This MedTech Startup Idea from the 1001 Startup Ideas collection of YoStartups is to offer a Virtual Healthcare Credit Card to enable payment of out-of-pocket expenses, which are not covered by medical insurance like dental implants, LASIK surgery, audiology, and others.
Market Definition for 1001 Startup Ideas – Virtual Healthcare Credit Card
As per a report on health care spending released by the US Government, out of pocket spending is estimated at 11% or $352.5 billion of the total $3.3 trillion spent on healthcare in 2016. It has grown fastest in 2016 since 2007. Out-of-pocket expenditure for healthcare is also one of the largest categories of household spending, which is about 38 % of the total expenses.
It was also found that 45% of U.S. patients knowingly skip elective medical care when the out-of-pocket costs exceeded $1,000.
The market for financing for out-of-pocket expenses is large as Care Credit, a medical financing company owned by GE reported that 12,000 consumers apply for a CareCredit card nearly every day in the USA.
Competitor Analysis for 1001 Startup Ideas – Virtual Healthcare Credit Card
Care Credit, CareCredit credit card, by a company owned by GE, is accepted at more than 200,000 enrolled healthcare providers, and medical, retail locations. More than 10 million cardholders use CareCredit credit card for their everyday health and personal care purchases,co-payments, deductibles, and prescriptions drugs.
Finrise, a Burlingame, California-based startup is trying the healthcare marketplace approach to serve as a one-stop online shop for doctor appointments, patient questions, and to make payments.
Finrise is targeting the pet care segment first and has launched Vetary.com.Fincare claims to have 160,000 interactions on its site since the launch of Vetary. They also offer specialized financing schemes called toothline for dental and Hearwise for audiology.
Pain Point and Target Audience for 1001 Startup Ideas – Virtual Healthcare Credit Card
The target audience for the proposed startup would be healthcare centers providing ancillary medical services which are not covered under standard insurance policies.
As per a Gallup Poll,2014, One in three Americans put off medical treatment for their family or themselves because of the high costs, these figures have been at their highest in the 14 years.
The report published by the Feds in 2017 is not encouraging either, 25% of all the people surveyed reported skipping medical care because of the costs, and 44% of the respondents said that they could not come up with $400 emergency expense without selling something or borrowing.
As per two recent Kaiser Health Tracking Polls -Four in ten (43 percent) adults with health insurance said they have difficulty affording their deductible, and roughly a third say they have trouble paying for their premiums and other cost-sharing.
IN November 2011, former Stanford University classmates Sam Tanzer and Ross Porter started Embrace Hearing, after learning that 75% of the 27 million Americans who qualify for a hearing aid choose not to buy on because of the cost.
Value Proposition for 1001 Startup Ideas – Virtual Healthcare Credit Card
The patients and their family members can get pre-approved credit finance for the procedures that are not covered by the insurance companies. The customers can repay them as EMIs with interest, based on their repayment capacity.
The enrolled healthcare providers on the platform can get access to more patients who would have likely skipped or delayed treatment being not in a position to afford the procedure by making the payment upfront.
Business Model for 1001 Startup Ideas – Virtual Healthcare Credit Card
The proposed business model will be to charge a one-time implementation fee to healthcare centers to integrate the solution with the existing billing and patient management systems. Thereon a nominal transaction fee will be charged for all the transactions on the card.
The startup can raise debt financing from the angel investors and lend this money on a nominal interest rate to creditworthy patients or the end users of the platform.
Way to market for 1001 Startup Ideas – Virtual Healthcare Credit Card
The proposed startup will have to design a cloud-based healthcare platform for medical services providers to enroll themselves to provide services. Once the platform is ready, the start-up can approach the local medical services providers for the pilot project.
Since both healthcare and financial services sectors are heavily regulated, the start-up will have to ensure that the platform is KYC enabled and is approved by local financial and healthcare regulators for lending and Credit checks.
The start-up can start lending to qualifying customers based on their credit history. The start-up at this point can limit itself to small ticket size procedures to keep the burn rate in check and focus on improving the project.
Once the product is proven and ready without any bugs, the startup can approach accelerators or angel investors to launch the product commercially.
Key milestones for 1001 Startup Ideas – Virtual Healthcare Credit Card
The software design, development, and testing of the cloud-based healthcare platform will have to be completed within the first three months of operation. The pilot project with local clinics, testing for any problems with the product and refining the product to work with all the existing billing, POS, and patient care systems will have to be completed in the next six months, to ensure there is a robust end product after the pilot phase. The start-up can then start approaching the investors for the lending side of the business.
Investment needed for Prototyping this startup idea- Virtual Healthcare Credit Card
The proposed start-up can look to raise upto 125K for design, development and market validation from accelerators like Fintech Innovation Lab, Startup Bootcamp Fintech or SixThirty. The startup will have to ensure all the money raised is utilized for the development of product and the pilot only, not towards operating expenses like rent or salaries.
Team capability | Virtual Healthcare Credit Card
The team will need a co-founder from financing industry who can ensure the startup can adhere to regulations like KYC and license for commercial lending. The team will also need one member from hospital solution selling industry who can help onboard hospitals and general other touch points for a quick scale up. The third member of the team will be a full stack developer who can design and develop the cloud-based platform.
Investors/Expert take on | Virtual Healthcare Credit Card
The acquisition of American Healthcare Lending by lending marketplace Prosper for $21 million proves that a well-packaged product attracts investors. CareCredit, medical financing company owned by GE has been in business for 30 years and is valued at billions of dollars because of its more than 200,000 touch points, more than 10 million users and a steady income through high lending rates. The latest start-up to raise funding is Finrise, which has raised more than $4.5 million till date and it lends at attractive rates of 6.95 percent APR from doctor’s office.
All tech businesses can be scaled across borders, as long as they operate within the regulatory framework. The investors have traditionally found SaaS-based business attractive business propositions.
Read More Startup ideas on Healthcare
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