PayZen is a startup firm that has set its sights on one in all America’s most urgent issues: medical affordability. The answer is easy. PayZen pays your invoice and affords you an reasonably priced fee plan with no curiosity or charges.
However how is that attainable? With no curiosity and no charges, how does the corporate earn money?
To reply that query, we have now to take a more in-depth have a look at the healthcare affordability disaster.
👉 Word: don’t confuse PayZen, the healthcare financing system, with the PayZen fee processing app.
Healthcare: The Unaffordable Dream
100 million Individuals have medical debt[1]. Households are liquidating retirement financial savings, promoting their belongings, and taking additional jobs when they need to be considering retirement, all as a result of they received sick or harm and couldn’t pay.
That disaster is brought on by a confluence of things.
- Costly care. The US has the world’s costliest care by a large margin.
- Insufficient insurance coverage: 50% of insured Individuals are on plans with vital out-of-pocket bills.
- Minimal financial savings. 56% of Individuals can’t cowl an sudden emergency expense[2].
This mixture creates an ideal storm of medical debt. Sickness and damage are regular components of life, and they don’t seem to be predictable. When they’re not reasonably priced, households are inevitably dragged into debt.
A Damaged System
So what occurs when sufferers can’t pay their payments?
- The supplier tries to gather. Medical suppliers throughout the nation spend billions on billing and assortment. Some hospitals have extra billing clerks than beds.
- The supplier fails to gather. The gathering price for bills not coated by insurance coverage may be very low: PayZen estimates it at solely 15.5%.
- The account is bought to a set company. When suppliers can’t acquire, the account is bought to a debt collector, typically for a fraction of the unique quantity.
- The supplier passes the price on. Suppliers write off their losses as uncompensated care and go them on to paying sufferers. American hospitals supplied over $40 billion in uncompensated care in 2020[3].
- The debt collectors pursue the affected person. Assortment efforts might go away sufferers with ruined credit score. Sufferers might face harassment, lawsuits and even wage garnishment.
The unpaid quantity is successfully collected twice, as soon as by the supplier passing the prices on to paying sufferers and as soon as by the collectors that pursue the affected person.
The pattern in well being care nationally is to place an increasing number of on the affected person.
David Cutler, Professor of Utilized Economics, Harvard College
This method is a burden for everybody concerned besides the gathering businesses.
- Suppliers spend huge quantities on billing and assortment and often fail to gather.
- Insurers face escalated prices. The price of billing, assortment, and uncompensated care is handed on to paying sufferers, often these with insurance coverage.
- Insurance coverage premiums rise, an extra value for employers and workers alike.
- Sufferers endure. Sufferers who can’t pay their payments are constantly in debt, in lots of circumstances including to the psychological and monetary stress of ongoing sickness.
- Prices spiral. Sufferers who know they will’t pay might keep away from wanted care, delaying it till their situations worsen and turn out to be far dearer to deal with.
PayZen affords a greater strategy.
The PayZen Resolution
PayZen has developed a healthcare financing answer that addresses the important thing issues of each suppliers and sufferers.
If you choose fee by means of PayZen, they are going to settle your invoice with the supplier. They are going to then negotiate an reasonably priced fee plan with you, utilizing a proprietary AI mannequin to calculate a fee that won’t be an exorbitant burden.
PayZen is not going to cost curiosity or charges. They won’t resort to aggressive assortment practices or lawsuits. There’s solely a mushy pull in your credit score report, which is not going to have an effect on your credit score rating.
However with no curiosity or charges, how does PayZen earn money?
The reply is easy: they settle your invoice for lower than what you really owe. The distinction between their settlement and your last fee quantity turns into their revenue.
PayZen doesn’t reveal, what they pay suppliers, however they do state that supplier assortment charges improve by 50%. Suppliers additionally receives a commission upfront with no added billing and assortment prices.
The improved assortment price, speedy fee, and decrease assortment prices make it worthwhile for suppliers to simply accept lower than the complete quantity a affected person owes.
The way it Works
PayZen is a comparatively new firm and nonetheless has restricted protection. At current, PayZen solely works by means of healthcare suppliers. In case your supplier is just not working with PayZen you can not use the service, although you possibly can recommend to your supplier that they need to contemplate working with PayZen.
