Fintech for Health Innovation

On October 29th, 2019, ACCESS Health launched the Fintech for Health innovation platform with support from MetLife Foundation, with the initial purpose of enabling people to pay for and access healthcare using digital financial services and a financial inclusion approach. Over three years, we expect to launch not only projects that address high out-of-pocket payments for high-quality care, but also work with partners to adopt systems technologies that can bring down the cost of care, through better data science, supply chain efficiencies, and bundled services (payments plus care).

Healthcare payment and access challenges

Across the patient journey, from prevention to palliative care, there is an accompanying financing journey. Despite governments’ re-commitments to the goals of universal health coverage (UHC), a significant amount of healthcare costs are borne by patients, especially for high quality care that is delivered in a timely way. In healthcare, costs are expensive, mostly paid out of pocket, entail high transaction costs, unpredictable, and not linked to health outcomes. These costs prohibit people from accessing the right care, at the right time, and at the right place.

Credit: ACCESS Health International, “Healthcare payment and access challenge”

The accompanying financing journey may include high cost care for a short duration (advanced diagnostics, chemotherapy, surgery), low cost care over a long period of time (chronic disease management, loss of caregiver income), or preventive care for which the return on investment may not be immediately clear to patients. The financial pain points along the healthcare journey impacts both care accessed and financial health after seeking care.

When care is unaffordable, patients either forgo care or they find alternative sources of funding, including borrowing from friends and families, borrowing from other informal lenders, selling assets, or making difficult choices between healthcare treatment and other necessary daily expenses such as food or school fees.

Patients and their families require access to trusted, transparent digital financial services that are designed specifically to meet health payment and access challenges.

What is Fintech for Health?

Like the term health tech, fintech is a vague term that encompasses all technologies developed, used, or refined for an industry, in this case the finance industry. Technologies that commonly fall under the umbrella of fintech include: digital ID, mobile money, artificial intelligence, robotics, and blockchain. These technologies are deployed in both business to consumer (B2C) and business to business (B2B) models through digital financial services including payments, savings, lending, advisory, and insurance.

However, despite the hype, not all of these technologies or models are immediately applicable to health financing challenges. To define a framework for Fintech for Health, we found it useful to delineate fintech solutions into three components: the digital financial solutions, key digital enablers, and the channel to healthcare services. We developed and refined this framework through successive iterations/discussions with fintech and healthcare providers to attempt to provide a common understanding.

Credit: ACCESS Health International Southeast Asia, “Fintech for Health Framework”

The fintech industry has demonstrated the power of digital transformation to reach underserved and remote communities. Through a combination of offline services (finance agents) and technology (mobile wallets), digital banking has been able to provide trusted, formal financial services to people who otherwise would not be able to access them. In addition to the movement and storage of money, digital banking has helped unbanked individuals and small-to-medium enterprises create financial records, establish credit, and lower or avoid the transaction fees (third party payments, transportation costs, loss of income due to time off work, manpower costs) associated with cash based payments.

Credit: ACCESS Health International Southeast Asia, “Fintech for Health Taxonomy of Fintech Solutions for Healthcare”

There are four main archetypes of innovative health financing solutions that can be offered to unbanked or underbanked consumers, using technology: digital health savings, digital lending, crowdfunding, and insurtech. These financing models are not mutually exclusive; the most practical and impactful models will combine two of more archetypes.

Why Fintech for Health? Why should healthcare look to financial inclusion?

Financial inclusion initiatives typically target the same low-income populations as universal health coverage policies. People who lack access to formal banking services also lack access to and cannot afford high-quality healthcare. It is logical to converge the goals and approaches of financial inclusion and UHC to address healthcare financing challenges.

An advantage of using technologies already deployed in the finance industry is the degree to which privacy and security are already built into the product and its related processes. The finance and healthcare industries share a high bar for the protection of personal data and privacy.

The healthcare industry has taken a traditional approach to financing. Public insurance is limited in its coverage and funding, while private insurance is far from common and is often out of reach for low- and moderate-income populations. Donor funding, which extends to impoverished communities through international non-profit organizations, is being scaled back. In most countries in Asia, there has not been a concerted, large scale effort to create innovative financing models that sufficiently protect populations from catastrophic healthcare expenditures until public insurance is able to cover populations at the levels needed. Until then, we need to bring expertise from the finance industry to the table.

General finance, as well as innovative financing, expertise is housed within the finance industry, which is not usually “at the table” of healthcare discussions.

Where is Fintech for Health already in use?

The Fintech for Health industry is still nascent. Digital financial service models have been crafted for the healthcare industry to a limited extent but most prominently in Sub-Saharan Africa, including Ghana, Kenya, Nigeria, and Tanzania, among others. These models have emerged with strong donor backing and were built upon existing digital wallets (e.g. M-TIBA created by PharmAccess and M-pesa).

Fintech for Health is starting to emerge as a point of interest in Asia for development organizations, healthcare companies, and digital health startups focused on low- and moderate-income populations. Growth-stage fintech startups, with significant investment and a proven track record yet unhindered by the need to create shareholder revenue, are rapidly trying to move into new sectors including healthcare.

In India, AffordPlan offers mobile health savings accounts (mHSAs) and patient-centered communication tools that enable integrated care. Also in India, Arogya Finance offers pre-approved point of care lending with low interest rates to patients with high healthcare bills. In China and Indonesia, mutual aid models such as Shuidi and Kitabisa are providing (untested) financial protection for people who may still have difficulty in securing or accessing private health insurance.

Under COVID-19 restrictions, the integration of telemedicine services onto payments platforms has accelerated, as payments platforms’ broad customer bases provide an efficient way to offer health services to a large number of people. In Bangladesh, Pathao, a leading ride hailing company backed by GoJek, has launched partnerships with three teleconsult companies and is now offering pharmaceutical deliveries, while bKash is working with Digital Healthcare Solutions to combine microinsurance and teleconsultations.

At ACCESS Health, we don’t use the word “disrupter” loosely, nor do we really like using the term at all. But if we were to refer to healthcare industry disrupters, it would be e- commerce platforms, which are essentially digital finance platforms with extensive distribution capabilities, moving into healthcare. The health technology, pharmaceutical, and insurance industries are watching with baited breath since Amazon announced its partnership with Warren Buffet’s Berkshire Hathaway and with JP Morgan. (Amazon and Warren Buffet usually get the most attention in the partnership, but JP Morgan’s potential role should not be underestimated). In China, when Jack Ma broadened Alibaba’s focus to healthcare, the rest of Asia paid attention.

From inside the healthcare industry, it feels like traditional players are waiting to see what these “disruptive” models will look like. But in the meantime, we need to take lessons from the e-commerce industry and from similar large-scale fintech platforms, to rethink how we offer healthcare and health financing in a manner that is efficient, affordable, scalable, and available to everyone.