PayZen Clinches $23M in Series B Funding Plus a $200M Debt Facility to Expand Its “Care Now, Pay Later” Offering

The financial burden of healthcare in the United States has escalated sharply, with the share of costs borne by patients increasing at an even quicker pace. Two decades ago, patient fees contributed merely 5% to the revenue of hospitals and doctors, but this figure had surged to 35% by 2017, as highlighted by Forbes.

As a direct consequence of this trend, a significant number of U.S. residents find themselves grappling with substantial medical debt, now exceeding $220 billion, according to data analyzed by the health policy research organization, KFF.

Addressing this overwhelming debt issue is complex, yet PayZen, a startup founded five years ago, seeks to make healthcare expenses more manageable by offering patients the option to settle their bills through installments without additional interest or fees.

The initiative, dubbed “care now, pay later” by the company, has witnessed remarkable consumer engagement — PayZen reports a six-time increase in revenue for the consecutive past two years.

This impressive growth enabled PayZen to secure a $23 million Series B funding round led by NEA, with participation from previous investors, such as 7WireVentures, Signal Fire, and Viola Ventures. Alongside the equity financing, PayZen obtained a new $200 million warehouse credit facility backed by Viola Credit along with a group of insurance companies.

The funding round has propelled the company’s valuation to surpass $200 million, as per individuals close to the deal.

Healthcare providers, too, seem to benefit from collaborating with PayZen, with an average 35% increase in their collection rates, according to Itzik Cohen, founder of PayZen.

Though achieving traction in the healthcare market was initially a hurdle for PayZen, Cohen reflects on the journey and the reluctance of traditional “buy now, pay later” (BNPL) services to enter the complex healthcare sector, an insight he shared with TechCrunch.

Navigating the healthcare industry’s intricacies to sell technology solutions proves immensely challenging.

Despite the crowded space with startups attempting to offer similar “care now, pay later” solutions, Cohen observed that many, including competitors like Walnut, shifted focus from providing zero-interest loans to patients. Unlike its competitors, PayZen stands out as the sole fintech entity to seamlessly integrate medical loans into patient medical record portals, such as Epic’s MyChart, bypassing the traditional need for call center operations.

“Providers are seeking unified solutions,” stated Cohen, emphasizing the competitive edge PayZen gains through its integration with widely adopted systems like Epic.

Presently, PayZen partners with over 60 health systems and prominent physician groups, including Geisinger in Pennsylvania and the multi-state Common Spirit, offering the startup’s financing solutions to their patients.

In addition to facilitating post-care payments, PayZen has recently unveiled a pre-care card, addressing the trend of upfront payments before proceeding with medical procedures. The company also leverages its data and AI technology to assist health systems in identifying patients eligible for government financial aid.

Cohen takes pride in PayZen’s societal impact, remarking, “We attract people to our mission,” and revels in the knowledge that their efforts meaningfully touch lives.