With ballooning healthcare costs and nearly half of Americans in medical debt, providers, patients, and employers are desperate for new solutions that empower them to save money and better allocate resources while continuously improving the quality of care.
As it stands today, stakeholders across the US healthcare ecosystem struggle with rising administrative expenses that currently account for 25% of national healthcare spending, while another 25% of expenditures are lost to fraud, waste, and abuse (FWA). Reliance on outdated IT technologies has contributed to inefficiencies and inflated costs throughout the industry. For instance, as recently as five years ago, fax machines were reported to account for 75% of all medical communication. Furthermore, according to the American Medical Association, data interoperability remains a significant issue in healthcare with 69% of digital health executives reporting gaps in their data.
Tech-powered solutions have successfully driven down prices and enhanced efficiencies in many industries, so why has adoption been so slow in the healthcare space? Heavy regulations and fragmentation are part of the problem, but data accessibility is also a major issue. Additionally, many health tech providers operate on low margins, making it difficult to attract investors. These challenges, however, also present a significant opportunity.
Technology can clearly play a constructive role in helping the healthcare industry capitalize on data. As more health equipment and medical records become digitized, there's an opportunity to harness this data for better accuracy, forecasting, personalization, and efficiency.
While tech-powered healthcare solutions have an inherent medical dimension, there's also a parallel financial dimension that offers plenty of room for innovation at the intersection of digital health and fintech. Fintech may not solve every challenge within the healthcare industry, but it can play a meaningful role in leveraging siloed data and driving efficiencies that can align incentives and allow healthcare professionals to focus more on patient care, thereby enhancing the overall quality of health services.
Let's take a deeper look at some of the emerging global trends and technologies that fintechs can leverage to help address some of the major problems in healthcare.
Artificial Intelligence (AI) - Thanks to GenAI, it's become much easier to digest and process structured and unstructured data - at scale - in order to generate insights and automate workflows. Though healthcare lags behind other industries in AI expertise, applying AI to health data through a financial lens can drive significant efficiencies and cost-savings, and automate processes like claims processing and plan administration. AI-powered tools can also automate assessments and significantly reduce wait times for payouts.
Similarly, AI can facilitate faster, more personalized support for patients, making them more satisfied customers. For example, generative AI-powered chatbots can offer 24/7 access to registration, routing to on-call providers, instant scheduling, and help with prescription refills, to name a few.
Embedded Finance with Vertical Integration - In a highly verticalized industry like healthcare, apps that integrate financial services typically offer a better user experience with faster transactions, from purchases to reimbursements. Surprisingly, end-to-end dashboards have become an industry standard everywhere except in healthcare, where their convenience could greatly improve customer engagement and satisfaction.
One of our portfolio companies that understands this well is Fijoya, an AI-powered platform for employer-sponsored benefits. Fijoya unifies all employee benefits into a single platform, eliminating vendor fatigue, optimizing healthcare costs, and boosting employee engagement. The app leverages fintech innovations, including embedded payments, on-demand issuance, budget management, and spend control tools. This makes it possible for users to conveniently access and pay for thousands of services from a single interface, resulting in a more streamlined user experience, better care, and higher satisfaction among employees.
Navigating Regulatory Shifts - Regulatory changes are a constant challenge in improving healthcare outcomes. The recent lawsuit against Johnson & Johnson for ERISA violations, for example, demonstrates why it's so important for employers to fortify their compliance strategies. As fiduciaries, they must take proactive measures to protect the financial interests of plan members, including ongoing efforts to reduce of FWA.
With their expertise in navigating complex financial regulations, fintechs are well-positioned to create robust solutions that follow and comply with healthcare regulations such as ERISA and the Price Transparency Act. By ensuring that self-insured employers are able to manage healthcare spending in a responsible fashion, fintechs can help companies improve fiduciary oversight, uphold compliance, and avoid legal risk.
Payment Innovation - A lot of money flows between employers, plan administrators, providers, and patients. Innovations in payment technology can streamline these transactions, benefiting everyone.
For example, fintechs focused on payments in the health space can enable real-time payments, reduce transaction fees, improve speed, and provide greater transparency in payment processes. They can also facilitate flexible payment terms for patients, such as payment plans or subscription-based models. This encourages patients to get the healthcare they need when they need it, without fear of medical debt.
The intersection of fintech and healthcare is more than just two industries coming together. The potential for fintech to further revolutionize healthcare is wide open. Addressing the financial misalignments and optimizing financial processes through fintech will enable healthcare professionals to focus on what matters most - their patients.
As the healthcare landscape continues to evolve, cutting-edge financial technology will be crucial for sustainability. Fintechs are dramatically increasing the probability of success in complex industries that require deep expertise, and healthcare is no different. The reality is that fintech is just as much a part of our health industry as health tech.
As we look to the future, how will fintech continue to shape healthcare, and what innovations will have the most profound impact on patient outcomes? Fintech founders who focus on improving healthcare solvency will find they are not only well-positioned to capitalize on the growing opportunities in the industry but also will lead us into a healthier future for all. What could be better than that?
