Reinventing Healthcare Payments
Haymaker Ventures is excited to announce its investment in the €6mm pre-series A round of hi.health, a payments provider that is building a digital solution to the claims reimbursement process in Europe.
The problem
Few industries stack up in terms of both complexity and regulation than healthcare and financial services, which explains in part why payments innovation in the healthcare industry has lagged other verticals. In our Q3 Quarterly Memo we discussed how the growing need for both affordability and access to healthcare has led to the development of new models that leverage the infrastructure built over the past decade in fintech to solve key pain points related to the payment, claims and reimbursement of medical bills.
Although most Europeans utilize public insurance plans, supplemental or private insurance introduces added complexity in the claims adjudication process. Even though private health insurance is considered more of a high-end or luxury product in Germany for example, ~40% or €40bn of healthcare payments are under reimbursement. Today, patients are sent physical invoices by clearinghouses or pharmacies, submit the claim to their private health insurer, and wait for reimbursement. Once the claim is manually submitted, the claims are manually reviewed by the insurance carrier. If approved, a reimbursement is wired back to the insured. This process can take anywhere from 1–2 weeks to months depending on the speed at which each step is completed.
This means that the burden to submit, navigate, and pay for out-of-network care falls on the patient. This process is at best a nuisance, but at worst leads to unnecessary cash outlays and friction in a process that still relies almost exclusively on manual work. Much like the US market, the German healthcare market is highly fragmented with no universal system of electronic health records. Coupled with high regulatory burdens, it is very challenging to automate billing workflows because there is lack of coordination and integration between providers, payers, and their systems of record. Reliance on manual processes lead to delays in payment to providers, but also leads to high administrative costs for health insurance carriers as a result.
The solution
Hi.health is building a platform that marries the payment and claims submission process in order to digitize reimbursement flows. It directly integrates with health insurance carriers and provides patients the ability to automatically submit claims at the point of sale. This model is particularly compelling because the company has the ability to earn transaction-based revenue on the payments processed through the platform, but also platform-based revenue for access to its data. Sitting in the flow of funds provides powerful network effects as it can leverage structured claims data and offer additional products or services to the carriers. In the short term it can improve operating leverage for carriers by reducing manual rework, but it also opens the door to other adjacent benefits or services in the future.
Selling into health insurance carriers is challenging but hi.health’s two cofounders, Sebastian Gruber (CEO) and Fredrik Debong (CSO), have deep industry expertise and proven track records of execution that we believe is core to tackling a complex problem in highly regulated industries. Additionally, hi.health has a unique value prop to all members of the value chain: patients, medical providers, and carriers.
We are thrilled to partner with the hi.health team as they take on the challenge of automating the payment process in the European healthcare market.
