The CEO of AI-backed medical debt purchasing company Payzen believes payment plans could become part of America's expensive healthcare solutions, despite consumer rights advocates warning that they lack transparency in third-party financial contracts.
The company is just one in the sea of healthcare finance companies where executives are watching “accelerate” in conversations with cash-confined hospitals facing historic Republican-led healthcare cuts.
The cut, signed into law by Donald Trump, is expected to leave 17 million people uninsured until 2034. As these uninsured people struggle to pay for healthcare, the change is effectively a cut in hospital revenues and threatens facilities bound by closed cash.
“We believe most people want to pay their bills. They are decent people trying to take responsibility,” said Payzen CEO Itzik Cohen. “It's not a collection issue, it's an affordable issue.”
Payzen's solution is to offer payment plans with interest up to 60 months.
“If we extend our payment plan to three, four or five years, more people will pay their bills and pay them successfully,” Cohen said. “What we're trying to do is make it affordable.”
Payzen's business model relies on discounted prices on purchasing debts from hospitals, and is supported by groups of venture capital such as New Enterprise Associates, a New York-based company, such as Dr. Scott Gottlieb, the president's first-term Food and Drug Administration (FDA) committee member. Nea and Gottlieb have postponed their interview request.
Pazen could pay just 10% and 90% of the bill's value, according to a 2022 contract with the University of Texas Medical Branch Health (UTMB) in Galveston obtained by the Guardian, depending on AI-supported forecasts on whether patients will pay. The company then collects the full amount of the bill from the patients.
That same agreement shows Payzen will charge hospitals a “platform fee” based on the transaction.
“Payzen will charge a 5% platform fee to support outreach, registration, underwriting and services for all payment plans.”
Cohen declined to comment on platform pricing, saying the 5% figure “is not accurate and does not reflect how pricing works.”
Payzen is part of the corporate industry, some of which provide interest-bearing funding, helping cash-confined hospitals increase liquidity issues.
“This is not a new business. It's based on an old model,” said GE Bye, professor of healthcare finance at the Carry School of Business at Johns Hopkins University. “The hospital will bring unpaid bills to the financial institution, sell these bills to the financial institution, and the financial institution will provide them [the hospital] Money soon…it changes ownership. ”
The main facility among hospitals facing liquidity issues is rural facilities. Of these, 153 have closed or lost major hospital services since 2010. For these facilities, government cuts are expected to result in a revenue reduction of $87 billion.
Over the past decade, insurance companies have increasingly pushed costs to patients. From 2006 to 2025, the average deduction – advance payments that must be made before insurance begins – increased from $303 to $1,562 per person, over 352% of inflation.
These payments represent difficulties for many Americans, with over a third of them unable to afford an unexpected $400 cost. Unpaid, they turn into bad debts on the hospital's balance sheet. In 2022, people with health insurance became the largest group of patients with hospital debt. This is a change in the industry's oceans. And these liabilities, known as “patient liability” or “self-payment,” are extremely difficult for providers to collect.
Companies like Payzen come in and pay the hospital before bills that can suffer on the hospital's balance sheet and can become bad debts.
“Many people have $2,500, $10,000 due to high deductible health plans. [deductibles] For the sake of their families, they really fund a lot of care,” said Richard Grandling, Chief Mission Impact Officer at the Healthcare Financial Management Association (HFMA).
Consumer advocates question the transparency of such transactions among patients.
“I don't think there's any transparency for patients who just got this account at a fraction of their face value,” said April Kuehnhoff, senior lawyer at the National Consumer Law Center. UTMB Health confirmed that Payzen has not told patients that they purchased debts at a discount.
“If the hospital was willing to accept this reduction, did we have a discount that patients could have access to by paying directly to the hospital instead of paying the full amount to this third-party company?” Künhoff asked.
Advocates also argue that low-income patients, who are often eligible for the discounted care they require by the federal government, are at risk of being caught up in payment plans. UTMB Health has confirmed that Payzen does not screen patients for what is commonly referred to as “charity care,” despite running “soft” credit pulls and debt and income information.
“UTMB will direct Payzen to all patients and discuss the terms of the specific contract with Payzen,” a hospital system spokesperson said. “We provide basic FAQ information, but the relationship is between the patient and Pazen.”
While Payzen relies on debt purchases, Cohen opposes the label “debt buyer.” Such companies were highlighted last week in John Oliver's tonight segment.
“To call it a debt purchase is frankly a shame for the patient,” Cohen said. “When you buy something [buy now, pay later] Approach, is it a debt purchase? You are provided a payment method for your purchase in a convenient and integrated way to extend your payment, so you can afford it. ”
Cohen said his company has not used “extraordinary collection practices” such as filing debt law suits and objects to describe Pasen as “buy now, pay later.”
“We've never actually called “buy now, pay later” for health care or “care now, pay later.” ” In fact, Cohen wrote a 2021 blog post on the company's website. He later revealed that his company had moved beyond that explanation.
Cohen said Payzen runs a “pilot” to get pre-qualified charity care accounts, but only 2-3 out of the approximately 100 participating healthcare providers. Some states require hospitals to screen patients for charity.
If hospitals continue to struggle to collect money from patients, Bai noted that “hospitals engage in even more aggressive mechanisms.”
“For example, all prepayments – no payments, no services – this happens,” Bai added.
UTMB Health has enacted one such policy. This was presented as a “Masterclass in Revenue Optimization” in a Payzen Sponsor report. The hospital had already requested that patients be paid before they could see a doctor as early as 2019. However, local news outlets say the implementation led to a major exchange in the waiting room as patients claimed they could not afford to pay before they could see their doctors.
In 2023, UTMB publicly reviewed its payment first policy and signed with Payzen to provide patients with long-term pay plans through an AI-backed debt purchasing model.
“If implemented thoughtfully, preservation payment policies can significantly increase collections without avoiding care avoidance,” says a Payzen-sponsored report.
