James Peyer, a venture capitalist, has invested between $2 to $5 million in each of four companies for anti-aging solutions. And he is not alone. Delaying death (indefinitely!) has been one of the biggest fantasies of mankind. But with billions of dollars being spent by VCs and philanthropists in decoding the human body, extending human […]
James Peyer, a venture capitalist, has invested between $2 to $5 million in each of four companies for anti-aging solutions. And he is not alone. Delaying death (indefinitely!) has been one of the biggest fantasies of mankind. But with billions of dollars being spent by VCs and philanthropists in decoding the human body, extending human lifespan by a meaningful amount seems plausible in the very near future. Whatever the outcome, it is easy to bet that life extension treatments are not going to be cheap. Want proof? Gilead is selling a Hepatitis C Virus at $95,000 for a 12-week treatment. The drug has an over 90% cure rate, but the insurers want to ration the drug for early-stage patients. This brings out the stark difference between those who can manage to pay for any medical treatment and those who cannot. Our healthcare is broken, and it is difficult to say if money is the solution or the problem.
Live Case: How Braja’s family is suffering from lack of funds to treat neurofibromatosis
Braja is a 14-year-old boy from Bali, Indonesia with two tumors (one got treated in January). The total treatment cost is $10,000 (which would be easily $100,000 or more in the United States), but the insurance company refused to cover the cost of surgery. The family does not have the $10,000 and, with no option left, the family is now raising funds through GoFundMe.
The family was lucky that it has raised 50% of that amount. But would it be lucky enough to afford the next surgery? And what about millions of Brajas in the developed and developing world who don’t have a GoFundMe page? Charity is not a permanent solution for the healthcare affordability mess.
Two facets of Healthcare: Opportunity & Risk
Wealth has indirectly produced a class system. With such expensive treatments, wealth directly translates into health and has led to the re-emergence of the haves and have-nots. If you can afford a treatment, you deserve to live. Otherwise, you are left to fend for yourself. But people are obviously willing to pay anything to ensure a healthy life for themselves and their family. This indicates an opportunity for a financial solution. There needs to be a structured lending solution for medical treatments, which can alleviate the financial stress and delay the payment of the treatment, spreading it over a longer time period, like a typical loan. Some reports estimate that medical bills are the root cause for over 60% of the bankruptcies in the US. Even if we believe that the number is political rhetoric, there is a massive business and humanitarian opportunity to solve a problem plaguing millions of people around the world.
If the health issues are not addressed timely or in a proper manner, there is a risk of mass protests and violence. If people are not able to save their families from certain death because they are not able to pay up the huge medical charges, you can expect them to resort to crime to ensure they get their money.
Numerous articles have been written, and movies have been made, on this subject, but the societal dysfunction remains. This risk is further exacerbated by the fact that billionaires are investing millions into their health so that they can live forever. This ever-widening gap will certainly manifest into class warfare. Movies like Altered Carbon (where the rich can “resleeve” their consciousness by buying replacement bodies) and Soylent Garden (where a Corporation makes food from human remains) depict a scary future.
How healthcare and its financing impacts us
It is important to understand how healthcare operates in different nations, and even more importantly, how it is funded. Healthcare is usually funded in three ways-
These divergent approaches to healthcare help us gain insight into different healthcare models and what can be done to fix them.
Americans spend over $400 billion out of their pockets on hospital expenses each year. The growth in healthcare costs has far outstripped inflation. Understandably, this has led to an increase in insurance premiums. In fact, if premiums were to cover all the benefits that a patient needs, they would be unaffordable for most Americans. As […]
Americans spend over $400 billion out of their pockets on hospital expenses each year. The growth in healthcare costs has far outstripped inflation. Understandably, this has led to an increase in insurance premiums. In fact, if premiums were to cover all the benefits that a patient needs, they would be unaffordable for most Americans. As a result, benefits have decreased to make healthcare insurance more affordable. This has led to an increase in health plans with high-deductible expenses within the last five years.
