PayZen-Bringing "Buy Now, Pay Later" to Healthcare
PayZen, a healthcare fintech startup, raised $220 million in a debt and equity financing just one year after raising $15 million in series A funding. PayZen will receive $200 million in a credit facility and $20 million in equity. PayZen brands itself as a get care now, pay later service that enables patients to pay their out-of-pocket medical bills over time with convenience and transparency. This round's $20 million equity constituent was made in part by 7wire Ventures while the credit facility is funded through Viola Credit. This credit will help focus on expanding growth in the market. This new funding will provide PayZen the opportunity to continue to expand and grow while providing their no-cost, inexpensive, pay-over-time service to many Americans allowing them the opportunity to focus on health and less on how to pay for medical billing and service all at one time.
70% of providers stated it takes over 30 days to collect a bill over $1,000, while almost one-half of medical practice leaders said that days in A/R increased in the most recent year according to the 2021 Instamed Trends in Healthcare Payments Annual Report
Approximately 40% of adults reported that they experienced problems paying off medical bills or they are paying off medical debt that contributed to long-term financial issues like lower credit rating, credit card debt, or depleting their savings according to the Commonwealth Fund 2022 Biennial Health Insurance Survey
41% of adults reported that they have debts from outstanding medical or dental bills due to healthcare expenses according to the KFF Health Care Debt Survey
65% of Hispanics, 60% of Blacks, and 39% of white adults state that on the KFF Health Care Debt survey it is hard to afford medical care costs, especially for the Black and Hispanic populations with lower financial income
PayZen was founded in 2019 by three fintech entrepreneurs, who are veterans who held various roles at fintech startups Beyond Finance and Prosper: Ariel Rosenthal, Itzik Cohen, and Tobias Mezger. The company uses its artificial intelligence (AI) based model to underwrite patients debt and allow them to buy medical care now and pay later. According to CEO Cohen, “because we watched what ‘buy now, pay later’ could do for e-commerce” they realized its potential in healthcare where “medical providers [were] having a hard time, because they [needed] to collect more and more of the bill from the patient.” For example, according to the West Health-Gallup Healthcare Affordability Index, “an estimated 44% of American adults are struggling to pay for healthcare.” In addition, according to a KFF Health Care Debt survey, 35% of adults have delayed dental services, 25% of vision health services, 24% of medical care services, and 18% of hospital services due to increasing and rising costs. PayZen’s goal is to allow patients the opportunity to have medical procedures done without having to worry about cost. The company believes it is providing an affordable choice by using the patient's data to create a payment plan where one bill can be paid over as many as 5 years. This model allows patients to attain health equity without having to make any livelihood sacrifices. This helps many in underserved communities attain health access right now when society is still living in the shadow of a pandemic while attempting to stay healthy overall. PayZen is providing an outlet for Americans that need options.
As noted in Crunchbase, PayZen’s “business model relies on medical providers to pay for the PayZen platform and integrate it into [the providers] own internal systems. The return on the provider’s investment comes by allowing hospitals and doctors to increase payment adherence, and receipt of a larger share of payments while at the same time increasing patient access to care. By using its AI-based platform and a provider's own data on the patient, PayZen is able to custom underwrite a payment plan for patients thereby making it easier for many to afford care now that they don’t have to pay for that entire bill all at once. This is particularly important given the post-COVID challenges of today’s economy, where 8% of Americans are considered “cost-desperate” defined as experiencing three key healthcare financial challenges (unable to pay for needed medical treatment over the prior three months; skipped prescribed medication due to cost over the prior three months and were, unable to afford quality care if it was needed today). PayZen offers a debit card that allows patients to pay for their healthcare bill right before their appointment or for pharmacy costs while transferring the balance into a custom payment plan-based selection that has no secret rates or hidden fees, just zero interest and zero fees. According to the company, PayZen’s model works as they are able to increase collections on the patient’s portion of the balance by 50% from its current rate of less than 20%.
The Big Picture:
According to the Commonwealth Fund 2022 Biennial Health Insurance Survey, approximately 40% of adults reported that they experienced problems paying off medical bills or they are paying off medical debt that contributed to long-term financial issues like lower credit rating, credit card debt or depleting their savings. This is particularly important for women, low-income Americans, and minority groups who are often underserved and where affordability of healthcare can be an issue. The introduction of innovative payment methods like PayZen makes it easier for many to afford care now that they don’t have to pay for that entire bill all at once or incur additional debt. Patients can spread out medical bills, which can typically be large, in payments over years and be able to attain health equity without having to make any livelihood sacrifices. For providers, using a system like PayZen helps accelerate payments and increase the amount they collect. For example, 70% of providers stated it takes over 30 days to collect a bill over $1,000, while almost one-half of medical practice leaders said that days in A/R increased in the most recent year according to the 2021 Instamed Trends in Healthcare Payments Annual Report. Clearly, finding more effective and affordable methods of payment could benefit both patients and providers.