The CEO of the artificial intelligence-backed medical debt purchasing company PayZen believes payment plans can be part of the solution to America\u2019s high-priced healthcare, even as consumer rights advocates warn third-party financial agreements lack transparency.<\/p>\n
The company is just one in a sea of healthcare financing companies, whose executives see \u201cacceleration\u201d in conversations with cash-strapped hospitals facing historic Republican-led healthcare cuts.<\/p>\n
Signed into law by Donald Trump, the cuts are expected to leave 17 million people<\/a> without insurance through 2034. As those uninsured people struggle to pay for healthcare, the change is effectively a cut to hospital revenue, and threatens some cash-strapped facilities with closure.<\/p>\n \u201cWe believe most people want to pay their bills \u2013 they\u2019re decent people trying to be responsible,\u201d said Itzik Cohen, PayZen CEO. \u201cIt\u2019s not a collections problem \u2013 it\u2019s an affordability problem.\u201d<\/p>\n PayZen\u2019s solution is to provide payment plans up to 60-months with 0% interest.<\/p>\n \u201cIf you extend the payment plan to three, four, five years \u2026 Then more people will pay their bills and successfully,\u201d said Cohen. \u201cWhat we\u2019re trying to do is make it affordable.\u201d<\/p>\n PayZen\u2019s business model relies on buying debt from hospitals at a discount, and is backed by venture capital<\/a> from groups such as New Enterprise Associates, a New York-based firm with big-name partners such as Dr Scott Gottlieb, the president\u2019s first-term Food and Drug Administration (FDA) commissioner. NEA and Gottlieb deferred requests for an interview.<\/p>\n PayZen may pay as little as 10% and as much as 90% of the value of the bill depending on an AI-backed prediction of whether the patient will pay, according to a 2022 contract with the University of Texas Medical Branch Health (UTMB) at Galveston obtained by the Guardian. The company then collects the full face value of the bill from patients.<\/p>\n That same contract shows that PayZen also charges hospitals a transaction based \u201cplatform fee\u201d.<\/p>\n \u201cPayZen charges a 5% platform fee to support outreach, enrollment, underwriting and serving all payment plans,\u201d it reads.<\/p>\n Cohen declined to comment on platform fees and said the 5% figure \u201cis not accurate and is not reflective of how our pricing works\u201d.<\/p>\n PayZen is part of an industry of companies, some of which provide interest-bearing <\/a>financing, that help cash-strapped hospitals with a growing a liquidity problem.<\/p>\n \u201cThis is not a new business. It is based on an old model,\u201d said Ge Bai, a healthcare finance professor at Johns Hopkins University\u2019s Carey School of Business. \u201cA hospital takes the unpaid bill to a financial institution, sells these bills to the financial institutions, then the financial institution will give them [the hospital] money immediately\u2026 It changes ownership.\u201d<\/p>\n Chief among hospitals facing liquidity problems are rural facilities \u2013 153<\/a> of which have closed or lost key hospital services since 2010. For these facilities, government cuts, expected to result in an $87bn drop<\/a> in revenue are only the latest blow.<\/p>\n Over the last decade, insurers have increasingly pushed costs onto patients. From 2006 to 2025, the average deductible<\/a> \u2013 an upfront payment that must be made before insurance kicks in \u2013 for a single person has grown from $303 to $1,562, outpacing inflation by more than 352%.<\/p>\n Those payments represent a hardship for many Americans, more than one-third<\/a> of whom can\u2019t afford an unexpected $400 expense. Unpaid, they also turn into bad debt on a hospital balance sheet. In 2022<\/a>, people with health insurance became the largest group of patients in debt to hospitals \u2013 a sea change in the industry. And those debts, known as \u201cpatient responsibility\u201d or \u201cself-pay\u201d are very hard for providers to collect.<\/p>\n Companies like PayZen come in and pay hospitals up front for bills that might otherwise languish on the hospital balance sheet and become bad debt.<\/p>\n \u201cBecause of the growth in high deductible health plans, many people have $2,500, $10,000 [deductibles] for families \u2013 so they\u2019re really financing so much of their care,\u201d said Richard Grundling, chief mission impact officer at the Healthcare Financial Management Association (HFMA).<\/p>\n Consumer advocates question the transparency of such deals for patients.<\/p>\n \u201cI don\u2019t think there\u2019s any transparency to the patient that PayZen has just acquired this account at a fraction of its face value,\u201d said April Kuehnhoff, senior attorney at the National Consumer Law Center. UTMB Health confirmed that it does not tell patients that PayZen bought their debt at a discount.<\/p>\n \u201cIf the hospital was willing to accept this reduced amount, was there a discount that the patient could have accessed by directly paying the hospital instead of paying the full amount to this third party company?\u201d Kuehnhoff asked.<\/p>\n Advocates also argue there is a risk that low-income patients, who are often eligible for federally required discounted care, are caught up in payment plans. UTMB Health confirmed that PayZen does not screen patients for what is commonly called \u201ccharity care,\u201d despite performing a \u201csoft\u201d credit pull and information on their debt and incomes.<\/p>\n \u201cUTMB directs all patients to PayZen to discuss the terms and conditions of the specific agreements with PayZen,\u201d said a spokesperson for the hospital system. \u201cWe provide basic FAQ information, but the relationship is between the patient and PayZen.\u201d<\/p>\n Although PayZen relies on purchasing debt, Cohen objects to the label \u201cdebt buyer\u201d, which he said refers to companies buying bundles of debt in default. Such companies were highlighted in a segment on John Oliver\u2019s Last Week Tonight<\/a>.<\/p>\n \u201cCalling it debt buying is insulting to patients quite frankly,\u201d said Cohen. \u201cWhen you purchase something with a [buy now, pay later] approach, is it debt buying? You\u2019re being offered a way to pay for your purchase in a convenient, integrated way that extends payments to you because now you can afford it.\u201d<\/p>\n Cohen said his company does not use \u201cextraordinary collection practices\u201d, such as filing debt law suits and objects to describing PayZen as \u201cbuy now, pay later\u201d.<\/p>\n \u201cWe never actually called ourselves \u2018buy now, pay later\u2019 for healthcare or \u2018care now, pay later\u2019.\u201d In fact, Cohen authored a 2021 blog post<\/a> on the company website headlined: \u201cPayZen\u2019s \u2018Care Now, Pay Later\u2019 Mission.\u201d He later clarified that his company has moved beyond that description.<\/p>\n Cohen said PayZen is running a \u201cpilot\u201d to pre-qualify accounts for charity care, but that only \u201ctwo to three\u201d of the roughly 100 healthcare providers it works with participate. Some states require hospitals to screen patients for charity care.<\/p>\n If hospitals continue to struggle to collect money from patients, Bai noted that \u201chospitals will engage in even more aggressive mechanisms\u201d.<\/p>\n \u201cFor example, all upfront payments \u2013 no payment, no service \u2013 this will happen,\u201d Bai added.<\/p>\n UTMB Health instituted one such policy, which was presented in a PayZen-sponsored report as \u201cmasterclass in revenue optimization<\/a>\u201d. The hospital required patients to pay before seeing a doctor as early as 2019<\/a>. However, the implementation reportedly led to loud exchanges in waiting rooms, as patients argued they could not afford to pay before seeing the doctor, according to local news outlets.<\/p>\n