Why It’s Time for the Connected Healthcare Wallet

Administrations come and go promising healthcare reform, but it’s nimble and creative FinTechs that are making it happen, creating connected digital ecosystems that add value to healthcare programs with unified loyalty, incentive and financing options suited to today’s demands.

Speaking with PYMNTS’ Karen Webster for our Executive Insights Series – The Next Three Years, Lynx Co-founder and CEO Matt Renfro said he sees a near future where the disconnected, redundant payment cards we carry now can be replaced by a unified digital experience.

Renfro said Lynx is in the process of “having a foundational conversation with many different industry participants that touch healthcare, which is really the blocking and tackling of owning the financial and digital experience with their members, patients, consumers.”

The endgame there is a digital wallet that replaces the stack of insurance member identification cards, pharmacy discount cards and gift cards, as well as payment cards favored for earning points.

“Nothing stops the plan from reimagining the insurance ID card to also be the consolidated healthcare wallet,” he said. “Why would I carry a separate HSA? Why would I carry a separate Walmart gift card when I perform a healthy behavior? We provide sophistication from a card processing standpoint,” giving plans more flexibility in how these can all work together.

While saying it’s not exactly earth-shattering, that depends on how well these efforts pan out as insurers and health systems confront new digital-savvy competitors from Amazon to CVS to Walmart moving aggressively into healthcare with convenient multifaceted offerings.

“We are articulating to different distributors that you don’t need to outsource your patient or member financial experience to a white-label, single-sign-on experience built 30 years ago,” he said. “You can control and manage … a health savings account, a loyalty account, an incentive account, in the same experience where you’re investing the majority of your dollars.”

See also: FinTechs Look to Leapfrog Point Solutions and Reward Good Health

Embedded Economics

Viewed on a three-year timeline, it’s hard to imagine intractable healthcare issues falling before the smarts of a mobile app, but that’s the consumerization of healthcare at work.

With a suite of consumable programmatic application programming interfaces (APIs) that he called “very tech-friendly,” Renfro said he sees Lynx’s three-year mission as uniting the disparate elements of healthcare, from HSAs to loyalty, incentives and discount programs into a holistic experience that’s easy to use and administer.

“Future state, we’ve got that hard stuff handled for you, and we can embed it into where you’re investing the majority of your capital, whether that’s your mobile app or your website, and you won’t lose the eyeballs anymore,” he said. “I can purchase this HSA-eligible product or a healthy meal right alongside seeing if my doctor’s in-network” using the API-digital wallet approach.

Economics are another aspect, as Renfro said the API-connected path can turn the annual expenses of distributors into an annual “multimillion-dollar revenue driver.”

Noting that people are more engaged by far in FinTech tools than in healthcare apps, he said, “the bigger value to players in our space is if you can meet people where they are engaged and connect them to the healthy food, to the virtual care appointment, that’s worth 10 times more. It’s a profitability infusion of our business model where we’re not just reliant on interchange and traditional payment economics.”

Read also: Consolidating Point-Solutions to Adapt in a Changing Economy

The Power of the Consumer-Patient

In envisioning a more connected healthcare ecosystem with embedded finance, demand is increasing for solutions that make health insurers and providers more competitive with large consumer and financial brands moving into healthcare.

Renfro said many of the conversations he’s having are from providers wanting “Starbucks-like loyalty programs,” but how that gets done deviates from common business models now.

It’s appropriate for a three-year outlook as “those players who have extreme expertise for how consumers operate and engage and how they can increase basket size, I would assume that is going to make its way into more of the healthcare-focused behaviors,” he said.

Asked about the reality of making this happen over the next few years, Renfro said it won’t be simple, noting for example that “most Medicare Advantage plans will be giving members a debit card starting Jan. 1, 2023. It’s largely based [on] gift card infrastructure, not API-enabled best-in-class payment processing. It can be a confusing experience at point of sale.”

That’s part of the job confronting healthcare companies and their tech partners, and we will see an acceleration of efforts along these lines as more providers see the need for connection. It also suggests a tipping point for healthcare payments and account management on the horizon.

Renfro said “that consolidated healthcare wallet I was describing with the insurance ID card, you’ll probably see different pilots over the course of the next year or so. Maybe in three years, you have at-scale types of programs. I’ve had this belief that the ID card should be a hybrid payment mechanism, but that’ll be longer” due to regulatory issues between individual states.

Consumers will drive much of the change as they have with many digital transformations, leaning into solutions that add value and enhance experience. That becomes the way forward.

“I want to be able to shop for groceries, or I want a ride via Uber or Lyft to my local provider,” Renfro said. “Whether you’re a health insurer or if you’re a financial institution at the intersection of health and wealth … they’re investing a lot of money to try to consolidate where their consumers can maximize their relationship and to be sticky as possible.”