A veteran of more than two decades in health-care financing believes he has the right prescription for financing what has grown into an $87-billion marketplace.
Hugh Bleemer is the CEO of PrimaHealth Credit, a marketplace lender focusing on elective procedures. While Americans spent $87 billion on such procedures in 2014, he said 80 percent either paid for the procedures in cash or with credit cards.
“It is a tremendous opportunity,” Mr. Bleemer said.
And he should know. For more than two decades, Mr. Bleemer ran an elective health-care finance company owned by J.P. Morgan Chase. In 2012 J.P. Morgan Chase (JPMC) chose to concentrate on core businesses and wound his division down. While he remained with the company, he began to look for other opportunities.
Mr. Bleemer said he was intrigued by the consumer loan sector, which was already experiencing a change in 2012. He knew a PrimaHealth Credit investor who mentioned Founder Brendon Kensel was building a platform.
With his knowledge of the industry Mr. Bleemer knew there was an opportunity. JPMC’s departure left one larger player and a group of smaller companies who had not seized the opportunity.
Speaking of PrimaHealth Credit’s large competitor, Mr. Bleemer said there were issues with their platform’s functionality and their products could be improved upon.
“I knew we could build a best-in-class and seamless platform for both the provider and user,” Mr. Bleemer explained.
Once he joined PrimaHealth Credit, Mr. Bleemer began working with two decades’ worth of clients to show them what he believed were superior products.
Mr. Bleemer said one reason PrimaHealth Credit’s products are better is because of lessons learned from the recession. Many companies thought they had good credit-scoring models only to see them fall apart during the recession.
Because Mr. Bleemer knew the segments of dentistry, orthodontics, and vision care so well, PrimaHealth Credit decided to focus on those sectors and develop specialized scoring models for each one.
He is also conscious of where we are in the current cycle and he is making sure PrimaHealth Credit is prepared whenever the downturn occurs.
It would not surprise him if demand for elective surgery stays high. That is what happened during the recent recession. The only thing that changed was companies became more strict on which loans they approved.
Because most marketplace lenders serve a relatively homogeneous client base they can create a one-size-fits-all credit scoring model. That is not the case with PrimaHealth Credit, Mr. Bleemer explained. While each model uses more than 200 separate data points, each specific healthcare area has its own unique characteristics which need to be assessed.
“It is different at a dentist than it is at an eye care specialist,” Mr. Bleemer said. “I’ve learned over time you see different behavior from people depending on which segment they choose.”
Look for PrimaHealth Credit to expand into more health care areas because the demand is there, Mr. Bleemer said. Deductible financing is another are they are considering.
When your industry is technology dependent, having a head start of more than a year makes it harder for later entrants, Mr. Bleemer said. It takes some time and many iterations to maximize the technology. PrimaHealth Credit’s platform is fully developed, mobile friendly, and simple for doctors’ offices to use, he added.
Doctors’ offices are the focus of PrimaHealth Credit’s marketing so far, Mr. Bleemer said while added there is no charge for practitioners to join. They do have an inside sales force and also employ internet marketing with a focus on social media networks. Once they build their provider network they will begin marketing to consumers who can encourage their providers to join or who can choose one who is already registered with PrimaHealth Credit.
People financing an elective procedure through a PrimaHealth Credit provider can expect easier to understand financing options without the surprises that exist with other financing options, Mr. Bleemer said.
He used the example of someone who financed a $1,200 procedure over a one-year period. To pay that off in full, the borrower would pay $100 each month. In contrast, what some providers do is charge $50 each month with a $600 balloon payment at the end. Should the borrower be unable to repay the full amount, they are charged back interest to day one, plus back interest on the $600 they still owe. It becomes the same as paying interest on the entire. Goodbye, no-interest loan.
Mr. Bleemer said he would not be surprised if the Consumer Financial Protection Bureau takes a closer look at such practices in the near future.