Scratch Financial raises $35M for its "care now, pay later" model

Steven Loeb · September 20, 2022 · Short URL:

The company allows patients to sign up for plans to pay off their medical bills in installments

Nearly 1 in 10 adults, or roughly 23 million people, owe medical debt, including 11 million who owe more than $2,000 and 3 million people who owe more than $10,000. Medical issues also account for over 66% of bankruptcy filings.

This is bad for everyone, not just the patient, who might just opt out of getting care at all if they are worried about not being able to pay, but the provider as well, as they need to be paid for their services.

Scratch Financial's solution to this solve this problem is what it calls a "care now, pay later" product; it acts sort of like an Affirm for medical bills, allowing practices to offer their patients payment plans so they can pay their bills in installments, rather than all at once. 

On Tuesday, the company announced a $35 million in Series C funding round led by Norwest Venture Partners, with participation from Alumni Ventures, Companion Fund, Struck Capital, SWS Venture Capital, TTV Capital and others. This brings its total raised to over $108 million.

Founded in 2016, Scratch was originally designed help pet owners cover the cost of pet care, while also helping vets grow their revenues. In six years, Scratch covered the cost of healthcare for hundreds of thousands of patients and pet owners, and it now partners with 1 in every 3 veterinary practices across the U.S. and Canada.

The company began to expand its products to support human elective medical providers in 2020; it now covers bills for dental, vision & LASIK, chiropractic & physical therapy, primary care, and dermatology & cosmetic surgery.

After a clinic visit, patients can apply for financing directly from their mobile device, and get instantly approved. After the practice confirms and finalizes the payment amount in their dashboard, the company will direct deposit the full amount the patient owes to the practice's bank within two to three business days, minus Scratch's flat provider fee. 

Available plans for patients include Scratch Plan Bi-weekly, which totals five payments, the first of which is paid at the appointment, while the remaining four are paid every two weeks; there is also a 12 month and a 24 month plan, none of which have deferred interest and no prepayment penalies; some plans also have 0% APR. 

More than 12,000 practices now use Scratch's product, and the company says it is on track to have processed nearly $1 billion of patient payments by the end of this year. 

Scratch plans to use its new funding to develop new technology that will help medical providers better connect with their clients.

"Financial inclusion has always been a goal for our company—helping connect more people with transparent and personalized financing options to get the care they need for themselves or their loved ones,"John Keatley, co-founder and CEO of Scratch, said in a statement.

"I am incredibly proud of Scratch's evolution, and this new funding will be instrumental in helping us create new products and better experiences to redefine the end-to-end patient experience."

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