There have been enough comments and written papers, about the idea of ‘digital health’ and how providing virtual care in this environment of restrictions on personal interactions, has forced patients and doctors to adopt methods of remote consultations and other aspects of ‘tele-health’. This is all true. However, the word I have used above is “effectively” change
The pandemic has been an unlikely catalyst across industries. Inadvertently causing changes in the way they have done business, and for people to adapt to new ways of living and working. One particular industry that has been in the centre of this storm – but has not effectively changed its methods of delivering its services – has been the healthcare industry. Let me explain.
There have been enough comments and written papers, about the idea of ‘digital health’ and how providing virtual care in this environment of restrictions on personal interactions, has forced patients and doctors to adopt methods of remote consultations and other aspects of ‘tele-health’. This is all true. However, the word I have used above is “effectively” change. To be able to effectively impact something would mean having a meaningful, even tectonic shift in the way something was being done before. That, in my opinion, has not happened in the healthcare industry yet.
An area of healthcare where a massive change is coming is in how we pay for it: The Fintech for Healthtech, with payments simplification driving this change.
Indian healthcare services expenditure* stood at $115 Billion this year, with over $72 Billion of that being spent by Indians from their pockets (i.e. Not paid by insurance). That effectively means that it was paid from a person’s savings or borrowings (such expenses are known as, Out-of-Pocket Expenditure or OoPE on healthcare).
Globally, the extent of poverty, impoverishment and indebtedness caused by OoPE is growing* with an estimated 808 million people across 133 countries having incurred what is known as ‘Catastrophic Health Spending (CHS)’.
Here’s the insight: The $72 Billion that Indians spent on OoPE is twice the size of the Indian smartphone market*. Now think about how easy it is to buy a smartphone on EMI, in India today, and compare that to your experience in paying at any hospital or clinic. Isn’t that tragic?
In any transaction, the one that pays, carries the power in that exchange. That is true in almost any industry, except healthcare. This then is the area of expected disruption.
By removing the friction in healthcare payments, you put the power back in the hands of the payer – in this case the patient or the recipient of the healthcare treatment.
There are two aspects to this: The Payments infrastructure, or the foundation of technology infrastructure that allows the consumer to easily pay for something they are buying. Think about how easily you can use your debit or credit card at any store and the underlying infrastructure that powers that transaction. The second part is the availability of low-cost capital to finance that transaction.
Fortunately with more 5 million*, point-of-sale (POS) terminals in India, and 748 million smartphone users, the first aspect is taken care of. Through a combination of physical and digital payment systems, the underlying infrastructure is established and proven.
What is absent though is the second part: the ‘lubricant’ that facilitates any transaction – the capital, or more specifically, the availability of low-cost, friction-free capital to pay for healthcare expenses of any kind.
This is where ‘embedded finance’ will disrupt the payments equation in healthcare. Simply put, when you integrate lending, payments etc into a digital wallet, with the intent to make healthcare payments as friction-less as possible, you are embedding finance into the patient-provider relationship. This is the ‘Fintech in Healthtech’.
The US & Israel based PayZen for example, uses Data and AI to create individualised, patient payment options that integrate into a hospital’s revenue cycle systems, simplifying healthcare payments for patients across the healthcare journey.
In India this trend is beginning to take shape, very few companies are leading the way in simplifying healthcare access and payments in the healthcare journey of patients.
With over 5.5. Crore Indians falling below the poverty line due to healthcare expenses – that too before the pandemic; this is an area of extreme urgency and has the potential to positively impact millions of Indian households who find themselves to be un-insured or under-insured. Globally too, out-of-pocket expenditure in healthcare OR insurance payments carry massive inefficiencies that are ripe for disruption through embedded finance or embedded insurance, both examples of applying financial technologies to healthcare and healthcare technologies.
Retail and other industries saw the opportunity in adding fintech – payments lending and banking channels to improve the customer experience, learn more from the data and drive better margins. Now it’s time for the healthcare industry.
India in particular can lead the way, with its high smartphone penetration and higher percentage of private healthcare providers. We predict that in five years, paying for healthcare will be seamless, instant and through always available credit the way we pay for any new washing machine or cell phone.
By Chris George, CEO, QubeHealth
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