The Rise Of The Class System In Healthcare; Risks & Opportunities In Finance

health care finance

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 […]

The post The Rise Of The Class System In Healthcare; Risks & Opportunities In Finance appeared first on Lending Times.

health care finance

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-

  • By Employer
  • By Government
  • By Individual

These divergent approaches to healthcare help us gain insight into different healthcare models and what can be done to fix them.

Source:

US Healthcare

There is no universal healthcare system in the United States (like the UK). Obamacare at least made health insurance compulsory (sort of!) for all, but even that is under fire from President Trump. Either employer covers the healthcare costs via insurance and offers them as a fringe benefit or the individual himself buys a health insurance policy. The US government funds two types of health plans:

  • Medicare
  • Medicaid

But if you are not on any insurance plan, which millions of Americans are not, you risk having to pay hundreds of thousands of dollars in medical bills. Over 12% of Americans do not have any health insurance. There is an increase of 3.2 million uninsured people under President Trump.

Europe Healthcare

The European healthcare style is considered to be the most humane system. Healthcare in Europe is designed with the goal to provide basic health service to all. There are different tweaks as per individual countries. UK has the NHS (National Health Service), where medical treatment is free and the government owns the hospitals and employs the doctors. There are private hospitals and practices for treatments not covered by NHS or for the super rich who don’t want to wait. Germany has a different model where it is the main health insurer in the country and insurance is compulsory.

Japan Healthcare

Healthcare in Japan is free for citizens, emigrants, and foreigners. A universal healthcare system is followed and all the hospitals are run as nonprofit organizations. For-profit organizations are strictly prohibited from owning medical services companies (hospitals, doctors, etc.)

Under its healthcare system, the government offers to pay 70% of treatment and leaves only a 30% burden on the patients.

Conclusion

Health is top on the wish list of families today. Being rich does not make sense if you can’t enjoy your wealth. A stable, healthy society is necessary to evolve, and there is an urgent requirement to address healthcare. There are multiple models to support healthcare, but it is critical that we first consider humanity and not the financial cost for solving this healthcare crisis.

Author:

Written by Heena Dhir.

The post The Rise Of The Class System In Healthcare; Risks & Opportunities In Finance appeared first on Lending Times.

Financing Unexpected Patient Healthcare Expenses

hospital bill financing

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 […]

hospital bill financing

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.

Author:

Written by Heena Dhir.