by Mike Peluso · CTO, Rectangle Health · February 19, 2021
As Buy Now, Pay Later (BNPL) continues to take off in the retail sector, I’m often asked whether it has a place in healthcare, and my answer is always twofold. The concept of BNPL, payments broken up into smaller installments over time, belongs in healthcare — absolutely. But here’s the thing: this ability has been around in healthcare for a long time. If you have ever gotten braces, or if you have a child who has, you know this to be true. So instead of trying to fit retail-centric BNPL into the healthcare space, I like to think of healthcare payment plans in a way that I’ve coined called Care Now, Pay Later (CNPL). Because for us in the healthcare industry, it all starts with care.
Care Now, Pay Later solves the problem that I have with BNPL. Patients in need of care should not be restricted to the same payment options as a consumer making a purchase. There is a significant, fundamental difference between a patient needing a colonoscopy, for example, and a consumer buying a new TV. Instead of leading patients to a financing option that creates debt or pushes them into extensions of credit, Care Now, Pay Later is a compassionate payment option that accounts for the difference between a patient and a buyer.
The need for CNPL is great. According to a recent consumer study by Rectangle Health and PYMNTS.com, two-thirds of patients want access to payment plans. An additional study by Freedom Debt Relief reports that 20 percent of people have medical debt, and that three-quarters of them have accumulated more medical debt since the beginning of the pandemic in the U.S. in March 2020. Americans are financially burdened and are opting out of care, both routine and essential, because they cannot afford it.
Beyond making healthcare payments manageable for patients, CNPL also benefits providers because these installments create steady, recurring cashflow. While the individual payment might be smaller, having consistent incoming payments each month with a card on file is a better, more sustainable option than what is, in many cases, the alternative: sending out multiple bills with no response, or worse, sending unpaid balances to collections where everyone loses.
Stay tuned for the next post in this Care Now, Pay Later series to learn how Rectangle Health’s solution helps practices build a better business model.