PHC is disrupting the antiquated lending process used by most doctor officers, which has been largely unchanged within the past 25 years. Mr. Bleemer explained that whilst “doctors primarily rely on lengthy and cumbersome paperwork for patient financing plans”, PHC offers an “easy-to-use, patient-friendly mobile lending platform”. In their doctor’s office, a patient can now apply for funding on their smartphone. Loans are offered on both no-interest or low-interest payment plans – whichever is more appropriate for the consumer.
Recently, Lending Club has entered the healthcare financing space with the launch of Lending Club Patient Solutions. Given Lending Club’s dominant position and reputation in wider P2P markets, we asked Mr. Bleemer how PHC intended to compete with the much larger, better known platform:
“Companies such as Lending Club recently entered this space by acquiring other medical lending companies, but we are the only company that has a lending platform specifically created for elective care finance. PrimaHealth Credit uses proprietary technology and a custom scorecard that weighs over 200 data points to optimize performance in each segment of elective care instalment credit.”
“Additionally, unlike some of our competitors, we are a hybrid lender where we tap into the marketplace for some of our originated loans and retain ownership for the remainder. This gives us an advantage in optimizing our cost of capital and driving returns.”
PHC is hoping that its more specialised service – focused on elective healthcare – will allow it to provide more desirable rates for its customers, and, at the same time, its financing method will help it make further, sustainable, rate cuts.
With the elective health care market being valued at $87 billion in the US, this venture is a potentially lucrative one. We asked Mr. Bleemer what proportion he thinks that disruptive financers, such as PHC, could capture. He pointed out that less than 20% of elective care procedures were financed last year and cited this as a huge opportunity to expand. He told AltFi that elective healthcare lending is overdue for the technical and product innovation that PHC is bringing to the market – backing this up with the statistic that third-party financing is expected to grow to over $27 billion by 2019. If PHC can gain even a sliver of this then it could be hugely successful. Going further than this, however, Mr. Bleemer argues that:
“We believe we are well positioned to not only capture market share, but to grow the market as a whole.”
Trust and track record can be a barrier for any start up. PHC – being both a financier and in the health care industry – may be particularly susceptible to this problem. AltFi asked Mr. Bleemer how he was combating this issue:
“As a licensed lender we take compliance seriously and operating in the medical finance adds one ore layer” he agreed.
“Not only are we building trust with our borrowers, but we are also building trust with the medical providers we partner with. Each doctor that offers PrimaHealth Credit has a strong understanding of our platform and finance programs so that they can quickly and easily explain the options to their patients.”
Of course, the US health care industry has recently seen the biggest shake up in half a decade – since the passage of Medicaid and Medicare in 1965. The Patient Protection and Affordable Care Act, commonly referred to as Obamacare, had huge ramifications for the US healthcare industry.
Mr. Bleemer explained that whilst procedures such as dental care and orthodontics have traditionally been a blend of need-based and elective procedures, the act has reduced the coverage of these treatments. While the Affordable Care Act made need-based procedures more accessible, the opposite was true for elective care. This has contributed to dental and orthodontic treatment accounting for 53% of the third-party financing market and, as a result of market growth stemming from the strengthening economy, the market is now projected to reach $112 billion by 2019.
With elective care procedures totalling 40 million a year, and an energized need for third-party financing, PrimaHealth Credit has the opportunity to be a major player in a major market.