We are delighted with the response to our new CEO Chat feature! This issue we bring you Brendon Kensel, Founder & CEO of Newport Beach, CA-based PrimaHealth Credit. Prior to founding PrimaHealth Credit, Brendon ran an orthodontic DSO and was frustrated when patients could not get approved for financing. So he started a new financing company and now approves up to 89% of patients.
The Consumer Financial Protection Bureau (CFPB) has been active and in the news quite a bit lately. We provide some updates and perspectives here on the CFPB's credit card late fee ruling, airline rewards cards (read on for a healthcare take), and a new report on HSAs. There was also this week's SCOTUS decision upholding the constitutionality of the CFPB's funding mechanism.
Brendon Kensel founded patient financing company PrimaHealth Credit to widen access to credit and help more patients afford the care they need. Based in Newport Beach, CA, PrimaHealth Credit is all about accessibility, transparency, fairness and empowerment for patients. There is no deferred interest, and up to 89% of applications are approved.
"CEO Chat" asks a healthcare payments executive to answer three questions:
What problem was your company founded to solve?
How do you describe your company's right to win in your market?
What are your key goals and definition of success in the next 12 months?
Competition heating up for patient financing in dental market
A few issues ago we covered Sunbit's more aggressive move into the dental space, and PrimaHealth Credit (CEO Chat) has a strong dental presence. Wellfit, a leading healthcare tech platform providing financing options, discount plans and payment processing, recently announced that it had expanded its footprint to 1,000 dentals offices throughout the U.S. Cedar also entered the dental market via a partnership with Tend, in which Cedar will manage the post-visit billing experience for Tend's 200,000 members (25 locations in six states). Additional options such as traditional market leader CareCredit, newer/ smaller players Cherry and LQPay, and platforms such as Versatile Credit mean there are a growing number of choices for providers to offer patients for financing dental care.
REGULATORY
CFPB late fee ruling update, HSA report, and SCOTUS decision
The CFPB has been active recently on healthcare-related matters. In May 2023 the agency published a report on Medical Credit Cards and Financing Plans, and in July 2023 it issued an RFI on the same topic (responses from vendors, banks, community groups and others can be found here).
In February 2023, the agency proposed new rules to significantly lower credit card late fees. The final ruling - lowering late fees to $8 from an average of $32 per missed payment - was issued in early March 2024. A federal judge in Texas issued a preliminary injunction on May 10 preventing the new rule from going into effect. The judge based his stay on the premise that the pending U.S. Supreme Court case regarding the constitutionality of the CFPB funding mechanism could invalidate the CFPB rule on late fees. Just this week, the Supreme Court decided in a 7-2 opinion that there is nothing in the U.S. constitution that prevents the CFPB to be funded out of Federal Reserve monies without annual Congressional approval. So presumably the injunction will be lifted, though it is likely that credit card companies and issuing banks will find new legal avenues to fight implementation of the rule.
Finally, on May 1 the CFPB issued a new report finding that "junk fees and high costs pervade Health Savings Accounts". The CFPB states that this report is part of its "continuing efforts to reduce the risks and costs brought by financial institutions as they increase their presence in the American healthcare system". Healthcare is nearly 20% of the U.S. economy. Obviously banks, fintechs and other payments companies will be participating in this enormous and growing market, and as far as the CFPB is concerned, all are fair game for a heightened level of scrutiny.
Read here for a balanced review of SCOTUS decision
PAYMENTS INNOVATION
Opportunity for credit card rewards in healthcare?
We have long believed that there is a role for a general purpose, rewards-based credit card in the healthcare market. Eligible spend for higher reward tiers could be extended to wellness merchant codes and specific SKUs that align with a healthy lifestyle. Rewards cards clearly motivate consumer behavior. Airlines have made a science out of their rewards programs, and have figured out the most profitable way to run the programs and impact behavior is to shift away from rewards based on "miles traveled" to status based on "dollars spent" on the their own co-branded card (e.g., Delta Amex, American Airlines Citi or Barclays, etc.)
Given how active the CFPB has been lately, it is not surprising that the agency has credit card pricing - including rewards programs - in its sights. On May 2, the agency argued in a blog post for more competition and less complexity in the credit card industry. The agency reminded that a 2023 analysis showed that "consumers who carry debt from month to month rather than paying it off earn just 27 percent of rewards at major credit card companies, while paying 94 percent of the interest and fees that those companies charged." The CFPB will put increasing pressure on card issuers, and will continue to publicize the extent to which lower income consumers receive disproportionately smaller share of rewards card benefits.
This gets us thinking that perhaps card issuers can finally look to the healthcare industry's $750 billion of patient spending to find a workable rewards model. There are many opportunities to reinforce patient behaviors that could be built into a healthcare credit card. And ideally, issuers could appeal to broader consumer populations/ demographics to create profitable rewards structures.
Sift Healthcare, based in Milwaukee, WI, recently announced the close of a $20 million Series B funding round led by B Capital with participation from existing investors including AllosVentures, First Trust Capital Partners and Rock River Capital. Sift will use this funding to expand staffing and technology investments in AI. According to the press release, Sift's "Payments Intelligence Platform unifies clinical and payments data, creating a longitudinal data set that ties clinical inputs to financial outcomes. This proprietary data set drives advanced machine-learning interventions that predict adverse payment outcomes, deliver workflow- integrated alerts and recommendations, and optimize patient financial engagement." Sift was founded in 2017.
We came across AI Insider recently, which bills itself as the "leading provider of media and market intelligence on the AI technology industry". The online publication covers a number of industries including healthcare. Recent pieces include:
Why One New York Health System Stopped Suing Its Patients. Rochester Regional Health has barred all aggressive patient collection activities. According to the hospital’s COO, getting rid of these tactics hasn’t hurt the bottom line, has allowed it to move staff out of its collections department, and has rebuilt trust with patients. (KFF)
Hospitals Are Refusing to Do Surgeries Unless You Pay in Full First. More hospitals and surgery centers are demanding patients pay in advance, which helps the facilities avoid chasing patients for payment later but often distresses patients who must come up with thousands of dollars while sometimes struggling with serious conditions. (WSJ)
Top 10 Fintech Innovations. Simon Taylor provides excellent commentary on what he considers the biggest innovations that Fintech has delivered over time. Great perspective when thinking about how payments can and should continue to evolve in healthcare. (Fintech Brainfood)
We will be at the upcoming HFMA annual meeting in Las Vegas from June 24 - 26. If you plan to attend, we would love to say hello - please drop us a line at info@finmedpartners.com!
Thank you for reading! If you enjoyed this newsletter, please forward to a friend or colleague.
FinMed Partners is a management consulting and advisory business focusing at the intersection of payments/ fintech and healthcare. Our founders have developed deep expertise from decades of experience with health IT companies, healthcare providers and many players within the payments ecosystem. Investors, boards and executive teams work with us to maximize business value through strategic input and tactical execution.
FinMed Partners, an affiliate of PayGility Advisors, 100 Theodore Fremd Ave., #b1c, Rye, NY 10580-2875, United States