Niche pays off for Bakersfield's 'cowboys of fintech'

The logs lit up not five seconds in.

“It was two in the morning,” Chief Marketing Officer Luke Johnson said. “Pretty cool.”

Within three years HFD’s sales jumped more than 700 percent. The company now employs 81 people, 40 percent of them living in Bakersfield, offering a tech platform that guarantees financing options for patients who need money to pay for procedures such as vision correction or a root canal.

Good timing played a role in the company’s success, and so did the arrival of a lucky opportunity. But no less important has been HFD’s dedication to the mission of using data to connect consumers and lenders in a way no one had done before.

Others in the booming field of financial services technology, or fintech, make loans available online to consumers. But HFD appears to be the only company that promises to line up financing for anyone — no exceptions — who’s looking to make payments on elective medical and dental treatments.

That’s one reason why HFD was selected by New York-based partner Rectangle Health, a technology company that simplifies practice management for providers of health care.

Vice President of Product Alexa Skalandunas said Rectangle Health talked with a number of companies about setting up a “care now pay later” service. Only Healthcare Finance Direct could pull it off.

Plus, HFD had years of experience serving borrowers in health care, which she said gave Rectangle Health confidence. She added that something else strikes her about the company.

“They’re just a great group of people as well,” Skalandunas said. “They’re fun to work with and they’re passionate about what they’re doing, and they’re creative” in the financial solutions they bring to the market.

They’re also a distinct outfit that has turned a family investment into a niche play.

Johnson’s brother Tyler is the company’s CEO. Their childhood friend Jack Craven is vice president of business development. None of them is older than 33. Wearing boots to work at the former Bakersfield Californian building downtown, they call themselves the “cowboys of fintech,” a name given to them by a CEO they met in New York City.

More remarkable is its backlog of business: HFD has five times as many patients lined up as it’s able to service at the moment.

Its customers don’t apply for loans so much as they click a button on the websites of major health-care providers like Smile Direct Club, Hearing Life and Bosley. Because HFD’s product is embedded as an unbranded payment option on other companies’ websites, consumers don’t usually learn the name Healthcare Finance Direct until their first payment.

Health-care providers such as dentists benefit by getting greater volume of business they wouldn’t otherwise see. In return, they accept a discounted payment for their services.

There’s no application process for patients, as customer data flows from information already given to the provider.

Borrowers receive three loan options that work by balancing different factors in finance: down payments, number of payments and interest rates, which are set below credit card levels and tend to be uniform across customers. HFD collects a service fee on each payment collected.

Instead of taking on financial risk, HFD places loans with lenders that securitize the debt. The company then services the loans with payment options as simple as sending a text. It charges no penalty for pre-payment.

As Vice President of Business Development Jack Craven put it, Healthcare Finance Direct is “bringing the Netflix experience to health care.”

Things weren’t always that way at HFD. The company grew slowly after its start in 2009 by serving people whose credit had been racked by the Great Recession.

That was before the rise of fintech, back when lenders weren’t yet comfortable interacting with tech platforms. With a noble idea but relatively few customers, HFI sold as a money-losing venture in 2016 to the Johnsons’ father, who had programmed the company’s core technology.

Luke, now 28, and Tyler, 31, were right out of school. Craven had been in the military and worked as a firefighter. They hired people they knew in college, including from Cal State Bakersfield, whose engineering program has continued to be a source of employees for the company.

Other hires in the fields of finance and engineering have come from outside the area. Luke said HFD doesn’t yet have any local clients, but it’s hoping at least to generate additional employment in Bakersfield.

“Without a doubt we would like to keep a lot of those jobs here,” he said.