Mobile Apps, Instant Decisioning Come to HealthCare Finance
Healthcare finance is due for disruption — a look at any medical bill will tell you that.
The process is complex, and everyone needs healthcare at some point and is forced to muddle through the painful, archaic process. Elective healthcare, which largely operates outside the billing system run by health insurance companies, has a different issue. Its process is decidedly old-fashioned, full of paper forms and often run by the doctor’s office manager, if not the doctor himself.
A startup launching this week — PrimaHealth Credit — looks to bring elective medical care financing, meaning optional medical procedures like plastic surgery and braces, up to date with a snappy mobile app and instant decisioning.
It works like this. Little Jimmy needs braces, so you head to the orthodontist, find out it will cost $10,000, and now must secure some kind of financing before treatment can begin. In most cases, customers will be asked to fill out a form on a clipboard, which is the application for financing from the office itself. A week or more later, a yes or no answer will arrive, and this may require an additional office visit, and some uncomfortable discussions.
A credit approval means the torture can begin — for the patient, obviously, as well as for the borrower and the office, which has to manage the relationship and track down payments. More than half of orthodontic care is financed, and elective care industry wide is 78% unfinanced, according to PrimaHealth President & Founder Brendon Kensel. Most of this financing is paper-based, and largely unchanged in the last 30 years, Kensel told Bank Innovation.
Up to 40% of patient treatments don’t happen in the $87 billion elective and need-based care market due to the historical lack of financing options and transparency around costs, the company said in press release.
PrimaHealth Credit will offer medical offices a new choice. When a patient requires financing at an office offering PrimaHealth Credit, he will receive a text on his phone leading him to a 12-question application. Decisioning is near-instant. Servicing of the loan is taken care of by PrimaHealth, and treatment can begin right away — or, wait, let’s check the doctor’s schedule first… How does next Thursday at noon look?
PrimaHealth is run by Kensel and CEO Hugh Bleemer, formerly of ChaseHealthAdvance. Their plan is to sell to providers — their sales team is already active — both large and small. The company’s underwriting model considers over 200 attributes and has built custom scorecards by segment and geographical region. The elective health segment is largely prime, but it’s hard to make money in prime lending with rates so low. The company also offers a product called LoanAssure, in which rates may reach 20%. PrimaHealth Credit still handles the servicing, but with LoanAssure, doctors do not receive a lump payment for the whole sum up front as they do with the prime product. Still, this allows more patients to be financed than with possible “house loans,” Kensel said.
He and Bleemer see considerable opportunity in this industry, and believe they can considerably widen the field of patients approved for elective procedures. That’s bad news for all the kids destined for braces in the world, but perhaps will brighten the day for more than a few medical office managers.
