Healthcare Banking Unit Economics

This is Part 3 of a 3-part series on neobank infrastructure for healthcare. Part 1 covered FBO accounts. Part 2 analyzed the partnership decision.

I kept building spreadsheets expecting the unit economics to look like consumer fintech. They never did. Not once. The compliance costs were too high, the sales cycles too long, and the customer acquisition math worked backwards from everything Y Combinator blog posts promised. Then I stopped trying to force the numbers into someone else's framework and let the data from 777 dental practices tell its own story.

What came back was a financial model that traditional banks cannot serve profitably but vertical neobanks can dominate. The distinction matters because it means healthcare banking is not a niche play on an existing model. It is a different model entirely.

Healthcare practices generate revenue differently than consumers. A traditional bank makes money on the spread between what it pays depositors and what it earns on loans. Average net interest margin: 2-3%. The problem is that practices maintain higher cash balances but lower loan utilization than typical small businesses. High cash, low loans. That is a terrible combination for traditional banking margins. Fee income helps a little. Traditional banks pull $150-300/month per small business account through maintenance fees, transaction fees, and service charges. But healthcare practices have higher transaction volumes and specialized service needs that can command premium pricing if someone actually builds for them.

Neobank revenue models for healthcare look different across every channel. On interchange, the average practice processes $50k-200k monthly in card payments. Consumer neobanks capture 0.5-1.5% interchange on consumer spending. Healthcare neobanks capture 0.8-2.1% on practice payments because average transaction values run higher. On subscriptions, healthcare practices already pay for specialized software so they are comfortable with monthly fees. Consumer neobanks charge $5-15/month. Healthcare neobanks charge $50-500/month because that is business software pricing. On premium services, consumer neobanks have limited fee opportunities beyond interchange. Healthcare neobanks can charge for professional license verification, compliance monitoring, and practice management integration.

Customer acquisition cost is where the model diverges hardest from consumer fintech. Consumer neobanks spend $50-150 per customer through digital marketing with sales cycles measured in days. Decision maker is one person. You need hundreds of thousands of customers for profitability. Healthcare practice acquisition costs $300-1,200 per practice through direct sales and referrals. Sales cycles run 3-6 months because the decision involves the practice owner, office manager, and accountant. But you only need hundreds of practices to reach profitability.

CAC breaks down by practice segment based on our acquisition experience across different practice types.

Lean Boutique Practices (less than $10k monthly spend) cost $300-500 per practice to acquire. Primarily digital and referral-driven. 3-4 month sales cycle.

Scaling Practices ($10-25k monthly spend) cost $500-800 per practice. Mix of digital and direct sales. 4-5 month sales cycle.

Strategic Growth Practices ($25-50k monthly spend) cost $800-1,200 per practice. Primarily direct sales and industry events. 5-6 month sales cycle.

Enterprise Practices ($50k+ monthly spend) cost $1,200-2,500 per practice. Relationship-based enterprise sales. 6-12 month sales cycle.

Lifetime value is where healthcare banking economics become extraordinary. Consumer neobanks retain customers 2-4 years at $5-25/month, producing LTV of $120-1,200 per customer and LTV/CAC ratios of 2-8x. Healthcare practices change banks rarely. Relationship duration runs 5-15+ years. Monthly revenue per practice ranges from $200 to $2,000+. Service expansion covers banking, lending, insurance, and practice management tools. LTV runs $12,000-240,000+ per practice. LTV/CAC ratios: 20-200x.

Breaking that down by segment:

Lean Boutique Practices generate $200-400 monthly revenue over 5-8 year relationships. LTV: $12,000-38,400. LTV/CAC: 24-77x.

Scaling Practices generate $400-800 monthly over 7-12 years. LTV: $33,600-115,200. LTV/CAC: 42-144x.

Strategic Growth Practices generate $800-1,500 monthly over 8-15 years. LTV: $76,800-270,000. LTV/CAC: 64-225x.