According to Bankrate’s’ latest financial security index survey, 34 percent of American households experienced a major unexpected expense in the last year. Only 39 percent of survey respondents said that they would be able to cover a $1,000 setback using their savings. So an unexpected medical situation can push 60 percent of Americans into instant financial turmoil. Parasail was born out of the founder’s experience with a similar medical emergency.
How Parasail Makes Healthcare More Accessible
Parasail help patients plan, manage, and pay for medical expenses and helps healthcare providers (hospitals) collect more with zero-percent interest payment plans and financing. Patients can focus on treatment instead of payment because Parasail offers a suite of products that make medical bills affordable so that healthcare providers get paid right away. Affordable patient plans and patient financing empowers patients to make the right decisions for their health.
Hospitals collect 15 cents for every dollar spent on healthcare in the U.S. in a nation where the No. 1 reason for personal bankruptcy is hospital bills. Managing patient payments has become a major headache for hospitals. Parasail helps them secure predictable revenue so they can focus on healing and lowering default rates.
They underwrite the individual customer and ask the hospital to give a subsidy to cover the cost of capital. The startup then funds the hospital immediately and collects from the patient through an amortized schedule of payments.
The company uses both traditional and alternative data and machine learning algorithms for loan application processing. They can approve loans in 60 seconds. They have developed an in-house software that integrates with hospital systems and gives staff a dedicated suite of tools to engage better with patients and speed up results. Patients may also apply for financing from their smartphones or computers with no effect on their credit. Parasail sends an email or text invitation to patients to enroll in a payment plan and the patient gets approval for a plan they can afford. The company is also developing a white label solution for hospitals.
Parasail’s integration with billing companies and healthcare providers is the key component of it’s go-to-market strategy. The company integrates its offerings with its partners to offer a payment option to patients outside of the hospital’s system. Parasail ProPatient gives payment plans for the entire repayment period, and patient interest rates remain at zero percent for the entire term. Many alternative lenders offer recourse lending, but if a patient misses a payment or defaults on the loan, then the hospital has to repay what they were advanced. With Parasail, they assume the risk and therefore take the loss.
To date, the company has onboarded over 20 hospitals and has served over 20,000 patients. The product has a very high conversion rate for a consumer-lending product.
The Genesis of a Good Idea
Todd Kimmel is the company’s chairman and co-founder and came up with the idea with CEO and co-founder Adam Tibbs. Tibbs’ wife had an accident in 2014 that resulted in more than $11,000 in medical bills. The frustrations involved in paying and dealing with healtchare insurance led Tibbs and Kimmel to a groundbreaking idea. Parasail got off the ground in 2015 when they raised $7 million in seed money from Peter Thiel, Montage Ventures, and Arbor Ventures.
The company created a win-win platform that helps patients plan finances better through zero-interest loans. Parasail is focused on partnering with healthcare providers so they can help them recover a much larger percentage of their invoices.
The Size of the Market and Future Potential
The healthcare industry is a $3 trillion market. Tibbs believes $400 billion of out-of-pocket patient expenses will grow to $1 trillion in the next five years. He also predicts that consumers will ultimately be responsible for the first $5,000 of healthcare as the size of deductibles rise.
Parasail a massive opportunity and continues to scale and partner with hospitals. Its aim is to make healthcare affordable, and they are obsessed with finding a means to work directly with consumers at affordable pricing. They also plan to roll out four other products in the near future. A partnership with Lively, a Health Savings Account (HSA) platform for employers and individuals, helps patients pay off hospital bills with pre-tax dollars. Parasail has strong investors and proof of concept locking in the pole position a very lucrative healthcare financing market.
