Making Healthcare Affordable with Itzik Cohen, Co-Founder & CEO at PayZen : this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Saul Marquez:
Hey everybody, Saul Marquez, and welcome back to the Outcomes Rocket. Today I have the privilege of hosting the amazing Itzik Cohen, he’s the co-founder and CEO of PayZen, they are solving the healthcare affordability challenge, using data and AI to create individualized patient payment options that families can afford and providers can maximize collections on, ultimately enabling access to care. Itzik, prior to founding PayZen started and lead Beyond Finance, a leading fintech firm that focused on improving the debt resolution products in the US. He started Beyond Finance after three years at Prosper Marketplace, where he served as chief business officer, leading top-line growth partnerships and strategy. He’s got a wealth of knowledge and previous experience in the early team with WebEx communications, with web meeting applications, one acquired by Cisco, and before that even was a professional basketball player in the Euroleague, just an incredible all-around person, such a pleasure to have you here on the podcast with us, Itzik, thanks for joining us.
Itzik Cohen:
It’s my pleasure. Thank you, Saul.
Saul Marquez:
So it’s, there’s a huge gap in the way that we handle payments in the healthcare space. You guys are focused on this, tell us a little bit about you and the company and specifically how you do it differently.
Itzik Cohen:
Yeah, so let’s break it down. The team and myself have worked together in other companies before, so it’s not our first rodeo, so to speak. We identified an emerging problem in healthcare payments, but mostly in healthcare affordability. What I mean by that is your health insurance, and we’re talking about people who have jobs, who have medical insurance, but medical insurance these days usually comes with a pretty high deductible, that means that there’s a major shift in payment responsibility to the patient, from the insurance company to the payers. The average per family, right now, in the United States it’s around $4,500 dollars a year out of pocket. So this whole trend of consumerization of healthcare is creating a real problem for patients who basically have unplanned and unbudgeted expenses because, you know, nobody expects to get sick, they need to go to the doctor, so you’re not really planning for this. You have insurance, you expect insurance to pay for this, but you’re basically paying the first $4,500 dollars out of pocket, and it leaves a lot of families with a lot of medical debt. Let’s not forget that the problem affects medical providers who are, kind of, stuck in the middle between the payers and the patients, who are basically saying I need to collect a lot more from patients now, but they’re not paying me and my cash flow is problematic as well because I need to pay for my staff, etc., etc. So PayZen was founded to address those issues and we were inspired by Buy Now, Pay Later. Essentially we kind of established or started the care now, pay later revolution in a way, and all of our experience and the team and myself, we are, we’re veterans of the fintech industry, so essentially how do we expand credit? How do we do things that are innovative when it comes to allowing people to afford more or care now, pay later. And the way we thought about it is, look, let’s agree on a few things in healthcare. First of all, if somebody wants to pay for his healthcare using PayZen, we don’t say no to people, so we approve 100% of all patients who wants to use our services. The second thing, we never charge interest and we never charge fees. So we will never pay more than you owe, and what we do is we look at an individual and an individual, own their liabilities, their financial data, and very quickly make a decision about how do we give you a plan that we know you can afford. Meaning something that’s going to not overburden you and your family financially and that will maximize your repayment success, ad this is what we offer you. I’m glad to report that based on the year that we’ve been in business now, 78% of people will see an offer from PayZen to pay the medical bill, end up paying the bill.
Saul Marquez:
Nice.
Itzik Cohen:
Which is.
Saul Marquez:
It’s a big number.
Itzik Cohen:
An estimate of, you know, we’re hitting it pretty close when it comes to offering payments that people can afford.
Saul Marquez:
Hey, that’s really great. And so there’s a huge opportunity, and this gap, right, this, this huge deductible gap is real, it is putting the choice, as you said it, in the hands of the consumer now versus, hey, you know, my insurance pays for everything, well, it really doesn’t, because there’s this huge gap up to 8 to 12,000 dollars in some cases.
Itzik Cohen:
That’s right!
