PayZen Bags $23M in Series B Funding and $200M Debt Financing to Expand Its “Care Now, Pay Later” Offering

In the United States, the escalating costs of healthcare are a growing concern, with the financial burden increasingly being shouldered by the patients themselves. Just 20 years back, patient payments constituted merely 5% of the total revenues for hospitals and doctors, yet by 2017, this figure had soared to 35%, as reported by Forbes.

This upsurge has led to a considerable number of Americans amassing substantial medical debt, with estimates from KFF, an independent health policy research organization, putting the total at a staggering at least $220 billion.

In response to this daunting challenge, PayZen, a startup founded five years ago, is endeavoring to render healthcare more accessible by facilitating the payment of medical bills through interest-free and fee-free installment plans.

Dubbing its service as a “care now, pay later” solution, PayZen has seen its consumer base rapidly expand, boasting a six-fold revenue increase annually over the last two years.

This impressive growth has played a significant role in PayZen securing a $23 million Series B funding round, spearheaded by NEA with contributions from previous investors such as 7WireVentures, Signal Fire, and Viola Ventures. Moreover, the funding round was complemented by a newly established $200 million warehouse credit line from Viola Credit alongside a consortium of insurers.

Following the funding, the company’s valuation has reportedly exceeded $200 million, according to sources close to the transaction.

Healthcare providers partnering with PayZen also stand to gain, experiencing on average a 35% increase in their collection rates, as mentioned by PayZen’s founder, Itzik Cohen.

Cohen acknowledges the initial struggle to persuade healthcare providers about the potential of a “buy now, pay later” offering. However, he was taken aback that other BNPL services hadn’t ventured into the vast healthcare domain due to its complexities, distinguishing it from more straightforward markets such as e-commerce.

While several startups have attempted to introduce similar “care now, pay later” models, Cohen pointed out the pivot of many, like Walnut, from offering interest-free financing options. He identifies PayZen’s competitive edge in integrating its financial services directly with patient medical record platforms, such as Epic’s MyChart, unlike competitors Clear Balance and Access One, which still depend on traditional call centers.

Currently, PayZen collaborates with over 60 health systems and significant physician groups, including Geisinger in Pennsylvania and the multi-state Common Spirit, making its payment solutions accessible to a wide patient base.

In addition to post-care financing, PayZen has introduced a pre-care card in response to the growing trend of upfront payments before scheduling medical procedures. The company also leverages data and artificial intelligence to assist healthcare providers in identifying patients eligible for government financial aid.

Cohen shares a sense of pride in PayZen’s societal impact, highlighting the company’s mission-driven workforce: “We retire each night with the knowledge that our efforts are contributing positively to society,” he remarked.