Enterprise Practices generate $1,500-5,000+ monthly over 10-15+ years. LTV: $180,000-900,000+. LTV/CAC: 72-360x.

Revenue per practice dwarfs consumer banking. Average practice card volume runs $75,000/month at a 1.2% average interchange rate, yielding $900/month in interchange revenue alone. Account fees add $200-650/month across business account maintenance, specialized healthcare features, and integration/API access. Premium services contribute $275-700/month for compliance monitoring, license verification, and practice management integration. Lending products layer on $300-3,300/month from equipment financing revenue shares, working capital facility fees, and practice acquisition financing.

Total monthly revenue per practice:

Lean Boutique: $200-400/month. Scaling: $400-800/month. Strategic Growth: $800-1,500/month. Enterprise: $1,500-5,000+/month.

Compare that to consumer neobanks generating $5-25/month per customer.

Traditional banks cannot compete because of structural limitations at every level of their cost structure. Branch overhead averages $200k-500k annually per location and healthcare practices do not value physical branches. Generalist bankers cannot provide healthcare-specific expertise. Healthcare compliance costs cannot be amortized across consumer accounts. Legacy systems cannot integrate with practice management software or provide real-time APIs.

The revenue model limitations compound the problem. Traditional banks rely on net interest margin, but practices hold high cash and take few loans. Traditional banks need millions of customers to achieve profitability while healthcare banking can be profitable with thousands. Traditional banks charge low fees to compete with free consumer accounts while healthcare practices expect to pay for specialized business services.

Service capability gaps are the final barrier. Traditional banks lack healthcare industry knowledge, cannot integrate with practice management systems or insurance networks, and do not offer products like professional liability insurance, practice acquisition financing, or compliance monitoring.

Vertical-specific banking wins on economics. Higher revenue per customer. Fewer competitors. Stronger relationships that create moats traditional banks cannot replicate. Expansion opportunities into lending, insurance, and practice management that improve lifetime value. On the operational side, deep expertise in healthcare regulations creates efficiency advantages. Industry partnerships with practice management software companies, professional associations, and service providers create defensible distribution. Solutions designed for healthcare practices from the start outperform solutions adapted from consumer needs.

The financial model comparison makes this concrete. A traditional bank serving healthcare spends $1,000+ per practice on generalist sales, generates $150-300 monthly in limited service revenue, produces $9,000-36,000 LTV, and achieves 9-36x LTV/CAC. A vertical healthcare neobank spends $300-1,200 per practice on specialized acquisition, generates $200-2,000+ monthly from a comprehensive service suite, produces $12,000-240,000+ LTV, and achieves 20-200x LTV/CAC.

Our unit economic analysis revealed a critical insight that changed everything: the highest-margin opportunity was not holding healthcare money. It was helping practices make better decisions about money. Banking infrastructure required $2-4M in development plus compliance costs, 40-60% revenue sharing with banking partners, complex ongoing regulations, and delivered 15-25% gross margins. Decision intelligence required $200k-500k in development, retained 85-95% of customer revenue, faced simpler software regulations instead of banking regulations, and delivered 75-90% gross margins.

The pivot from CLIN banking infrastructure to Dentplicity decision intelligence improved every metric. Time to market dropped from 18+ months to 6 months. Development costs dropped from $2M+ to $200k. Revenue margins jumped from 25% to 85%. Customer acquisition shifted from complex banking education to a direct value proposition.

Healthcare banking unit economics favor vertical-specific approaches, but the model you choose within that vertical matters more than most founders realize. SaaS subscriptions plus premium services often outperform pure interchange models. Different practice types have dramatically different LTV/CAC ratios. Unit economics often favor integration partnerships over infrastructure development. And vertical focus creates expansion opportunities that compound lifetime value in ways horizontal platforms never achieve.

The entrepreneurs who understand healthcare practice economics, not banking economics, will capture the returns available in this market.

Data sources: CLIN customer analysis (777 practices), healthcare banking partner negotiations, practice revenue analysis, traditional bank healthcare service benchmarking