News Comments Today’s main news: A comparison of funding & liquidity sources with lender maturity by PeerIQ. China Rapid Finance sets terms for U.S. IPO. China bank lending falls in March. Perfios raise $6.1M in Series A round. Abu Dhabi ranks as top fintech hub for MENA region. Today’s main analysis: Lenders test personalities to determine loan eligibility. Today’s […]
A comparison of funding & liquidity sources. GP:”Very interesting comparison of companies founded in 1912, 2006 and more recent. The funding source diversity and mix in a mature company like OneMain is mostly ABS and OnDeck mostly credit facility while Enova is mostly corporate debt. A must read”
China Rapid Finance sets terms for U.S. IPO. GP:”Valued at $586mil, raising $105mil. How will this compare to Elevate and Yirendai. A very interesting trend of IPOs in our space lately. I imagine that as long as the IPOs do well enough new ones will take place. “AT: “CRF has the potential to outdo Yirendai. I hope they reach their funding goal.”
Lenders test personalities to determine loan eligibility. GP:”Lenders, like EFL, have used this a long time. The “AT: “Employers use psychometrics to make hiring decisions. I believe psychometrics will be the future standard for determining credit risk and will eventually replace the outdated FICO score.”
Blockchain can save banks tens of billions of dollars per year. GP:”There is a lot of speculatio and the technology is not mature enough yet. There are also still unclear business cases. In the US about 40% of professionals in finance are very familiar with blockchain according to latest surveys so it is not a familiarity problem. On the other side regulation is not there yet and is in fact the largest obstacle to blockchain adoption.” AT: “Blockchain is a technology is a lot of underused potential. It could make the banks competitive again, but it would take years to implement on a global scale to the point where it would be useful and effective in making the financial system of the world transparent, trustworthy, and effective. Getting every bank to adopt it would be a massive undertaking. All it’s going to take is one major bank using it and proving how it can improve banking services to include regaining customer trust. If bank services customers get behind it, the banks will have to.”
Earnings season kicked off last week, with J.P. Morgan leading the trio of banks who released their first quarter earnings. In a positive sign, JPM booked lower loan loss provisions ($1.32 Bn) vs. prior year ($1.82 Bn) for the same quarter. Higher rates improved net interest margin by 11 bps to 2.33%.
Analysis of Funding Mix Across Leading Non-Bank Lenders
Although the funding mix might indicate that OneMain does not rely on warehouse finance, quite the opposite is true. OneMain also has eleven revolving conduit facilities with a maximum balance of $4.8 Bn in additional liquidity. The facilities represent a substantial liquidity backstop (from diverse counterparties with staggered maturities) should term ABS markets seize for a prolonged portion of time.
OneMain does not appear to be optimizing for a singular goal such as low-cost funding or maximizing ROE. All together, it appears that OneMain has implemented a financing strategy to deliver an attractive ROE (potentially high-teens or low twenties) while ensuring sufficient liquidity ballast to guard against disruptions in capital markets. For example, OneMain is also funding via $1 Bn of 8.25% senior notes issued in April last year rather than drawing on lower-cost liquidity available via warehouse finance. OneMain is willing to take on somewhat higher financing costs in exchange for access to diverse and longer-term funding sources.
OnDeck’s financing strategy varies significantly from OneMain. OnDeck is unique in the peer group from their utilization of whole loan marketplace sales. We note that the usage of this liquidity channel continues to decline over time as gains-on-sales from whole loans decrease, and as investors demand more ‘skin-in-the-game.’
OnDeck also utilizes both securitization and credit facilities for their funding. Securitization makes up 24% of their loan funding, while their utilized credit facilities comprise 50% (although ONDK still has $287 MM undrawn).
OnDeck has the highest loan generation per unit of capital in the cohort. OnDeck is funding through the heavy usage of low-cost securitization and warehouse finance channels, and accordingly has the lowest funding cost in the peer group. However, we note OnDeck has more concentrated sources of funding channels that in turn rely on reliable execution and smooth functioning capital markets.
Enova employs all three debt financing tools—ABS, warehouse finance, and corporate debt—to fund origination. Enova had no facility borrowing amount reported as outstanding at the end of 2016.
Elevate, as a young online lender measured by receivable and inception, does not have any securitization programs to date and limited diversity in warehouse finance. Elevate’s primary source of financing consists of credit facilities provided by Victory Park Capital. Of the four platforms, Elevate has the least diversity in funding sources. The peer analysis suggests that diversification into securitization channels could potentially lower cost of funds for Elevate.
