What if paying for healthcare meant that you always had the money available — on tap, ready to be paid, to any clinic or hospital? For any health or medical service. For anyone in your family — no restrictions and always available?
What if this transaction was through a frictionless ‘instrument’? Like, through the swipe of a card, or the scan of a QR code through your cell phone, with instant confirmation? And what if this instrument acts as a carrier for a no-cost or low-cost medical loan, reimbursement funds from your employer, or funds from your healthcare savings, maybe even your health insurance?
This then would be an experience enabled by ‘embedded finance’ in your healthcare transaction, i.e., the seamless integration of financial services into a transaction equation between you and the healthcare provider (hospital or clinic) or merchant (pharmacy).
Healthcare expenses have been the single biggest reason for Indians dropping below the poverty line every year, even before the recent pandemic. Embedded finance focuses on disrupting the massive healthcare payments that Indians make from their pockets, essentially from their savings or borrowings. A March 2021 report by NITI Aayog (Govt. of India) put this amount at a jaw-dropping $72 Billion.
Still, when we think of healthcare payments, we naturally think about costs for critical care at the hospital. We fail to recall the numerous payments we make to purchase medicines, health checks, or dental treatments. All of these are coupled with expenses incurred for treatments that are non-emergency, such as eye care, hair treatments, skin procedures, assisted pregnancy, and more. Collectively such medical expenses would fall under the category of ‘elective procedures’ or even ‘OPD.’
OPD and elective procedures are seldom covered by a health insurance policy, assuming you even have one. With 3 out of 4 Indians being either un-insured or under-insured, a majority of us Indians routinely pay for such ‘non-critical’ medical procedures from our pockets, contributing to the staggering growth of this piece of the $112 Billion healthcare services market in India.
Imagine then the ‘frictionless’ transaction experience described above, when you’re at the dentist, getting those ‘Invisalign’ teeth aligners for your teenage daughter, or paying for your pet’s treatment at the veterinarian. The power of embedded finance in healthcare is that it puts the power back in your hands — the payer of healthcare services.
By aggregating banks, lenders, payment systems, and more through an efficient payment system, embedded finance has the power to consolidate the healthcare payer’s needs while lubricating the flow of money to the healthcare provider. This works well for the provider too, who gets their customer’s money earlier than before (since Customers or Patients will not defer treatment for the lack of money), improving their cash flows and potentially reducing costs.
There is significant movement in this industry already, with international players like Hello Walnut or PayZen from the US, CarePay from Africa, and Aya Care from Canada making a serious impact in their respective markets. Closer to home, QubeHealth (the author is the Co-Founder) is rapidly making a dent in India, providing a No-Cost EMI option on healthcare payments to employees of corporates that sign up with it.
Embedded Finance is no longer an experimental technology. It’s long been used by ‘Buy Now Pay Later’ and other financial technology companies to enable frictionless transactions between the payer and the merchant. The difference though has been that this innovation has been largely limited to retail and related sectors. Only now is it being applied to an industry ripe for disruption — healthcare.
Solving the healthcare problem for India begins by solving the healthcare financing problem first. Through embedded finance in healthcare, we have the opportunity to expand access to healthcare and provide better options to the patients seeking care. To the healthcare providers, it means increased revenue, as patients are more likely to opt-in for elective procedures, better cashflows, and closer relationships with their patients.
As we emerge from the pandemic years, the heightened awareness amongst individuals about healthcare payments can only sharpen this proverbial sword of embedded finance.
Views expressed above are the author’s own.
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