated, and there’s governmental health insurance involved in most of the payments’ procedures,” he said.

There are shortages of skilled workers to navigate the bureaucratic intricacies, and some professionals spend more than half of their workdays concentrating on those back-office flows.

“We see doctors fleeing [from Germany] to Switzerland, and they call themselves bureaucratic refugees,” Radner said.

Nelly’s platform and patient portal also allow doctors to transmit documents and invoices, auto populate data, and select payment plans. There are 2 million patients on the platform.

For the providers themselves, Nelly offers a factoring option wherein the company acquires a claim from the doctor and pays out that claim the next day through its partner banks.

“We do the invoice, send out the collection, and we take on the payment default risk,” he said.

Nelly charges a fee of between 2.5% to 5% of the invoice depending on risk factors.

Harnessing the Data

The same data that is collected on payments can be used to schedule follow-up appointments, power independent insurance calculations and offer additional insurance options to end users.

“We have the health data, we have the financial data, and if patients allow us to use that, we can offer this calculation and a benefit to the patients because we can help them reduce their healthcare spending,” Radner said.

This month, Nelly raised 50 million euros (about $52 million) in a series B funding round, and Radner said the money will be used to scale the software and FinTech offerings into new geographies.

“We won’t expand into all medical verticals at the same time,” he said, but the game plan is to start with a single vertical in each country (say, dentistry, where in Germany, 70% of practices use factoring) and then move into adjacent markets marked by recurring payments. (Oncology is a vertical marked by high costs and repeated treatments.)

Nelly’s presence in Germany, Austria, Switzerland, Luxembourg and Italy will be a natural springboard to the rest of the European Union, Radner said.

As the firm pursues its goal of becoming the largest FinTech in healthcare, it is also “helping patients get the treatments that they actually want,” he said.

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