Funding Cost by Financing Channel
As observed in Exhibit3, securitizations can partially replace secured and unsecured debt in the capital structure with more favorable nonrecourse funding. The overall funding costs are positively impacted by the increased usage of securitizations and credit facilities, as the deals are executed at interest rates significantly below the coupon associated with the unsecured debt.
China Rapid Finance, a peer-to-peer (P2P) lender based in Shanghai, China, announced that it has set the terms for its upcoming US IPO. The company plans to raise $105 million through the offering of 10 million shares priced between $9.50 to $11.50 a share. At $10.50 a share, China Rapid Finance would have a fully diluted market value of $586 million.
Founded in 2001, China Rapid Finance is a consumer lending marketplace that aims to serve China’s emerging middle class. Their target demographic are employed and well-educated Chinese individuals between the ages of 18 and 29, who live in urban cities, and who are avid mobile users. This demographic, known as EMMA (Emerging Middle class Mobile Active), is estimated to include over 500 million individuals.
When no credit history is available, lenders in emerging markets are increasingly looking to personality tests to fill the gap. Psychometric data, or data acquired through personality tests, is now being used to determine if customers qualify for credit in countries like Turkey, Russia, Mexico and India. Some assessors look at traits like conscientiousness, extroversion, agreeableness and neuroticism. For example, if someone ranks high on conscientiousness, they’re likelier to be better at saving, thus more secure financially.
The method has yet to go mainstream in the U.S. in part due to culture, regulations and the range of data already available to American lenders.
Still, psychometric data offers another option to assess consumers for whom insufficient data is available to generate a credit score. It’s a section of the population that’s gained more attention in the U.S., where over 25 million people are considered unscoreable by the Consumer Financial Protection Bureau.
Over 700 characteristics are organized; results are crunched along with repayment data into a number that represents a credit score.
The global unscoreable population is huge, including in India where over 70 percent of the 1.2 billion-strong population fall into this category, McCaffery said.
For the past few months, FICO, working with the Entrepreneurial Finance Lab, has been testing psychometric testing in Turkey, Russia and Mexico. While it’s too early to offer definitive assessments, FICO is optimistic about the model’s ability to deliver results.
Before launching psychometric data in the U.S., Taylor-Shoff said lenders would need to ensure compliance with regulations including those on consumer disclosure (e.g. being able to explain to someone why they were denied credit); fair lending (making sure the method doesn’t disadvantage a particular type of customer) and safety and soundness of the data. Operational considerations, including how lenders would use this method alongside traditional methods , would still need to be resolved too.
“U.S. consumers are not going to submit to a psychometric analysis by their lender,” said Zeydoon Munir, founder and CEO of RevolutionCredit, a startup that uses behavioral data garnered from quizzes and games, in addition to traditional data, to determine if customers qualify for certain credit products. “Who would do that?”
Fifth Third Bank announced on Thursday an investment and expanded partnership with nonprofit small business lender network, Accion U.S. Network, to support lending to underserved small businesses in Florida, Indiana, Illinois, Michigan, and Ohio.
This builds upon the bank’s five-year, $30 billion Community Commitment, which includes $10 billion for small business lending, product innovation and enhanced underwriting and fulfillment. Additionally, the Fifth Third Bank’s commitment includes expanding technical assistance and support for alternative lending channels.
What happened: eMoney Advisor announced on March 23 the launch of eMoney for Enterprise, a division that will support users in the home offices of banks, large registered investment advisors, broker/dealers, insurance companies and other financial institutions.
What happened: The new product is likely to target individuals with less than $1 million to invest, a significantly larger market than Goldman Sachs’ current private wealth management service that caters to clients with at least $50 million. Their acquisition of Honest Dollar and the launch of a loan platform called Marcus suggest that this robo venture is part of a larger diversification strategy.
What happened: The Office of the Comptroller of the Currency pressed ahead with its plan to offer a specialty license to fintech firms, a move that would allow the industry to enter the federal banking system. Currently, fintech firms must apply for licenses in each state to do business, which can be a costly process. The new federal banking license would allow for one set of rules nationwide.
