- Bank of America plans on integrating AxiaMed with its existing business payments hub.
- Spending on healthcare in the US is expected to top $6 trillion by 2028.
- Insider spoke to Faiz Ahmad, Bank of America’s global head of transaction services, about the deal.
If you’ve ever received a medical bill in the US, you’ve likely seen first-hand how complicated navigating healthcare payments can be.
For Faiz Ahmad, head of global transaction services at Bank of America, the COVID-19 pandemic underscored the need for a more efficient network of payment services connecting patients and providers.
“That complexity was really brought to the forefront in COVID, where all of a sudden the entire economy, including significant portions of the healthcare system, were locked down or moved to providing care remotely. Yet, a lot of these processes are older processes that require a lot of paper, and then a lot of manual payments,” Ahmad told Insider.
Bank of America’s April acquisition of AxiaMed, a digital healthcare payments startup, is aimed at helping the bank further dive into a competitive space that is ripe for change and integration with more modern forms of payments, Ahmad said.
With AxiaMed, new payment options for transactions made at the care facility — like paying for a co-pay with a contactless method — will be available through a flexible, healthcare-specific portal used by businesses on CashPro, the bank’s payments hub for clients and merchants, Ahmad said.
AxiaMed has a tool integrated with CareCredit, meanwhile, that offers healthcare financing for out-of-pocket expenses not covered by insurance, available through the same patient portal.
A spokesperson for the bank declined to provide further details on what sort of lending arrangements might underpin such financing options. CareCredit’s services are currently underwritten by Synchrony Bank.
Existing manual payments don’t just obstruct automation between different players — they’re also expensive. It costs between $3 and $20 to process a check passed between healthcare patients, providers, and hospital systems, Ahmad said. For an ACH payment, the cost is less than 50 cents.
“If you look at the savings opportunity, the reduced costs associated with paper-based revenue cycle transactions are somewhere in the order of, easily, $16 to 20 billion,” Ahmad said.
BofA is looking to disrupt a $3.8 trillion business
Healthcare expenditure hit $3.8 trillion in 2019, even before the pandemic, accounting for 18% of the US economy, according to the most recent National Health Expenditure data. It’s set to grow to $6.2 trillion by 2028, according to NHE data.
Bank of America has strong footing in the industry — Ahmad said the bank is connected to more than 90% of the top 25 health insurers and payers.
But it’s not the only financial institution looking to change how Americans pay for healthcare, as Insider has reported.
In 2019, for example, JPMorgan Chase acquired healthcare payments startup InstaMed in a $500 million deal that was the bank’s largest since the Financial Crisis.
Newcomers have also entered the space. Cedar, which helps hospitals get paid, announced plans to buy fellow startup Ooda for $425 million in May 2021.
For Bank of America, the goal is connecting the gaps across the payment journey, like between patients, hospital systems, insurers, provider networks, banks, and the government.
The biggest threat to bringing healthcare payments into the modern era is complacency, Ahmad added. While the current methods of paying medical bills might be inefficient, they do largely work, he said. Paper remains one common denominator in a healthcare ecosystem built on a network of disparate providers and customers.
“We’ve noticed, not just in healthcare but in other industries we deal with, that industries that are fragmented tend to have a heavy dependence on paper because different players in the industry haven’t developed interoperability of their systems,” Ahmad said.