Opinions expressed by Entrepreneur contributors are their own.
You’re reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.
When it comes to the financial stability of healthcare providers in the MENA region, there is one particular issue that has long proven to be a pain point for them: delayed and/or rejected insurance claim payments. In fact, as per research done by UAE-based fintech firm Klaim, it takes between 112 and 270 days for healthcare insurers to receive cash for services that are only available through submitted medical claims. “Additionally, between 15% and 30% of medical claims in the UAE are rejected by insurers and must be resubmitted for processing,” says Karim Dakki, co-founder and CEO, Klaim. “Often when claims are rejected, the second submission will be ignored. Insurance companies limit entry into their network and negotiate very low rates- a reality that further harms healthcare providers already having to deal with payment delays and complex medical claims processing.”
Klaim
Launched in 2019, Klaim aims to address this issue by becoming an intermediary in the traditional payment cycle. Through this approach, KLAIM then enables quick cash replenishment of a medical entity’s insurance claims. But before delving into how this is achieved, it is good to understand the gravity of the core problem. “The payment of insurance claims is a cumulative process, which means it may take up to two years before some claims turn to cash,” explains Dakki. “This rate of rejection of medical claims makes it difficult for the healthcare industry to sustain its growth and meet analysts’ high expectations.” In fact, the ripple effect of what seems to primarily be a finance-related issue for medical firms, is one that can be directly felt by the patients too, says Dakki. “Many healthcare providers, especially small ones and hospitals who can’t access business loans, are facing persistent cash flow challenges that threaten their existence, and, sometimes, put the patients at risk,” he points out.
By becoming an intermediary in the traditional insurance claim payment cycle, Klaim enables quick cash replenishment. Source: Klaim
The good news, however, is that this problem is solvable. “Although 15%-30% of new claims and 15% of resubmitted claims are rejected, 86% of these claim denials can be avoided,” says Dakki. “The lack of better managerial and processing systems is still causing healthcare providers to lose revenue, contributing to the overall cash flow problem.” And this is exactly where his enterprise’s offering comes in. “At Klaim, we provide access to working capital and a better claim management platform, all under one umbrella,” explains Dakki. “Our objective is to help healthcare providers get paid faster for their medical claims. We believe the only way to do this is to have a combination of technology, a claim management platform with automation, and also extend working capital to healthcare providers.”
The first step in this combined process involves healthcare providers to create an account with Klaim, following which the entity’s financial performance will be evaluated. After that, once a healthcare provider signs a contract with Klaim, it becomes eligible to receive medical claim payments in cash within seven days. Here, Klaim charges a processing fee, which is calculated as a percentage of the value of a given claim. “We use technology to assess and buy claims that have a very good chance of being paid by the insurer (low-risk claims), and typically reject ones that don’t have such chances,” explains Dakki. “With this advanced payment system, healthcare providers can cash in on their medical claims quickly, giving them the positive cash flow and working capital they need to support growing operations.”
Klaim offers a combination of technology, a claim management platform with automation, and also extends working capital. Source: Klaim
But how does Klaim ensure its own profitability amid this process? “When the insurer is ready to pay, the money is finally recovered by us,” explains Dakki. He then goes on to explain the company’s three main sources of revenue. “As a software as a service (SaaS) provider, there is a subscription fee that is paid for accessing Klaim’s software,” he explains. “We also charge a flat fee or percentage on billing revenue when the healthcare providers completely outsource the claims collectivity to us. And, finally, we charge a receivable purchase fee, which is a typical discount on the claim nominal value.”
Three years into the business, Dakki and his team have big plans for Klaim’s future. For one, they hope to deploy at least US$50 million of capital to 50-75 healthcare facilities in the UAE alone. In the years to come, the firm also has plans to utilize another $200-300 million in Saudi Arabia as well, in a bid to “become the ATM of healthcare providers in the MENA region.” A major step towards that dream was realized when Klaim signed a memorandum of understanding (MoU) with Alkhair Capital Saudi Arabia, a financial institute licensed by the Saudi Arabian Capital Markets Authority, in January 2022. The MoU between the two entities has led to the launch of investment products worth $50 million to better support healthcare service providers in the MENA region. “The growth and prosperity of the healthcare sector depend on the financial stability of healthcare providers, and we are pleased that through this partnership, we can facilitate the collection, provide the necessary cash flow and help more healthcare providers achieve this stability,” says Dakki. “So, our objective now is to deploy the maximum amount of this capital as quickly as possible within the largest number of centers first in the UAE, then Saudi Arabia and Oman.”
And with over 190 healthcare providers already on its platform (and not to mention having already processed claims worth $670 million), Klaim seems to be all set to flourish as an enterprise- it’s probably only a matter of time!