Healthcare Might Look Good in Plaid

By KIM BELLARD

I don’t
really follow FinTech — I can’t even keep up with HealthTech! — but it caught
my eye when Visa announced that
it was acquiring FinTech company Plaid for $5.3b; a 2018 funding round valued
the company at $2.65b.  A 100% increase in valuation within a year suggests
that something important is going on, or at least that people think something
is.  

I suspect
there may be some lessons for healthcare in there somewhere.  

For those
of you who are equally as unfamiliar with FinTech’s terrain, Plaid has been described as
the “plumbing” that supports many other FinTech companies. 
Launched in 2013, one in four people with a U.S. bank account are now believed to
use Plaid to connect with 2,600 FinTech developers connected to more than
11,000 financial institutions.  Its customers include Acorns, Betterment,
Chime, Coinbase, Gemini, Robinhood, Transferwise, and Venmo.  Plaid claims
it connects with 200 million consumer accounts. 

What
terrifies Visa and rival Mastercard is that the future may be less card
(credit/debit)-centric.  In 2015, only 18% of
internet-connected consumers worldwide had used a FinTech app to move money; in
2018 75% had.  Plaid is one of the services that allow for such
movement.  

Rival
Mastercard hasn’t been sitting idly; it had previously acquired FinTech
companies VocaLink for
$1b in 2016 and Nets for
$3.2b in 2019, and had been an investor in Plaid.  It has been trying
to describe itself as
a “multi-rails payment company.”

In a call
with analysts, Visa CEO Al Kelly admitted:  

We are
increasingly trying to move from being strictly focused on payments, to being
focused on the movement of funds for any purpose around the world.  As
big as Visa is in terms of the bank accounts that we can reach, we’re not as
big as we need to be if we want to be a formidable player in money movement
around the world.

Techcrunch says that
what Plaid’s APIs do “is akin to what Stripe does for payments, but
instead of facilitating payments, it helps developers share banking and other
financial information more easily.”  It adds that, with the
acquisition, Visa “now has a view into scads of high-growth, private
companies that are reinventing the world in which Visa operates. Buying Plaid
is insurance against disruption for Visa, and also a way to know who to
buy.”

CEO Mr.
Kelly praised the acquisition, noting: “Plaid opens up new market opportunities by significantly
expanding Visa’s network capabilities.”  Mr. Kelly predicted that the acquisition would “expand
a new financial data network” and  add “new growth in core, as we work
more closely with fintechs.”  

Similarly,
Visa President Ryan McInerney told Fortune:  “Fintechs
are clearly reshaping financial services, and Plaid is unquestionably the
leader in this space…It’s something that positions Visa for the next decade
and beyond.”  

Meanwhile, healthcare
struggles to share our data even between healthcare institutions using the same
platforms, can’t seem to uniquely identify us, and is always trying to figure
out who to chase for how much payment.  It’s slow, inefficient,
inaccurate, and very expensive.  

There are companies
like Noyo that are trying to
change that.  It describes itself as “modern architecture for health
insurance,” and “the first API integration platform for health
insurance.”  Crunchbase even went so far as to say Noyo
is “a sort of Plaid for health insurance data,” which Noyo liked so
much that it quotes that description on its home page.  

Founded in 2017 by veterans of troubled benefit software company Zenefits, Noyo has raised $4
million, and is still in the early stages of partnerships with carriers. 
Similar to Plaid’s strategy, Crunchbase said “Noyo wants
its service to become a platform upon which other companies can build, but it
doesn’t want to write all the apps.”  

Healthcare doesn’t talk much about platforms, or at least it
didn’t until the Mayo Clinic made a splash this past December by hiring the well-known health tech guru John Halamka, MD, as
president of the Mayo Clinic Platform.  Mayo describes its platform as
“a strategic initiative to improve health care
through insights and knowledge derived from data. The technology platform will
elevate Mayo Clinic to a global leadership position within digital health
care.”

Mayo just
announced
 its first platform initiative, the
Clinical Analytics Data Platform, “a
strategic initiative to improve health care through insights and knowledge
derived from data.”  As part of the announcement, Dr.Halamka said: 

Platform business models have been a force of disruption in
many sectors, and the rapid digitalization of health care is affording us an
unprecedented opportunity to solve complex medical problems and improve lives
of people on a global scale

Mayo is certainly thinking globally, and it recognizes the
opportunities that digital health affords, but I’m not sure that either it or
the rest of healthcare see the threats, and opportunities, that platform models
present.  I’m not even sure that many in healthcare even understand what
“platforms” in healthcare might look like, Noyo
notwithstanding.  

There certainly don’t seem to be many established healthcare
companies that are as determined to be part of disruption in the same way that
Visa and Mastercard are.  

Credit/debit cards are well-entrenched in most consumers’
lives, especially in developed countries.  Mastercard and Visa are huge,
profitable, and seemingly indispensable.  Despite that, FinTech
solutions have sprung up to reach more consumers and reduce dependencies on
networks like Visa and Mastercard.  They’re not waiting to be toppled;
they’re buying “insurance against disruption.”

Healthcare has a data problem.  It is too fragmented,
too siloed, too complicated, and too difficult to use and to move.  Its
volume is growing exponentially, with more types coming from more sources.  At the same
time, more of the payment burden is falling directly on consumers, and they’re
not happy about it.  

In other words, it is ripe for disruption.  

Disruption
in healthcare won’t be easy, and it won’t come quickly.  Then again,
credit/debit cards aren’t going away anytime soon either, but Visa and
Mastercard are preparing for a future in which they might, or at least in which
their role is greatly diminished.  

Healthcare organizations better start buying insurance for disruption that doesn’t look much like the current system.  The platforms are coming.

Kim Bellard is editor of Tincture and thoughtfully challenges the status quo, with a constant focus on what would be best for people’s health.

The post Healthcare Might Look Good in Plaid appeared first on The Health Care Blog.

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