I am pleased to announce our investment in?Visitpay, a patient financial health platform that improves the consumer experience in managing healthcare expenses and improves the health system’s ability to engage patients in meeting their financial obligations.
The story of Visitpay?is one of a massive market need being created through the dual forces of government policies and patient demand for consumer friendly solutions.?High deductible plans, driven by rising healthcare costs for employers and fueled with Obamacare’s mandates, have driven over half of US employees to a deductible of over $1,000 (from 10 percent in 2006, with many north of $3,000 per household).?More than just a deductible increase, however, these structural changes expose the fact that today’s patient responsibility for a hospital bill is often the size of an unplanned mortgage when in days prior it was the size of an extra car payment.
As reported by The?Wall Street Journal this week, we led this first institutional investment round with Ascension Ventures.?At the time of this investment, the company counts over $30 billion in net patient revenue in the hands of their existing customers, including leading names like St. Luke’s Health System, Intermountain and INOVA, and is looking forward to partnering with a pipeline of entities with more than $100 billion in net patient revenue.
Visitpay’s founders and the leadership team come from backgrounds steeped in?consumer finance, healthcare IT, and healthcare operations.?The founder and CEO,?Kent Ivanoff, led a highly profitable business at CapitalOne before leading revenue cycle management at a leading health system in Idaho, where he conceived of the idea for a better way to improve the consumer and patient experience in managing the financial challenges of healthcare.
The Soaring Cost of Healthcare
Medical bills continue to dominate the short list of causes forcing US households into bankruptcy, compounding their?medical pain with financial catastrophe.??We all are familiar with analogies to the challenges that today’s healthcare patient experiences with a hospitalization or needed surgical procedure in today’s world of the high deductible health plan.
- Imagine showing up at a hotel without knowing the room rate, staying there one night, and then getting a mailed bill for $2,500 demanding payment in full a few weeks later with check by mail or phone and without itemized charges.
- Imagine taking a necessary flight for work with no ability to understand the cost in advance and getting a paper bill weeks later asking for $3,000 immediately.
This is where we are today in consumer healthcare finance.?As we focus more and more on healthcare quality and cost at the highest levels (with the PPACA), we have forfeited the patient’s financial health through high deductibles, reduced benefits and the lack of systems and processes to help them manage their patient financial responsibilities.
Hospitals fare no better, since historically, patient responsibility was a small fraction of their overall?revenue base.??As the portion of health system revenue in the hands of patients shifted more than 10 percentage points in the last 5 years, the yield (percent paid as a function of face claim value) on the part of the revenue dropped from 95 cents on the dollar to 40-50 cents on the dollar.?Consider this example:??A health system with $1 billion in net patient revenue and a 5 percent operating margin ($50M) might have had 5 percent of that revenue in the hands of its patients in 2010 ($50M) with a typical yield of 50 percent ($25M yield on $50M patient responsibility face value).
Today, that same $1 billion net patient revenue system has 20 percent of its revenue in the hands of patients.?Without a great solution, the incremental $150 million in revenue shift is being paid, without Visitpay, at 50 cents on the dollar.?The $75 million loss in revenue paid by the new payor (the consumer) drives the health system’s operating margin negative.?Patient financial responsibility trends are unsustainable for both consumers of healthcare services and for the hard working health systems that serve them.
Helping Consumers and Providers Manage Patient Financial Health
It doesn’t have to be that way.?The?Visitpay?team and their sophisticated and elegant solution has already improved the patient financial responsibility problem for their customers, delighting patient consumers with a consumer grade experience and helping providers get properly paid for the life-saving work they have performed.?Visitpay?is a solution required in today’s world of health payments, making both consumers and health systems more financially healthy than they would be otherwise.
I look forward to a conversation at the upcoming?Becker’s Conference in Chicago next week at the CEO and CFO Roundtable?on November 14th.?As co-chair of the?Digital Healthcare innovation Summit, I am also thrilled that we have a?panel organized?to discuss patient financial health with leaders like Ric Magnuson (CFO Allina Health), Jeff Taylor (SVP and CFO St Luke’s Health System) and Doug Vanderslice (SVP and CFO, Boston Children’s Hospital) on November 30th at the Boston Mandarin Oriental.
We are thrilled to be part of the?Visitpay?story and look forward to a future steeped in stories of patient delight and health system financial stability.
Also published on Medium.