70% of Indians are one medical bill away from slipping into poverty. Can new-age finance help?

Shamolie Oberoi   /    Content Marketing Specialist    /    2022-05-05

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Zomato’s ten minute delivery plan was met with a fair bit of uproar when it was announced earlier this year. Apart from concerns about delivery partners’ wellbeing, a common refrain centered around the opinion that such conveniences would be better utilized in sectors where time and ease is truly of the essence, such as healthcare.

Now, we don’t know if the 10 minute delivery innovators will take this seriously, but there’s some good news - embedded finance folks seem to be listening. In February 2022, buy now, pay later (BNPL) provider Sezzle partnered with an urgent care provider to provide interest-free loans to over a 100 clinics in several American states. 

The logic is interesting. Why can’t convenience improvement experiences such as BNPL come to critical areas such as healthcare rather than be confined to impulse consumer purchase such as fashion and retail? 

The time to innovate healthcare financing is here and  here’s why it has been  a long time coming. India has one-of-the highest level of Out-Of-Pocket Expenditures (OOPE) - in healthcare, this increases the risk of vulnerable groups slipping into poverty because of catastrophic health expenditures. What’s more, while sources differ on numbers, it can be safely estimated that about 80 percent of Indians don’t have health expenditure coverage. When a medical emergency arises, they’re plunged into financial uncertainty, and many may ignore initial symptoms to avoid high upfront medical costs.

BNPL in healthcare, or as some brands have termed it, Care Now, Pay Later, could be a game changer - both for providers and healthcare providers. Let’s take a look at how this could unfold.

Healthcare providers

Predictable cash flows

Hospitals that partner with a third party BNPL provider are shielded from the risk of missed or delayed payments. The payment provider pays the healthcare provider in full, and the end consumer pays the former in flexible installments. Without uncertainty around payments, hospitals have full visibility into their cash flows.

Increased income

People may delay or completely avoid elective procedures (e.g. bariatric surgery, cosmetic procedures, tonsillectomies, LASIK), due to lack of financing options/unaffordability. With the option of BNPL, they will now have access to flexible payment plans that will allow them to undergo procedures that may not be critical to survival but essential to improved wellbeing. This, when combined with the fact that hospitals save the logistical expenses of building an expensive in-house payment plan, results in increased revenue.

(P.S. Interestingly, there are companies in the US that have launched BNPL especially for patients seeking elective procedures!)

Patients

Flexible payments

First and foremost, the biggest benefit to patients is that they no longer have to pay large medical bills upfront, or rely solely on often confusing insurance terms. With BNPL, they can seek the care they need and pay off their bills in small installments overtime, thus making medical debt more manageable. Even in case of emergency, they have access to financing at comfortable terms.

Access to better medical facilities

Access to finance equals access to better care and accessories. Take for example, optometry research that has shown that had patients been given the choice of BNPL, they may have chosen higher quality lenses or better glasses. This extends to several situations - access to high-tech procedures, more regular checkups, elective surgery, and so on.

Conclusion

We’ve only scratched the surface when it comes to the utility of BNPL in healthcare. Apart from bill payments, it’s also slowly making inroads into insurance, both health and life. We’re not far from the day when hospitals rush to launch their own credit ecoystems that both ease the financial pressure on the patients while rewarding them for making healthier lifestyle choices. 

Indian healthcare has several problems but financing is a low-hanging fruit that can be immediately plucked with a bit of courage from both lenders and healthcare providers.  

Read more: The case for Embedded Finance in healthcare