HealthCare X Fintech 🏗️

🤕Health care is a mess.

You don't just have to deal with parties like doctors, staff and patients. But a lot of tools who are not even connected.

📃So a person at the reception takes your record, can not push that to the insurer with a button. A lot of time, even big hospitals have to do this manually. That means a person will be hired, trained, and assigned to do this task.

💸 This costs money and time, which eventually refelts in your final discharge bill somehow.

This is particularly tragic after 2020–2022 was one of the toughest years in recent history for providers in terms of financial performance.

For healthcare providers, the electronic health records (EHR) system serves as the clinical source of truth, but as a financial source of truth, there are almost no healthcare-specific systems for accounting and financial planning.

How patients pay bills in the hospitals 💳

1. Direct Cash: The patient does not have insurance and pays the whole bill
2. Reimbursement: The patient has the insurance but the current one is not a network one, so the patient pays the whole bill now which later gets reimbursed from the insurance company
3. Cashless — CoPay: The patient has insurance and is at a network hospital, some portion of the bill is not covered by insurance, so that is paid by the patient before they are discharged
4. Cashless:- Patient has the insurance and is at the network hospital and the completed bill is covered by insurance. So, patients don’t have to pay anything before they discharge.

Methods 2,3 and 4 are a little tricky to execute as TPAs are involved.

🏦 TPAs are IRDIA-licensed entities that work as a process and manage such claims on behalf of the Health Insurance company. They factor everything based on your hospital bill and the terms and conditions of your insurance. Based on that they decide, how many portions of the bill amount need to be paid by the patient.

The same goes for hospitals. These TPAs decide how much hospitals are going to get paid from the insurance company and here the settlement cycle is almost 90 days.

⏳ That’s the reason why hospitals usually don’t enjoy health insurance claims because it’s hard to predict how much they’ll get paid and when.

This varies even more from insurer to insurer and TPA to TPA.

Now this is called Revenue Cycle Management (RCM) and it’s an almost $100B industry.

Pain points in healthcare financial processes 😣

1. Disconnected clinical and financial records:- Patient data relies in EHRs and/or Practice Management Solutions. But financial data lies in General Ledger or ERPs like Quickbook. Now the 2 solutions are mostly not integrated. What they have it a patchy plugin that can break whenever there is an update in either of the solutions.
2. Manual Revenue reconciliation:- Now because there is no integration between patient records and financial record, the finance team need to compare the records from spreadsheets on a monthly or quarterly basis. This leaves significant room for error and makes proactive cash flow adjustments nearly impossible. Because of these reasons, a lot of hospitals have found positive or negative dollars because of accounting errors.
3. Rudimentary business forecasting:- To create a business forecast, these financial and patient records need to be converted into spreadsheets, merged and built a model even when they are not sure how much they expect to get paid by each payor and on what timelines.
4. Lack of health care specific tools:- As I have earlier, there are no health car specific financial tools that can manage this complex flow of money. They are also not built as regulatory compliance of the National Health Commission India.
5. Limited access to financing:- Lenders prefer a simple and repeatable flow of cash in business, which is not the case here. Yes, it is repeatable but it’s not simple to underwrite. If a hospital is partnered with just one insurer then this might be easier but that’s not how it is. Because of these reasons, hospitals may have an overall good business, but they can also face cash crunch sometimes.

With great pain points come great opportunities.

A healthcare financial system for healthcare would act as a real-time, action-oriented engine that ingests financial data from the EHR, RCM, banking and credit products, and payroll to become the financial system of record for the practice; predictive analytics to surface opportunities for proactive and reactive improvements; and a trusted source of truth for lenders, vendor partners, and insurance companies when underwriting loans or contracts.

Features for HealthCare financial solution 🔮

1. Automation:- Streamlined financial planning and analysis by pulling in accurate and real-time data. So that the financial team can focus on more strategic work and not on administrative work.
2. Smart reconciliation:- Consistency across claims (EHR), submissions (RCM), and final record (GL) tools, primarily via real-time data integrations.
3. Compliance:- Offer trusted bookkeeping infrastructure for complex corporate structures. Help customers navigate central and state regulations and reporting compliance.

Products with these properties are well-positioned to become the financial source of truth for accounts payable, accounts receivable, and other payment flows through the practice.

💰From here, the doors open to an even broader product footprint (and higher annual contract values) by integrating adjacent financial products, such as business bank accounts, credit cards, expense management, asset-based lending, patient financing, claims coding, and even data-driven revenue cycle management and payor contracting.

🔮A financial OS of this reach and centrality to a practice’s financial state holds the promise of re-orienting the focus of the EHR (and of care) from billing to patient outcomes.

With existing fintech infrastructure, it would be great for such a problem to be solved where LTV can be improved without spending a lot on CAC.

In many cases, systems of record are even better positioned than banks to underwrite said customers, since they have ongoing access to all key operating data of the business.

As healthcare increasingly takes up more of the nation’s GDP — while still relying on disconnected, outdated financial rails — building in the healthcare x fintech space becomes more critical to the health of the system as a whole.

https://www.americanprogress.org/article/excess-administrative-costs-burden-u-s-health-care-system/