Analysis Featured

Healthcare credit: a $510 bil under-addressed market

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).

PrimaHealth 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.

Company history

PrimaHealth 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 PrimaHealth 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.

Product strategy

PrimaHealth has 2 products for healthcare providers: they can outsource their financing function or they can start offering financing.

Their  payment management turnkey solution helps medical offices with existing financing functions outsource their loan underwriting and servicing functions.

They also help providers 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.

Business model

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.

Legal Framework

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.

Future steps

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.

Author:

George Popescu
George Popescu

About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( www.currencymountain.com ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.

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