Saul Marquez:
So it’s a very real problem that, that you and the company are solving for. And so the thing that I’m sure a lot of people are wondering, like, hmm, wait a minute, this doesn’t cost anything, no fees, so so tell us about the model. Is it, is it something that you guys offer to large provider organizations as a way to, tell us about that.
Itzik Cohen:
Right, right, Saul, so you’re spot on. Essentially, our business is B2B2C, so we sell to the big providers and basically we say, look, you know, we want to offer more flexible option, payment options, and affordability solutions to your patients, and because there will be offered more flexible ways of paying for their, for their care, more of them will participate in caring of paying for their, for those services. So essentially, we’re, we’re increasing the payment adherence in a lot of our providers by 25 to 30%, which is extremely, it’s very significant to them.
Saul Marquez:
Yes.
Itzik Cohen:
We give an option to the provider of actually getting paid the full amount, minus a deduction, minus a discount a day after enrollment. So basically what we do, we are a fintech company, after all, so we can price the risk of each individual, that means that we look at you, Saul, we gave you, let’s say, a 12-month plan, we know you pay $83 dollars a month out of $1,000 dollars over 12 months, great, you make your first payment, ouy’re good to go, set it and forget it. We look at you and we think, you know, Saul it’s, based on our proprietary predictive model, we say it’s always a low, low risk, so we can advance the majority of that to the provider a day after enrollment, and we take the risk ourselves. Essentially, we are buying that, we’re servicing the patient and essentially the provider gets most of the money a day after enrollment.
Saul Marquez:
That’s great. And, you know, and so, Itzik, I’m curious, you know, we talk a lot about the use of AI and machine learning in healthcare, finance is way, way ahead of healthcare on this front.
Itzik Cohen:
Yes.
Saul Marquez:
But is that a piece of it? Is that how you guys are figuring all this out? Because you’ve got to do it a mess for it to make sense, right?
Itzik Cohen:
Yes.
Saul Marquez:
Yeah.
Itzik Cohen:
You’re absolutely right. It’s a major piece. And we use AI and machine learning to do two things. First of all, based on experience, based on the results and the vintages of patients who paid already or enrolled already, are we giving the patients the right plans? So someone in your position, we give you a 12-month plan, how successful were you in paying that plan? So based on those, based on that, that data, we are able to keep making it tighter and tighter and tighter, to make sure that the underwriting that we have is evolving all the time with every patient. That’s the first calculation we make, which is, in my mind, the most important one. The second one is how tightly can we predict loss rates, meaning of people who will not pay so we can pay more to the provider. So our pricing will be a lot tighter and the yield to the provider will be a lot higher. So, you know, we pay 80 cents a dollar now on average on a non-recourse basis, meaning we, we take the non-payment risk and we are, we are responsible enough for, I mean we’re holding the bag, right?
Saul Marquez:
Yeah.
Itzik Cohen:
So, we need to be really good at pricing risk and understanding how loss rates are being calculated in the future. So this is where machine learning and AI come, and using a lot of data. We use thousands of data points for every patient when it comes to understanding their financial liability. And our underwriting is very different because we don’t calculate interest rates, we calculate cash flow. Essentially, the way I’m looking at it is for what are your obligations every month? What are you paying for your utilities? This is another alternative data we use to understand what you pay for your utilities, for your phone, for everything else to understand, How much do you have left and how much can you afford? And I want to make sure that we can actually afford it. So this is a very challenging exercise, let’s put it this way, to kind of, understand that.
Saul Marquez:
Fascinating. And so at what point of the, thank you, by the way, appreciate you sharing that. At what point of the payment lifecycle do you guys come in? Do you come in after they receive treatment? Talk to us about that.
Itzik Cohen:
You’re hitting it. You’re hitting all the big problems with the questions, that’s awesome. So, you know, so, yeah, we were inspired by buy now, pay later. Let’s look at a firm for example, a firm did a fantastic job of being integrated into the checkout flow of an e-commerce transaction. I mean, they did an amazing job, but, you know, e-commerce, it’s pretty simple checkout. I mean, you put something in a basket, you check out and you’re being offered ways to pay for your item or items. And of course, financing is another option of affording something. And buy now, pay later did a great job of allowing people to afford big-ticket items because it’s so transparent and easy to use.
