Anyone who has dealt with a significant medical event knows that the claims and payment process can be brutal. If there ever was a payment process in need of a shake-up and some transparency, this one is at the top of the list. There are few other scenarios where the buyer (patient) has so little control, influence or understanding over what they are buying. Healthcare expenses top $3 trillion annually in the U.S., is growing rapidly and is increasingly being funded by consumers themselves. There is opportunity in all of that dysfunction. This is why last week’s announcement that JP Morgan Chase spent half a billion dollars on healthcare payments processor InstaMed makes sense, and also supports other ventures the bank has made including Haven, the joint venture with Amazon and Berkshire Hathaway:
This is the bank’s biggest takeover since it bought investment bank Bear Stearns and the retail banking assets of Washington Mutual in 2008.
So the commitment is not just an interesting one, but JPMorgan backs up its importance because it is willing to commit so much to the deal.
The deal will bolster the bank’s payments division and push it into what it said was one of the fastest growing areas of the business of moving money throughout the financial system.
Right now, the bank already processes more than $6 trillion payments per day.
InstaMed is a Philadelphia-based healthcare payment network.
And, the term network is the key, because this network connects providers, payers, and consumers on one platform.
This platform will expand the portfolio of payment services under JPMorgan’s umbrella and thereby expand the linkages that the bank now provides.
The deal gives JPMorgan the chance to add a new, niche business sector to its wholesale payments business, something the bank has steadily expanded in recent years.
Over the next decade, this space is expected to at least double as it ties together hospitals and doctors’ offices, insurers and patients.
InstaMed processed almost $100 billion in healthcare payments in 2018.
Mr. Dimon and JPMorgan are moving rapidly to build the bank into a “new” Modern Corporation, an organization whose foundation is information technology and whose business model is constructed around platforms and networks.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group