PayZen at present works with 30 suppliers in 15 states within the Gulf, Southeast, Mid-Atlantic, and Midwest areas. The Firm is increasing quickly and expects to have a presence in all 50 states by the tip of 2023.
The Firm expects to supply providers on to sufferers sooner or later however doesn’t have a particular timeline for doing so.
In case your supplier works with PayZen, there are solely three necessities you might want to meet.
- You will need to reside within the U.S.
- The care you obtain should be needed (elective beauty surgical procedure, for instance, wouldn’t be eligible).
- Your out-of-pocket value (after insurance coverage) should be between $250 and $10,000.
Inside these restrictions, all sufferers will be served. There aren’t any credit score or earnings necessities.
In case your supplier makes use of PayZen and also you meet the three standards above, you’ll be authorized. Simply ask your supplier in the event that they work with PayZen. In the event that they do, observe the directions they offer you. In the event that they don’t, recommend that they begin!
Key Options
Listed below are a few of PayZen’s most distinguished traits.
- You pay solely what you owe. There’s no curiosity or charges.
- Fee plans vary from three to 60 months.
- Month-to-month funds are usually between $25 and $100.
- You may request a unique due date, month-to-month fee, or fee time period.
- You may request a fee pause in the event you’re below monetary stress.
- A number of fee strategies can be found, together with checking accounts, debit playing cards, and HSA/FSA playing cards. You may change fee strategies at any time.
- You may pay early or make bigger funds than scheduled for gratis.
- You may take away a invoice out of your fee plan at any time. The invoice shall be re-integrated into the supplier’s fee system.
- You may cancel your fee plan at any time. The account shall be re-integrated into the supplier’s fee system.
This array of benefits makes PayZen a clearly advantageous choice in the event you can entry their providers.
About PayZen
PayZen is a healthcare fintech firm primarily based in San Francisco, CA. It was based in July 2019 by Ariel Rosenthal, Itzik Cohen, and Tobias Mezger.
The Firm has raised $240 million in 5 funding rounds, the latest in November 2022. 9 enterprise capital companies have dedicated cash to PayZen, together with 7wire Ventures, SignalFire, Viola Ventures, and Picus Capital.
PayZen goals to permit healthcare suppliers to deal with healthcare moderately than monetary providers and to attain higher monetary outcomes for each suppliers and sufferers by providing non-recourse affected person financing and good fee plans.
PayZen Rivals
The healthcare fee fintech enterprise is model new and has attracted quite a few contributors providing completely different options for sufferers and suppliers.
Prima HealthCredit companions with suppliers to supply financing plans that approve as much as 89% of sufferers. The plans carry curiosity, and people with “challenged credit score” pays charges as excessive as 24.99%.
Walnut affords financing to sufferers utilizing collaborating medical suppliers. Some credit score historical past is required, and there shall be a tough inquiry in the event you select a financing plan. There could also be curiosity and costs for financing plans.
Paytient lets employers, insurers, and suppliers supply an interest-free Paytient Card to cowl their out-of-patient prices.
Like PayZen, these providers are at present structured as “Purchase Now Pay Later” techniques provided by collaborating suppliers. In case your supplier is just not concerned with one in all these firms, the providers is not going to be obtainable to you.
Ought to You Use PayZen?
If in case you have payments you possibly can’t pay, and your supplier affords PayZen as an choice, it’s a clearly superior selection, and there’s nothing to lose and far to achieve from utilizing it.
The principle impediment proper now could be the restricted variety of suppliers. When selecting a supplier, it is sensible to search for one that gives PayZen’s providers. They might be troublesome to seek out now, however that can doubtless change.
The very excessive stage of affected person debt and the very low assortment price for uninsured obligations point out huge potential demand for these providers. We count on speedy adoption by suppliers and the arrival of techniques that enable sufferers to use instantly moderately than by means of a supplier.
Proper now, PayZen is out there solely by means of a restricted variety of suppliers. In just a few years, it could be the default selection for coping with out-of-pocket medical prices.