Steadily increasing deductibles mean American consumers pay an ever-larger slice of their health-care bills out of their own pockets.
That may be a bummer for family finances, but it is exactly what Bill Marvin and Chris Seib banked on in 2004 when they founded InstaMed, a payments network for the health-care industry based in Philadelphia and Newport Beach, Calif., after a 2003 federal law created Health Savings Accounts, which allow consumers to save pre-tax dollars to pay for health care expenses.
It was immediately clear, InstaMed chief executive Marvin said, that the money flow in health care was going to completely change if deductibles went to more than $2,000 dollars and the consumer had to pay the first claims because of the deductible.
Millions of Americans are now covered by such plans.
"Providers weren't set up for that," said Marvin, who worked in Accenture's Philadelphia office in 2003. Seib, now InstaMed's chief technology officer, worked for Accenture in California. Both specialized in connecting insurers and providers electronically.
"There was still a lot to do to get claims filed electronically in 2004," Marvin said "Even doing a simple thing like going to a website and checking eligibility was a big deal."
Undaunted by those challenges, Seib and Marvin founded InstaMed and jumped ahead to the payments piece.
The son of a retired cardiologist and a nurse who grew up in Wynnewood, Marvin said he always identified with the struggles health-care providers have getting paid.
In the simplest terms, InstaMed allows doctors' offices to accept card payments, in person and over the internet. It also handles electronic payments to doctors from insurers. But its services come with an extra dose of security because the payments are linked to health records that include social security numbers, a highly valued commodity among cyber criminals.
That gamble of tackling health payments more than a decade ago, when the industry was still mired in paper, appears to be paying off.
InstaMed's customer base grew 50 percent last year, to include 75,000 of the 180,000 legal entities in the United States that make or receive health-care payments, Marvin said. While that does not mean InstaMed handles all payments for those entities, the company is benefiting from network effects, Marvin said.
Philadelphia-area customers include Virtua Health in South Jersey and Main Line Health, both of which are adopting InstaMed as part of their installation of new electronic health records systems from Epic Systems Corp.
Tom Buckley, Virtua's vice president for revenue cycle, said data security and ease of payment for patients were key factors in Virtua's choice of InstaMed.
"They understand where the market's going," Buckley said. "They understand the motivator for everybody is trying to make it as easy for people to pay as you possibly can."
At Lehigh Valley Health Network in Allentown, which has been using InstaMed since it went live with Epic in February 2015, ease of payment means that patients at certain locations can check in at a kiosk and pay their co-pay at the same time, said Mary Shorkey who works in information systems at Lehigh Valley.
All the payments are recorded directly in the patient's electronic health record. Previously, manual data entry was required to join the payment information with the clinical data.
"It's streamlined and more accurate, a far better process," said Shorkey, who was scheduled to speak at InstaMed's annual user's conference Tuesday in Philadelphia.
Marvin declined to share annual revenue for InstaMed, but he said that it processes about $3 billion a month. It makes money on the consumer-payments piece, charging fees that are similar to those of credit card companies or other payment processors like PayPal and Square, Marvin said.
Marvin said the company is under no pressure to sell.
"We've got a lot of capacity and a lot of freedom to take this business to where it deserves to go," he said.