Why it matters: Thumbs up for allowing fintech firms to focus on innovation rather than paperwork. Removing the handcuffs of redundant licenses will surface relevant technology even faster, and I think we’ll see advisor confidence in fintech platforms continue to rise.
What happened: Morgan Stanley is continuing its technology surge after hiring Charles Schwab’s Naureen Hassan as Chief Digital Officer and appointing Jim Rosenthal to lead the development of the company’s digital services, which includes tentative plans for a self-directed robo platform.
What happened: Merrill Lynch is introducing new features to its website, such as a dashboard to track investments, real-time maps of the markets and interactive charts.
What happened: MIT and TD Bank hosted their first fintech hackathon, an event challenging 26 student teams to develop a fintech platform in under 36 hours. A team from Cornell University and their product called Switch, which they describe as a micro-loan and insurance broker, took home the $5,000 prize.
DecisivEdge, a business consulting and technology services company, launched its lending and leasing as a service (LLaaS) product, powered by Oracle.
LLaaS is a simple, flexible, securely featured and cost-effective way for small and medium sized lenders to the leverage the capabilities of a solution.
Oracle Financial Services Lending and Leasing is at the core of DecisivEdge’s offering. It is hosted in a securely featured cloud and bundled with 24/7 monitoring, support and other value added services.
HEALTHCARE LENDER HCS RECEIVES FUNDS FROM ARES MANAGEMENT (Health Credit Services), Rated: B
Health Credit Services (HCS), a healthcare funding company created to bring quality-of-life care to more individuals, announces a new financing relationship with Ares Management, a leading global alternative asset manager.
The HCS team will leverage the Ares Management-provided financing to increase patient access to quality-of-life medical care nationwide. With loan approvals in seconds, budget-friendly installment loans ranging from 12 to 84 months and simple loan management, HCS solutions make healthcare financing easy and affordable.
Due to rising insurance deductibles and premiums, the typical American spends nearly 10 percent of their income on out-of-pocket healthcare expenses.
The Bank of England (BoE), one of the first central banks to form a research group dedicated to the development of Blockchain technology, still believes the Blockchain has the potential to save banks tens of billions of dollars in operating costs.
Researchers at BoE perceive the Blockchain as an immutable, transparent and secure technology which banks and financial institutions can utilize to handle operations in an autonomous ecosystem.
BoE along with other banks including the Reserve Bank of Australia and Bank of Korea envision a Blockchain-based platform wherein many banks can participate as members of the network and settle transactions and assets in a transparent ecosystem. By relying on a shared ledger, banks can easily eliminate any additional intermediaries that are contracted to process complex settlements.
Apart from collaborative projects, BoE recently showcased a proof of concept Blockchain platform with PwC, with the intent of demonstrating the potential and applicability of Blockchain technology in the finance industry.
Link Pariti to your bank accounts and credit cards, and it will show you the total costs of your debts. If peer-to-peer lending would offer a better deal, it then offers you the option of consolidating everything into a single loan at a lower rate. The company says that while credit cards typically charge interest rates in the 16-25% range, it can get the APR down to single digits.
Former Barclays CEO Antony Jenkins believes the global financial system is beginning to undergo the “Uber moments” he predicted in the sector a year and a half ago.
Jenkins, who was CEO of Barclays from 2012 to 2015, forecast a series of Uber-style disruptions in the banking industry in late 2015. He said that advances in technology could shrink headcount at traditional big banks by as much as 50%, while profitability in some areas could collapse by over 60%.
Since being ousted at Barclays, Jenkins has set up his own fintech business: 10X Future Technologies. The startup has developed a new core banking platform, effectively a new operating system for banking to build products and services on top off. It aims to help banks cope with the “Uber” disruption by giving them a modern canvas to build upon.
The Benzinga Global Fintech Awards is the largest fintech event focusing on the capital markets. In its third year, Benzinga has expanded the event’s purview to the global stage, bringing over 200 companies to New York City from countries including India, Israel, Poland, and Singapore.
