Health events are associated with financial costs along the patient journey. Healthcare is often paid directly out-of-pocket by patients and their families, especially when people do not have adequate financial protection through insurance. Paying for healthcare expenses out-of-pocket can result in borrowing with interest from informal lenders and delaying/foregoing healthcare.
According to a report from the Alliance for Financial Inclusion and ACCESS Health International, digital financial services (DFS) can alleviate the challenges of healthcare payment, promote seamless health consumption, and provide patients with access to a broader range of financial resources. However, the use of DFS for healthcare remains nascent, calling for a collaborative approach among multiple stakeholders.
Digital payments are used to pay for healthcare services and products, as well as the wages of healthcare workers. They also improve supply chain management within the healthcare system. Digital health vouchers are often combined with e-wallets to improve the accessibility and affordability of prenatal, well-child, and chronic disease management healthcare services.
Digital savings, a savings account or e-wallet that contains electronic deposits of money dedicated to healthcare expenses, serves as accessible funds for urgent health events. It also allows for online tracking of expenses, automatic bill payments, and safety and security in terms of usage. Donors, insurers, and governments can more efficiently and affordably offer vouchers, subsidies, incentives, and other financial products specifically for healthcare services through health wallets. Digital credit/lending can be used to cover unaffordable upfront costs.
Insurtech (insurance technology) extends the reach of financial protection through digital technologies. It is deployed for enhanced underwriting of healthcare insurance products and plans, risk assessment, claims management, improved user experience, and distribution.
From April 2021 to June 2021, 87 companies offering a total of 114 DFS for healthcare solutions were found across five regions the report covers (Africa, Asia, Eastern Europe, Latin America, and the Middle East.). Of the DFS for healthcare models studied, Insurtech was the most prominent, followed by digital payments, savings/e-wallets, credit/lending, and remittance.
PayMaya in the Philippines displays a convenient link on the app that prompts users to set up a linked bank account specifically to save for healthcare needs. It provides a way to pay healthcare bills at the point of service through the PayMaya card or the PayMaya Scan QR code. It also offers healthcare and nutrition education, financial planning advice, and contactless payment options for preventive care activities.
Integrating DFS with healthcare can enable the path to include customer segments otherwise overlooked by formal financial services. BIMA, a leading mobile delivery-based insurance provider in Indonesia, has partnered with the Pacific Financial Inclusion Program to provide microinsurance products to underserved communities, primarily women and those living in rural areas, in Papua New Guinea. The innovative products allow their customers to forego the lengthy paperwork process, preliminary healthcare checks, and identification process required for traditional insurance products as users subscribe via text message.
Models that make it easier for women to have control over household financial decisions can lead to better health-seeking behaviors and higher savings for healthcare needs. Though relatively few DFS for healthcare models adopt a gender lens, companies that add a gender strategy to their business processes improve profitability and productivity, talent pool and retention, creativity, innovation, and openness.
Diverse and sustained partnerships are a key feature of a thriving DFS for healthcare model that can further financial and healthcare inclusion. Collaborative and regulatory actions that bolster the DFS ecosystem create more opportunities for DFS companies to explore partnerships with the healthcare sector.
Enablers of DFS for health
A report by USAID highlights key factors that serve as enablers or barriers to DFS for health.
Implementing digital financial services for health requires assessing and building up on the existing digital landscape, the financial realities of the target populations served, and the health system.
Political and regulatory environments (clear regulations on digital banking, mobile money, and insurance) protect customers and create opportunities for new products. A political mandate or high-level government support can expedite DFS implementation.
The digital and financial infrastructure, ecosystem, and culture affect the uptake of DFS in health. Establishing interoperable systems and digital payment ecosystems is key to expanding digital financial services. Labeled accounts and transaction fees can deter social appropriation and improve self-control. Consumer understanding of the value of financial protection products is important for their adoption.
Digital skill is a key aspect of a functioning digital economy. A strong community of software developers is needed to manage and improve digital platforms. Digital literacy of households and proper training of implementing staff determines usage.
Health system maturity and facility readiness (digitization of parallel and upstream systems) facilitate DFS implementation. For instance, digitizing the claims process of a national health insurance program incentivizes digitization at the health facility level.
A case study in Rwanda explores the integration of DFS with Community-based Health Insurance (CBHI). Rwanda’s CBHI is centrally managed and uses digital technologies for client management and mobile payments. CBHI Mutuelle Membership Management System (3MS) was developed as an interoperable software platform that supports participant and premium management through online registration, membership validation, and connection to electronic payment gateways. The system integrates the national household income categorization database to determine insurance premium tiers. Integration with Irembo, the government-wide digital payment gateway, enables citizens to pay for CBHI membership annual premiums through a variety of digital payment mechanisms.
Reade the full reports here