Saul Marquez:
Yeah.
Itzik Cohen:
The problem with healthcare is not very simple as we know.
Saul Marquez:
Yes.
Itzik Cohen:
The conversations around cost and affordability are happening pre-care, post-care, during care, so we need to be integrated into the workflow of the provider in a much tighter way, anticipating a lot more use cases of conversations about payments than just wait for the bill to occur and then offer a payment plan. So essentially when we, what we like to do is when we think about the problem we’re solving, the problem is healthcare affordability, we’re making healthcare affordable. But there are two main problems. The one we addressed first is the unpaid medical bills problem, which is basically the post-service billing issue, where.
Saul Marquez:
Yes.
Itzik Cohen:
You get a statement and you’re like, I can’t afford it, so we’re helping patients pay for those bills and providers collect on those bills in a much easier, automated way. The other problem that we’re solving is pre-care or what we call access to healthcare, many people today just choose not to go to the doctor to do preventative care because they don’t want to pay their deductible or co-pays or co-insurance fees or out-of-network fees. The costs are, can be a lot of different things, but people just don’t do preventative care, which will lead to chronic disease and actually additional costs down the road. So the way we address it is we want to be, we’re training the financial advisors. When people on the phone from the provider side, brochures at the clinic, digital communication to the patients from the provider to know, you can afford your care, here’s how you should go do your annual physical, you can afford it, we’re, you’re guaranteed to be enrolled. So essentially we encourage people to access healthcare and not be afraid that they cannot afford it. Essentially, so there’s the access issue and then there’s the unpaid medical bills issue, which is again a part of affordability, but two different problems with two different solutions.
Saul Marquez:
Beautiful. Thanks for outlining that, and certainly a place in both, the beginning before you get to care, because so much care goes without actually being delivered, that decision, that people make. And then on the back end, right? Shit, now I have this bill. Like, what do I do with this? Yeah. It’s one of the things that I was wondering was there’s the, there’s traditional insurance methods like employer, government delivered insurance methods, employer delivered insurance methods, and then there’s this, this other group of, of like, co-ops and like the large kind of like Christian organization insurances, and there’s a couple of others out there, they are on a model where they get care, but they go into these facilities as cash pay, right? So they figure out the best deals and then they get reimbursed by the particular organization. I’m blanking on the name of this category, maybe you know it better than I do.
Itzik Cohen:
No.
Saul Marquez:
Yeah. No, no, no worries. But like, there’s an opportunity here, right? And it is about cash flow. This is about cash flow, right? Individual cash flow. And so you have a chance to have this gap addressed where, okay, these guys are going to help me take care of this and then this third party is going to reimburse it for me, there’s a there’s an opportunity there, isn’t there?
Itzik Cohen:
Yes, there is. And the model there are, there are a lot of different models where we can actually distribute the product. The best way we thought was let’s just go to providers which are really hurting right now. Let’s not forget providers are not just very rich organizations in big, big cities or metropolitan areas, most providers are rural community hospitals that are really struggling with cash flow right now. Let’s not forget ….. The average operating margin of a hospital right now in the United States is less than a percent. They are very, very tight margins, especially after COVID, you know, services are still not back to the volumes they used to be. And FTEs, meaning employees, I mean, it’s very hard to retain employees right now, it’s very expensive. And what they’re looking for is acceleration of capital, less, trying to do more with less employees, automation and efficiency. And essentially, we address all of those four pillars that they are looking for. I mean, we accelerate capital, so we’re helping their cash flow, it’s fully automated because, you know, they really don’t have to do anything to manage this program. And so we thought, look, we should, we need to be good at a few things, but let’s be good at working with providers first and then helping their patients, so our go-to-market is to go through providers. But the other thing that happened recently is that we kind of became the care now, pay later platform because there’s a lot of payment vendors, right, that basically have a way of collecting payments for a hospital, but they want to offer a pay over time function. So instead of building that function, they connect to PayZen, give us the data through APIs and we became the platform for them to offer these types of payment plans and affordability options to their patients, even without them building it themselves. So in order, we go direct to providers and indirect to other vendors.