Last week, Perfios, a fintech startup based in Bangalore (Bengaluru), India, announced it had raised approximately US $6.2 Million (400 Million INR) in its Series A round of funding. The funding is a sign of how much the fintech market has been steadily growing in India the last few years.
The report estimates that the fintech market in India will rise to over USD 2.4 billion by 2020.
The peer-to-peer (P2P) lending industry is off to an encouraging start. Funding Societies Malaysia, the first platform to launch, successfully raised RM320,000 for two term loan financing programmes within three weeks in March.
The loans will be used to fund the working capital of two companies – an electronics business and an automobile parts distribution business. Meanwhile, the platform aims to provide investors with an effective return of 22% and 24.91% respectively over a year.
Wong says the platform aims to seal another 80 to 100 deals in the next 12 months and raise RM10 million to RM20 million. This means investors can expect more deal flows, which will allow them to invest in a variety of companies.
Singapore and Switzerland are not competitors when it comes to the development of financial technology (fintech) and with both countries being small financial hubs, it is important to cooperate, said Swiss Finance Minister Ueli Maurer.
The minister also noted that Singapore’s fintech sector benefits from its close proximity to a big Asian market, and can act as a stepping stone into Asia for Swiss fintech start-ups. For Singapore firms looking to expand into Europe, Switzerland can similarly do the same.
Lattice80 is one of the organisations that the Swiss delegation is visiting during their time in Singapore. Launched in November 2016, more than 80 foreign and local fintech firms have taken up spaces at Lattice80, which is dubbed the world’s largest fintech hub by Singapore-based private investment group Marvelstone.
The Financial Technology Enabler Group (FTEG) that was established by Bank Negara Malaysia in June 2016, has launched an initiative ‘Fintech Hacks’ that identifies pain points in the delivery as well as consumption of financial services.
The Malaysian central bank has sought ideas from the public regarding the improvements to financial services sector by adopting innovation and technology.
Abu Dhabi with the Abu Dhabi Global Market, ADGM, has been ranked as the top FinTech Hub for the MENA region in the latest Global FinTech Hubs Review, “A Tale of 44 Cities”, by Deloitte in partnership with the Global FinTech Hubs Federation.
From the 44 cities, Abu Dhabi is ranked top FinTech hub in the MENA region. The Deloitte report reiterated that the launch of ADGM’s Regulatory Laboratory, RegLab, for FinTech startups, the only “live” Fintech regulatory regime in the MENA region with 11 Fintech players in its first batch of applications, as a “milestone success for Abu Dhabi and marked the openness and support by regulators and government towards innovation.”
In an alternative funding benchmarking report by the Cambridge Centre for Alternative Finance‚ published last month‚ South Africa was identified as the potential leader in the growth of online and peer-to-peer lending models in Africa.
In 2015 South Africa represented 18% of the total African online alternative finance market‚ raising over $15-million. Kenya was the only African country ahead of it with $16.7-million raised.
The report also found that in Africa 90% of online alternative finance was originated from platforms headquartered outside of the continent.
Only 20% of the $510 billion out-of-pocket annual expenses in the US are being financed. This is a massive pain point and a huge addressable market. Prima Health Credit (PHC) was born to provide a one-stop platform for professional healthcare services and outpatient care providers (which represent 62% of the out-of –pocket health care expenditures). The […]
Only 20% of the $510 billion out-of-pocket annual expenses in the US are being financed. This is a massive pain point and a huge addressable market.
Prima Health Credit (PHC) was born to provide a one-stop platform for professional healthcare services and outpatient care providers (which represent 62% of the out-of –pocket health care expenditures).
The total US out of pocket expenses are comprised of the out of pocket payments for insured patients, which in 2015, was $420 billion. Added to the over $90 billion out of pocket for elective care procedures (dental, cosmetic).
Prima health credit wants to change how elective care providers and patients use healthcare financing by offering simple, easy to use, mobile friendly lending platform. The company is helping healthcare providers extend point-of-care credit to patients without having to create an entire back office to handle the transactions.
