Ann Kaplan is building a fortress in a land of giants. Her firm, Medicard Finance Inc., is now pulling together the final pieces of a strategy aimed at making Medicard — a provider of consumer loans for medical procedures not covered by medicare — an even more entrenched player in a sector dominated by the banks’ all-purpose credit cards.

Later this fall, Toronto-based Medicard will become a subsidiary of a new entity, iFinance Canada Inc. This new company will not only access funding through banks, it will become a bank in its own right, issuing term deposits to sophisticated investors whose funds iFinance will use to finance medical loans. It will repay investors from the interest it charges on these loans.

iFinance will own an array of subsidiaries sprawling across the private medical space, from cosmetic enhancement to veterinary procedures to infertility treatment. And, more than just a lender, the firm aims to become the central service provider in its niche. “My goal is to create an entity that someone like GE Capital can’t just come in and copy,” says Kaplan, her firm’s president and CEO. “They don’t have the infrastructure or understanding of the market. It would be better for them to buy us.”

This was never part of any master plan. When Kaplan first considered entering the consumer-financing business in 1995, she was a single mother in her 30s who had moved from Vancouver to Victoria to take care of her dying father. Kaplan had no experience in financing. But she’d been raised by doctors in a family in which concern over the health-care system was ever-present. She remembers the frustrations of her father, a radiologist who provided free ultrasounds because the government wouldn’t fund them: “He kept saying, ‘They’re going to need private clinics. There’s so much demand.’”

When Kaplan launched Medicard in the mid-1990s, Ottawa was in full deficit-fighting mode and slashing health-care funding. She could only wonder how patients would pay for the types of procedures that governments no longer covered. It was this obvious need that led Kaplan to launch Medicard, although initially it financed only cosmetic procedures. With demand for these rising by 35% a year, Medicard’s revenue skyrocketed from $1 million in its first year to $1 million a month in its second.

When the firm wasn’t growing up, it was growing out — diversifying into every niche imaginable. Medicard expanded into cosmetic dentistry (issuing a credit card called the DentalCard) and veterinary procedures (PetCard). It launched The New You Show, a consumer show (now on indefinite hiatus) about cosmetic procedures, and several websites, including and

Today, Medicard offers financing to patients via almost 6,500 affiliated doctors across Canada, and has revenue of $25 million. Although cosmetic procedures account for almost 60% of its business, the fastest growth is in medically necessary procedures such as MRIs, drug rehabilitation and infertility treatments.

Kaplan’s diversification drive, however, didn’t extend to her own sources of financing — at least, not at first. During Medicard’s startup, Kaplan relied heavily on her primary lender, the Bank of Montreal: “I built the company the really hard way, where I kept ownership and funded it through large financial institutions. It wasn’t seed capital from an angel investor, where I would eventually lose control.”

For a time, this seemed to be a sound strategy. Sure, it would limit Kaplan’s potential for a lucrative cash-out from her firm. But, as long as the banks provided stable, low-cost financing, she was willing to stick it out and wait for better terms.

Then, in 2008, the credit crisis struck. Like so many other firms, Medicard was suddenly frozen out of new credit and facing a doubling of financing costs. “We were right in the one area that you don’t want to be in,” says Kaplan. Although Medicard kept operating without interruption, it found additional financing impossible to come by for at least a year, while Canadian banks waited to gauge the impact of bank collapses in the U.S.

In the end, Canada’s conservative banking practices saved the day, says Kaplan. But she had learned a blunt lesson: Medicard couldn’t rely on just one or two funding sources. “I said, ‘Holy cow! What if something like that happens again?’” says Kaplan. “I didn’t want to be dependent on one company, because then you’re really just an arm of one bank.”

So began her mission over the past two years to renegotiate and diversify Medicard’s financing pool. “I’ve been in front of I don’t know how many people,” says Kaplan. Her persistence paid off. Last year, after producing a mountain of paperwork responding to every risk-averse question a lender might have, Medicard raised $76 million in fresh financing from BMO, Sun Life and Laurentian Bank — a monumental feat in a still tight market. The credit crunch also inspired Kaplan to create iFinance so her firm would be less vulnerable to the vagaries of bank lending practices.

Chris Wallace, managing partner of Second City Capital Partners, a Vancouver-based private-equity firm, says that for independent, non-bank lenders in this sector: “The challenge is whether the big banks are just going to own the entire industry. Will there be room for the independents, or are the banks going to move in?”

While Medicard is vastly bigger than any other independent, its revenue is a drop in the bucket next to the $32 billion Canadians spend per year on privately funded medical products and procedures. Most consumers needing financing for these use a general-purpose credit card or a bank loan. The banks don’t target this market directly — although they could at any time.

Yet, Wallace says, it wouldn’t make sense for the banks to compete directly against Kaplan, given the legwork she has done to sign up a large network of private clinics. Why not just acquire Medicard instead?

Kaplan is counting on this logic, and has already started the ball rolling toward an eventual sale to a strategic investor or to an initial public offering. She predicts that Medicard’s revenue will double within five years, and even can see her firm providing payment options within the public health-care system. “If I could have the ear in politics to provide loans, where the government worked with us, I think we could play an important role in Canada,” she says. That would blow open the doors to yet another market, and make her firm an even more attractive acquisition target.

Then again, she might just see how far she can take the business on her own. As health care continues on its path to multiple tiers, Medicard’s market is limited only by Kaplan’s ambition. And she has plenty.

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