The Importance of Tech-Based Underwriting in Healthcare

Welcome back to the Care.Fi Resource Centre! In the following paragraphs, we’re going to simplify and illustrate how and why tech-based underwriting is the future of healthcare finance. 

So let’s begin with the basics, shall we?

“What is underwriting?” we hear you ask. 

For the uninitiated, underwriting, in general, is the process through which an individual or an institution assesses and takes on financial risk for a fee. 

If you have read our previous blogs, by now you know what our product CareCred is capable of, and what its purpose is. As a cash flow-based lending platform, we are often asked how we determine that a healthcare provider or a goods supplier is credit-worthy.  Surely there must be risks to extending short-term financing to these parties? 

You are right - there are. This is where technology such as Artificial Intelligence (AI), Machine Learning (ML) and other hybrids that organizations such as Care.Fi utilize come of use.

Our product, CareCred, allows us as financers to carry out credit checks before disbursing the funds required by the healthcare provider or the supplier. You see, we have developed a flexible funding system through a set of composite parameters. We call this concept ‘surrogate underwriting’. But to fully grasp how surrogate underwriting works, let’s dive into how the traditional underwriting model works. 

Traditional Underwriting

Traditional underwriting relies on extensive research on the risk profile of the customer. As you could imagine, manual underwriting is an immensely time-consuming process and involves various steps and stages, especially for players in the healthcare sector. For example, the cumbersome process to analyze a risk profile involves –

• The collection of large volumes of data from financials like bank statements, and the accompanying bureaucratic obstacles

And then there’s the struggle of…

• Historical data going out of date and becoming irrelevant and redundant

In addition to this, when it comes to the ultimate challenge of having the funds disbursed, healthcare suppliers will have to cope with:

• The submission of collateral,
• The tedious process that hospitals must comply with repeatedly for their OpEx expenditure to be taken care of daily…

Phew!

This means that underwriters face a dilemma: 

• They must either accept the risk of incomplete or outdated data to process submissions quicker and cheaper,

Or, 

• they must accept higher costs and take the risk of losing customers for prolonged processing times in favor of more complete data

And this is where tech-based underwriting could change everything!

How Can AI/ML Ease the Process? 

To combat the gaps in traditional underwriting methods, AI/ML can significantly improve submission processing and free up valuable time for more productive tasks. For instance, various stages in the arduous underwriting process can be automated. 

Tech-based underwriters can:

• automate data collection, 
• aid the data extraction, filling of forms, or other repetitive and tedious tasks,
• speed up decision making and predict risk profiles with more objectivity and accuracy,
• constantly evolve the understanding of a risk profile with changes in the dataset.

By utilizing data from internal and external sources such as third parties, and other spaces like IoT claims histories, location, or historical data of business occupancy for property risk assessment, these models can learn from the past data fed into it, and predict the risk profile of new submissions. 

In essence, tech intervention can save a significant amount of time allocated to data analysis and can make more informed decisions since these models are likely to be more adept than we, as humans, might be at recognizing patterns in large data.

The space of fintech and underwriting has already achieved immense success worldwide and continues to evolve. 🌍

This unique fusion of healthcare and fintech is producing products that are going to leave a positive mark on the world. It’s tech innovations like these that have allowed Care.Fi to successfully carve a niche in a critical sphere of healthcare and financing. With faster data automation and fund disbursement, we know we’re on the way to making great strides in our cause of improving the country’s quality of healthcare.