Prima Health Credit is based out of Newport Beach, CA and was launched in 2014 with a seed capital of $1 million and in June 2015 they raised another $1.2 million. It was founded by Brendon Kensel, an experienced entrepreneur, with his particular focus on fintech, ad tech, and sports tech. Before starting Prima Health Credit, Brendon was President of MediaShift, a next-generation ad tech company that monetizes Wi-Fi networks. He was also the co-founder of Elite Smiles, a south Californian chain of orthodontic clinics. The start-up has recently been able to bring Hugh Bleemer on board as Chairman. He was Senior Vice President at JP Morgan Chase and has spent several years in retail banking. He was also the president of Chase Health Advance, which he built from scratch to 1 billion dollars in size.
Prima Health has 2 products for healthcare providers: they can outsource their financing function to Pay Assure or they can start offering financing thanks to Loan Assure.
Pay Assure – the payment management turnkey solution helps medical offices with existing financing functions outsource their loan underwriting and servicing functions.
Loan Assure helps the healthcare providers to make more income by developing new in-house patient financing programs. Loan Assure focuses on the healthcare provider who has not implemented an in-house patient financing program. Loan Assure helps the health care providers to improve efficiency and reduce cost. PrimaHealth Credit manages loan originations, servicing, and collection for in-house loans.
Because most marketplace lenders serve a relatively homogeneous client base they can create a one-size-fits-all credit scoring model. That is not the case with PrimaHealth Credit, with each model using more than 200 separate data points. Each specific healthcare area has its own unique characteristics which need to be assessed.
PrimaHealth generates it’s revenue by charging the patients an average APR of 19.99%. The entire application is done electronically and the solution is cloud-based. It is a SaaS solution for the client. When a new client comes onboard, they provide them guidance on default rates across all the credit tiers, so the providers know what to expect from this program.
Pay Assure has a unique business model, it is based on medical bills that are hard to underwrite like addiction treatment, weight loss clinic etc.
Pay Assure enables the healthcare provider to use a cloud-base network to send the credit application via SMS or email. The online application has only 12 fields and is easy to fill. After the completion of the form, the loan is immediately underwritten and the decision is made right away whether the loan is approved or not.
Pay Assure has multiple payment options.
Equal Payment Plans- No interest and Low-interest equal payment plans are offered to patients by Prima Health Credit with regular repayment terms.
No Interest Equal Payment on certain procedures – No interest is charged if loans of $300 or more are paid in full within 3, 6, 12, and 18 or 24 months. Low-Interest Equal Payments Plans are available for loans over $2400 or more, starting at 14.99% APR if the loan is paid in full within 24, 36, 48 or 60 months.
Minimum Payment Plans- With low monthly payment patients are able to afford most of the treatments. No interest is charged during the promotional period. At the end of the promotional, whatever amount is left either can be paid full or can be extended to 12 months more at 24.99% APR.
Alternative Payment Plans- This is available for those who do not qualify for the Equal Payments or Minimum Payment Plans. Minimum down payment is required by the patient and loans are available at 19.99%
PrimaHealth Credit provides the disclosure, note, and payment documents which are signed by the borrower and money is disbursed. It also provides service and collection on the behalf of doctors.
PrimaHealth is registered and operating in California, Texas, Florida and Oregon.
The management believes that they have a better product because while testing the products in the market, they also considered the lessons they learned from the recession, that having a good credit-scoring model was not sufficient for the product or company to last the recession. Since, their management has extensive experience in dentistry, orthodontics, and vision care; the company decided to focus on those sectors and developed scoring models focussing on each segment separately.
PrimaHealth Credit plans to expand to more health care areas because of high demand; another segment they are considering to expand in is deductible financing. For marketing, it focuses on Doctor’s office and there are no charges for the practitioners if they want to join. PHC is different from other fintech companies as it does not have any balance sheet risk and is a service provider. But it needs to bring third-party lenders on the platform so that it can also cater to healthcare providers who want to outsource not only credit monitoring and disbursal but the entire finance portfolio from their balance sheet.