By Jeff Domansky, Jan 7, 2021
California-based fintech startup PrimaHealth Credit launched a ‘Buy Now Pay Later’ (BNPL) payment plan specifically designed for credit-challenged patients seeking elective healthcare treatments.
According to the company, most healthcare lending products focus on the prime market, leaving behind 52% of Americans who don’t qualify for credit.
“For many dental, orthodontics, LASIK, and cataract surgery patients, our BNPL product is a ‘last resort’ – the difference between getting the treatment they need or not,” says Brendon Kensel, founder and CEO of PrimaHealth Credit.
Elective care payment options for credit-challenged
The healthcare industry accounts for 18% of US GDP. A report from Financial Technology Partners shows average US consumer healthcare spending has grown to more than $1000 per capita. The report also notes only 23% of Americans can afford a medical bill of more than $2,000.
With one in five consumers without a credit history or credit score and 51% of US credit users with “subprime” credit scores, the market for BNPL healthcare payment services is substantial.
“Until now, when providers couldn’t approve patients for an existing payment plan, they’d either forego providing them care or take them on anyway, exposing themselves to significant liability as they struggle with adequately assessing creditworthiness and properly servicing and collecting loans,” Kensel says.
PrimaHealth Credit makes it possible to serve credit-challenged patients by leveraging its proprietary credit analytics engine to adequately screen and responsibly approve patients who apply.
The company’s credit model analyzes over 200 attributes, including traditional and alternative data, taking a deeper look into the patient’s background to detect fraud, bankruptcy, and overall ability to pay. Its underwriting scorecards are also tailored to each healthcare segment it serves. “We can gauge a patient’s creditworthiness in ways traditional lenders overlook,” adds Kensel. “Frankly, typical credit scores don’t tell the whole story.”
Healthcare payment plans by care category
Patients use a simple mobile application, apply with a Social Security Number or an Individual Taxpayer Identification Number, and receive instant credit decisions. When approved, clients can select from several payment options – making the experience simple and fast.
PrimaHealth Credit’s program handles all back-office tasks for participating providers, including all payment servicing, accounts receivable, and credit reporting. With BNPL, healthcare companies can accept more patients and focus on providing quality patient care.
“Our goal as a company is to remove barriers to patient acceptance and help people who have the means but not necessarily the credit score to get the quality care that everyone deserves. It’s a win-win scenario, and this solution couldn’t be timelier,” Kensel says.
The company says its services are available for elective care providers in audiology, cosmetic surgery, dental & orthodontic, hair replacement, LASIK & vision care, and medical spas. It also serves outpatient care markets, including addiction treatment, behavioral health, fertility, ambulatory surgery, diagnostic imaging, and weight loss.
Financing plans are available at rates between 0% and 24.99% APR, based on an applicant’s credit. Providers have the option to require a down payment or a deposit, and amounts from $300 to $24,000 can be financed.
BNPL market growth is substantial
BNPL services in other categories have seen 200% growth during the COVID-19 pandemic, according to financial services firm Klarna. Coherent Market Insights says the global BNPL market is currently valued at $7 billion and is expected to reach $33 billion by 2027.
In August of this year, PayPal launched “Pay in 4”, a short term loan that allows consumers to pay for purchases from $30-$600 interest-free in four payments. The service does not cost merchants additional fees above PayPal’s processing, nor does it cost consumers unless they are late with payments.
Other rival fintechs in the BNPL market include Affirm, AfterPay, and Alliance Data, which just acquired Bread – a Klarna competitor – for $450 million. Affirm recently partnered with web hosting service Wix to enable small business owners to offer their customers buy-now-pay-later services.
PrimaHealth Credit sees potential in the healthcare payments market and now operates in Arizona, California, Florida, Oklahoma, and Texas, with plans to expand to all 50 states in 2021. You can learn more about the company here.
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