Medical Loans

What are medical loans?

Medical loans are financing products that pay for medical procedures, medical equipment such as wheelchairs and other cosmetic surgeries such as facelifts, breast augmentations or weight loss surgeries. Sometimes, expensive fertility treatments are also financed and paid over time.

Many of these medical procedures and surgeries are covered by the individual’s health insurance. However, there are a vast array of medical treatments or elective surgeries that are partially covered and not covered at all by a person’s health insurance policy.

Some of these elective surgeries such as weight loss procedures are live saving and patients are sometimes presented with a variety of ways to pay for their treatment at the doctor’s office or their healthcare facilities.

Medical loans extend to medical equipment such as oxygen generators, motorized wheelchairs and medical beds that patients need to have to care for themselves at home or on the road.

Medical Loans - Where do people get financing?

When patients discuss their medical outcomes and treatments, they often don’t think about financing their procedures. Sometimes they are caught off guard when their provider or insurance companies make them aware that their procedure is not covered. Meaning that they will have to finance or pay for these medical procedures themselves.

There are some larger financing companies such as Care Credit that offer a line of credit for patients to use to pay for their surgery such as eye sight correction surgery.

However, not everyone seeking financing is approved by some of the larger health care finance providers, that leaves a void for health care providers to either work other medical finance providers or provide in house financing options.

Sometimes the larger financing providers only finance a certain type of procedures and can not offer financing for procedures that deem to be experimental, risky or simply the procedure cost is too small to be considered.

We estimate that about 30% to 40% of the patients seeking credit are either declined because of their credit and income or the procedure is not financeable by the larger financial institutions.

Medical Loans - Emergence of patient financing

In the past few years, we see a sleuth of financing companies trying to capture market share and entering the patient financing market. 

Here are some of the reasons why the medical financing space needs multiple players:

• Advanced and experimental medical procedures: As medical procedures advances and newer treatments are developed, insurance companies and traditional medical financing companies aren’t ready to dip their toes into these advanced procedures, other financing companies are stepping up. Hair treatments and other human growth treatments are left out. Some of the fertility treatments are also being ignored by traditional medical financing companies.

  
  

• Lack of coverage of full credit spectrum: Larger and traditional medical financing companies can not cover the full spectrum of creditworthiness of their applicants. Their credit facilities are restrictive and conservative. For instance, some of the larger financing companies can only approve patients with a credit score greater than 700 credit score. This credit underwriting rule automatically cuts out more than 2/3rd of US residences. This provides an opportunity for other medical lenders to come in and underwrite those that are ignored or declined by traditional medical financing companies.

  
  

• Custom provider management: Traditional medical financing companies treat all of their provider partners the same way. Regardless of volume, procedure, manufacturers involved, their lending product is uniform across the board. In other words, they don’t work with providers to calibrate pricing, promotions and discounts. Newer fintech driven medical financing companies have provider specific configurations where discounts, promotions can be arranged when patients seek financing. This gives medical providers a way to differentiate themselves and drive better patient outcomes.

  
  

• Online application and patient portal: Traditional financing company require the patients to fill out paper based applications at the office of their healthcare provider. It’s a cumbersome process and there is a chance the application will get declined. Newer financing companies in the medical space will provide a pre-approval online application the patient can fill out at home and receive an approval. With an approval in hand, they are more likely and more confident to proceed with their doctor’s visit and scheduling their procedure date.

Medical Loan - Tech stack is important

The technology stack becomes very important in the next generation of patient financing processes. Here are some key points on what types of technology, platforms you might need to build out your own patient financing company

• Patient onboarding and portal access - whether you are offering a patient onboarding online application at the doctor’s office at home. The patient must be able to sign-on, apply and render a credit decision for the procedure they elected to seek financing. The technology stack should also have a patient portal where they can see their application status, approved amount, repayment obligations and other medical related information with respect to HIPAA.

  
  

• Provider onboarding and portal access - Patient financing companies seeking partnerships with medical providers need a way to onboard, verify and onboard new medical facilities. The financing company should provide a way for owners of these medical facilities to apply to become a partner. The medical provider should also have a portal to see all of their patient’s application, set procedure dates and perhaps negotiate the loan amount as the types of procedures firm up after a medical consultation.

  
  

• Versatile credit decision engine - The medical financing platform should have a robust decision engine which can be used to underwrite patients and sometimes additional medical providers. Both of these underwriting processes can be different and the decision engine should run multiple types of rules and offers so that the medical financing provider can safely and securely onboard the entire ecosystem

LendAPI Sub-tenant platform: 

At LendAPI, our system is designed to have merchant financing, especially medical financing in mind. We understand that the lender needs to manage each provider differently and each provider may have their own application process. We designed our system for lenders and their providers to login and onboard applications. Here are some highlights of our platform:

• Digital onboarding - both patience and merchants can be onboarded through a digital application

• Credit decision engine - Our decision engine is flexible and can run multiple rules and offer multiple products at the same time.

• Workflow orchestration - Our workflow orchestration system allows lenders and their providers to adjudicate applications in a centralized or decentralized manner.

For a free trial, please visit www.lendapi.com or sign up here at app.lendapi.com/signup