Criterion Ventures is launching a new venture that will adapt existing financial services and connect them with consumers through affinity groups to address the needs of the cash market of healthcare.
Currently, the healthcare industry is dominated by an insurance market. But sitting next to the insurance market is a $300 billion/year cash market for health care. This cash market lacks the rational pricing, products, services and intermediaries needed to deliver health care affordably and in a way that maximizes access. In the end, consumers are not getting the best value per dollar spent. By introducing and bringing to scale innovative products and services, and connecting them to consumers through existing affinity groups whose members are struggling with the impact of the cash portion of healthcare, we will be able to rationalize the market. By creating a rational market we will bring greater value to consumers for their healthcare dollars and increase access to care.
Innovative products and services are the key to rationalizing any nascent market. We will introduce needed products and services into the cash market for healthcare by adapting existing financial products and services so that affinity groups can take advantage of the benefits of those services in the healthcare market and can better leverage their own purchasing power. To achieve this, we will partner with banks and other financial services companies and reorient their products to serve the needs of a new customer base, groups of people using cash to purchase healthcare. A key to the successful introduction of innovative products will be working closely with the affinity groups to analyze their needs and customize solutions that offer individual configurations of our offerings connected to unique circumstances in that locality. We will work with a wide range of affinity groups, including large employers, unions, trade associations, and religious networks.
The business will draw revenues from four sources:
- Charging transaction fees to consumers who use our products
- Charging interest to consumers who take advantage of our lines of credit offerings
- Interest earned on deposits that we or our partners will hold for consumers
- Charging management fees to affinity groups for setting up their customized set of products and services.
Currently the limited competition in this field targets individuals with high interest credit offerings or by offering Health Savings Accounts through employers. Other companies are offering card services that streamline payment, usually targeted to the providers. We have not identified any company that offers a comprehensive suite of products that tie all of the options together. We also have not identified anyone using this model with affinity groups to take advantage of their purchasing power, to pool risk together as a way to offer affordable credit, and to lower marketing costs.