Bellevue’s CareCap believes in keeping life’s payments manageable

Photo by Rachel Coward

Photo by Rachel Coward

In a 2015 survey conducted by the Federal Reserve, 47 percent of respondents said it would be challenging to find the cash for a $400 emergency. For those households, a broken tooth, injured pet, or unexpected death could spell disaster for family finances.

The founders of CareCap have taken such numbers to heart. The Bellevue company offers an automated payment system for patients who can’t handle a lump-sum fee. Merchants include dentists, funeral homes, veterinary clinics, and aesthetic surgery centers.

“People don’t go into a transaction because they want to pay money,” said cofounder and CEO Nevil Hermer. “They do it because they need the service and they’re happy to pay if they can afford it.”

Founded in 2013, CareCap’s web-based system meets federal privacy standards and offers a pay-later capability. This mitigates a patient’s immediate burden while converting a service provider’s receivables and the need for traditional collections. The clinic pays CareCap a 1 percent monthly management fee.

“If you don’t have enough money on the credit card, or have an unanticipated need, all of these things are difficult for the patient because the only option if they don’t have credit is to either beg the doctor to let them pay over time, or walk out the door without receiving services,” Hermer said. “Frustrating for the patient because they can’t afford the service they need, and frustrating for the doctor because business is walking out the door.”

Clinics using CareCap can charge patients an initial payment to cover the cost of goods and then institute a payment plan to pay off the balance over time. The process is automated, so statements and payments are handled electronically through CareCap, eliminating the need for clinic staff to print and mail statements.

Investors are responding favorably to CareCap. The company has raised more than $4 million in seed and angel investing rounds since it launched, and now is gearing up for a big marketing push to enterprise businesses in the Seattle and Phoenix metro areas.

“The most fascinating thing we’ve found in our business is while we were helping patients get treatment and care they needed, we were helping doctors see fewer people walk out the door,” Hermer said. “What we were building was an incredibly loyal community between the patient and the doctor. We were providing a platform and opportunity for people to get what they needed when they needed it.”

31Facilitating payments over time, CareCap’s founders say, is becoming a popular facet of commerce.

“This is what’s happening at a very early stage in most industries. Banking is changing dramatically, how money is moved, how we pay for things,” said cofounder Roger Girard. “Being out in front of this, we’re part of a whole movement in how business is transacted for the merchants.”

Some providers extend a line of credit to patients, but lacking a system that handles credit checks increases the likelihood of getting stiffed. “People would make a couple payments and stop paying. That went on for years and years, and we didn’t really have a way of judging people to see if they would make payments or not,” said Dr. Dave Richardson of Kirkland Dentistry, a CareCap client. “I stopped doing that and would tell people to save up the money and then come in for the work, but then we started losing a lot of patients, nice people who legitimately can’t come up with the money for treatment, so it was costing me patients as well.”

Richardson started his Kirkland practice in 1985, and quickly had $280,000 of unpaid patient debt. Kirkland Dentistry opted to use a financing service for a while, but Richardson said patients were getting charged “amazing amounts of interest” and receiving harassing phone calls and letters from the finance company.

When Richardson started using CareCap in 2013, his staff referred a group of 30 to 40 delinquent patients to CareCap. The office collected the majority of money it was owed.

“It comes down to this: If you had to pay your dentist or credit card bill, which would you pay first?” Richardson said. “CareCap gave the billing legitimacy with a contract for a dollar amount and automated payments.”

In Richardson’s office, a patient has three payment options: cash, credit card, or CareCap. This change in payment offerings not only has decreased the amount of money owed to the business, but it has decreased the amount of time spent collecting money for services rendered.

“I had one person spending hours printing bills and stuffing envelopes and making follow-up calls, and that’s a thing of the past now,” Richardson said. “My receivables was at one time $280,000, and right now it’s down to $50,000. The problems of the past are long gone. We don’t have receivables now unless we’re waiting for an insurance payment, but there are no open accounts or cash pending.”

This article originally appeared in the March 2016 issue of “425 Business.”