Saul Marquez:
That’s fantastic, it becomes a turnkey, long-term payment solution.
Itzik Cohen:
Exactly. Exactly. And, you know, payments, I mean, there’s a lot of payment processors and ways to collect money from from patients these days, but when it comes to affordability and underwriting and servicing of those options, there’s really not a lot of options.
Saul Marquez:
Wow.
Itzik Cohen:
I mean, there is no, we don’t see, I mean, we see now more companies entering the space because it’s such a huge space. I mean, we’re talking about, healthcare spend in the United States out of pocket, it’s $1.2 trillion dollar market. I mean.
Saul Marquez:
Annual?
Itzik Cohen:
It’s a good market, it’s obviously a lot to address here.
Saul Marquez:
That’s an annual number? 1.8 trillion.
Itzik Cohen:
…
Saul Marquez:
It’s a bigger total addressable market.
Itzik Cohen:
It’s huge. The unpaid medical bills problem is around $300 billion dollars a year alone, just to kind of size that field. It’s crazy.
Saul Marquez:
Massive. Well, hey, I’m glad you guys are here, and I’m glad you guys are doing what you do. For those of you listening, thinking through some of those bills that you’re still trying to collect on or your organization’s trying to collect on, its Payzen, PayZen,, is it dotcom?
Itzik Cohen:
Yes!
Saul Marquez:
Is it PayZen.com? Okay, so PayZen.com is where you go to learn more. What are you most excited about today, Itzik?
Itzik Cohen:
I’m excited about two things, three things, actually. The one thing that we’re most excited about is our NPS scores, meaning what do patients who actually signed up with us, how do they feel about PayZen? And, you know, so I was bracing myself for a very low score because essentially you’re basically associated with paying for medical bills and nobody likes that, so.
Saul Marquez:
Yeah.
Itzik Cohen:
I didn’t know what to expect. We got an NPS score of over 60, right? And when you think about the average in healthcare, it’s less than 30. So we’re, we’re doing very well when it comes to, and the two leading reasons a patient like that, patients like that is how easy it is to use and how affordable we are. The number two thing that I’m very excited about is the fact that PayZen is going to grow over 5,000% this year.
Saul Marquez:
That’s huge.
Itzik Cohen:
So our growth rate and traction we’re getting is phenomenal. And it shows two things, first of all, I think we’re addressing a big problem, so it shows that there’s a big problem here. But the other thing is, I think we’re, we, we’re hitting, we hit the market with the right product at the right time, so I think that’s exciting. The third thing I can’t talk about, because we’re going to announce a new product sometime in a month and a half, but stay tuned. It’s going to be even more innovative than we have right now, so I’m very excited about it.
Saul Marquez:
We’re just going to have to follow you, figure out what you guys are up to.
Itzik Cohen:
Exactly.
Saul Marquez:
I love it. Now, that’s really exciting. And this, this niche that you guys have carved out for yourselves is certainly promising. Well, Itzik, it’s an enormous pleasure here today. Tell us where the listeners could follow you, reach out to you, learn more.
Itzik Cohen:
Yeah. I mean, if you go to PayZen.com, a lot of the news and the recent updates that we have, like new providers, new partnerships that we, we signed are going to be mentioned over there. You can follow us on social media, on Twitter, on LinkedIn, we’re everywhere, and if you’re provided just, you know, what we offer providers is actually something very simple. A provider contacts us, we look at their data or get some data from them. And we do a whole analysis of saying this is how many more dollars you will make in one year by using PayZen in a certain way. And you know, if they want, usually they want it, that’s great. But we do it, we do it for everyone for free, essentially kind of a financial analysis based on our data, based on their data, and you can see exactly how much you’re going to, how much more you’re going to make every year, and we think the results are going to be very impressive for people.
Saul Marquez:
Love it. Well, there’s the invitations, folks, take Itzik and his team up on it. It’s PayZen.com and, Itzik, just want to say thank you, really appreciate the chance to explore this.
Itzik Cohen:
It was a pleasure of mine. Thank you very much.
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