May 11, 2021 at 09:00AM

According to data released by LendingTree, medical debt is a costly anchor on the financial lives of many consumers.

Nearly two-thirds of all consumers report either being in or having been in medical debt in the past — debt mostly incurred due to unforeseen and unexpected medical issues that arose suddenly and expensively. And it takes a bite out of the average consumer’s financial life. One-third of those who paid off medical bills used their savings to do it, while nearly one-quarter used credit cards and 10 percent took out a medical loan.

It’s a problem that Rectangle Health is aiming to relieve by giving practitioners the ability to offer their patients care now, pay later (CNPL) options to settle their bills for services. CNPL, as Rectangle Chief Technology Officer Mike Peluso explained to PYMNTS, is meant to bring the kind of flexibility to healthcare payments that buy now, pay later (BNPL), from which it takes its name, brought to retail payments. And while there are other financing options floating around in the world of high-deductible medicine, CNPL as Rectangle Health envisions it keeps the discussion between the only two parties that should be involved: the patient and their provider.

The Patient-Provider Relationship

“There isn’t a third-party bank involved, there isn’t a third-party financing entity involved,” Peluso said. “Care is often too expensive, and it’s not too expensive because the provider is overpriced; providers don’t control prices. It’s too expensive because the patient may have a $2,000 deductible. The provider can’t control that, but they can control the ability to deliver the care and what options the patient has for paying over time.”

Importantly, he said, Rectangle Health is committed to giving providers control over how they structure their CNPL options. They can, for example, structure payments such that the patient pays a larger share up front before they divide the rest of their payments over time. Offering options and designing them to work around the reality of patients’ financial lives ultimately pays off for the provider because patients in general want to pay their providers and will do so if given the right tools.

First, most people genuinely want to pay for what they receive, he said. Second, a provider is someone a patient has a long-term relationship with over time and is someone they will have to see often. When given the tools to pay, patients have strong incentive to do so.

The benefit of patient loyalty is hard to quantify but invaluable to providers who rely on long-term relationships with patients, he said.

“Every provider cares about their patients in a way that they want to make them healthier,” Peluso said. “But providers can now say, ‘Well, I want to make you better off financially. I want to offer you the ability to continue to come to my practice, and [if] the ability to have a high-dollar procedure is something that is going to prohibit that care or somehow gives you pause about coming to my practice, we’re going to eliminate that.’”

That patient always has a reason to stick with that provider because they can walk into an appointment knowing that they aren’t going to have to take on debt or pass up care that they need because they can’t pay a massive price for it, he said.

A Better Business Model

This kind of offering is not something Rectangle Health invented, Peluso said. Orthodontists long ago figured out this model as an offering for patients who need several thousand dollars’ worth of treatment and also need the ability to pay it off over several years while they receive the service. Rectangle Health is looking to bring that kind of flexible payment model to the rest of the industry in an attempt to bring healthcare providers the consistent cash flow that consumer companies like Netflix see with their payments.

“[The] Netflix business model works, where they just charge a subscription every single month, not every time you rent a new video or every time you watch a new series,” he said. “They just charge you every single month. And things become very consistent.”

Offering CNPL options isn’t exactly the same as offering medical care on subscription, he said, but it does offer a similar sense of constancy for care providers, who can collect monthly payments for procedures they’ve done previously. A slow month might not even be noticeable to a practice that has so modernized its billing infrastructure to allow patients to pay over time for procedures.

Modernization is increasingly what healthcare payments need to make a healthier system for both practitioners and patients, he said. Doctors don’t want to be in the role of bill collectors, and no one wants to make decisions about their healthcare based on how large a deductible payment they can make at once.

While allowing easy, hassle-free installment payment options won’t heal every woe in the healthcare system, it will create a path to better care for a lot of patients in a way that is actually financially healthy.

Care Now, Pay Later Removes Cash Flow Tradeoffs For Patients, Healthcare Providers …

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