Using AI to help patients pay their medical bills, PayZen takes $232 million

The round included $32 million in equity and new $200 million credit warehouse

PayZen is a company that allows patients to pay off their debt in installments, rather than all at once. This comes as health spending in the U.S. increased by 7.5% in 2023 to $4.8 trillion, or $14,423 per person, a number that is predicted to be $15,074 in 2024. At the same time, ten of millions of people are going into medical debt, causing them to file for bankruptcy.

To combat this, PayZen pays hospitals upfront for patient invoices, and then it offers patients zero-interest, fee-free payment plans. Launched in early 2021, the company has achieved 6x year-over-year growth Over the last two years, along with 100% customer retention and 132% net retention. 

To continue this growth, and to expand into new markets, the company announced an oversubscribed $232 million Series B on Tuesday led by NEA, with full participation from existing investors including 7wireVentures, SignalFire, Viola Ventures, and others. The round included $32 million in equity, along with a new $200 million credit warehouse from Viola Credit and a syndicate of insurance companies.

This latest funding follows the $220 million round the company raised in November of last year.

PayZen works by offering patients a healthcare payment card they can use at any time for any health related expense, which is accepted anywhere debit cards are used; they can be used at any stage of care, from pre-procedure to post-procedure. Payment plans are 100% free for everyone, and have no service fees, no late charges, and never any interest on payments.

The company uses using financial technology, AI, and machine learning to generate healthcare payment plans tailored to each individual's budget and circumstances. This allows PayZen to automatically offer its payment option to the right patients at the right time and using the right engagement channel, fully automating the process.

The advantage for providers for using PayZen is that they are more likely to get paid: the company says its customers, which includes Geisinger, see a 50% increase in their collections rate thanks to its predictive modeling power. 

PayZen currently has deals with RMS, a Revenue Cycle Management vendor, and Vim, a digital health company that connects payers to providers at the point of care, which have allowed the company to partner with hundreds of hospital systems and thousands of patients.

In conjunction with the financing, Mohamad Makhzoumi, Co-CEO, NEA, will be joining PayZen's Board of Directors. Makhzoumi has more than two decades of experience at NEA, partnering with transformative healthcare startups across all stages of company-building.

"This latest round is the next step in our journey to remove financial barriers to care for patients," Itzik Cohen, CEO and co-founder at PayZen, said in a statement.

"We are honored to have found partners in both our investors and our health systems network that share the same vision for the future. This milestone, marked by a highly competitive and oversubscribed round, positions us to continue perfecting our platform and bridge healthcare's financial gap for good."