How Can I Work With My Bank to Reduce My Costs and/or Administration?

By June St. John, CTP, MBA, senior vice president, Wachovia Bank

Effectively leveraging banks´ Treasury and payments solutions competencies, rather than reinventing the wheel, is a great way to save money and concentrate on your company´s core competencies in this increasingly complex and financially risky industry. Adopting solutions developed by banks increases efficiency, takes cost out of your financial supply chain, improves cash flow and days in accounts receivable, and improves customer service as higher percentages of health care costs are shifted to patients. Here are several scenarios illustrating how the health care industry is innovating and leveraging new financial solutions to address today´s challenging environment:
 •  A local hospital needs to reduce the personnel hours required to post payer receivables coming in as paper benefits explanations. It adopts a solution from its bank that automates this receivable processing, freeing up staff hours, reducing processing errors and increasing patient satisfaction. Adopting solutions developed by the banking industry is going to transform health care institutions´ cost structure and how they cooperate and compete within their extended enterprises.
 •  A major health plan needs to reduce expenses associated with paying claims. It went through an acquisition and has yet to merge its back-end payables systems. It turns to a Treasury expert at its bank for ideas, who offers a solution that enables the health plan to outsource its payables processing to the bank, reducing its payables processing expenses and eliminating the need to invest in a major payables systems conversion. Providers are proactively enrolled by the health plans in conjunction with the bank, which quickly progresses them toward a total electronic environment.
 •  An employer has decided to switch from HMO/PPO insurance to high-deductible health plans. It turns to its bank for health savings account (HSA) custodial support, including investment options and a debit card. The employer not only keeps an important benefit for its work force, but achieves its cost-reduction goal.

Standardization
     In the banking industry, standardization is mandated by banking regulators and the Federal Reserve, which governs the payment infrastructure in the United States. Banks have become adept at competing head-to-head while using the same standardized IT and, in many cases, identical software such as the Automated Clearinghouse, Federal Reserve Wire Transfer network and credit/debit card networks. Banks have learned that collaboration does not impede competition, but instead improves efficiency and speeds data exchange.
     In contrast, each major health plan has its own system to handle claims adjudication and payment, while providers have different patient accounting systems. This creates a whole industry of clearinghouses to convert claims into the HIPAA mandated 837 format, so that Medicare and Medicaid will accept claims for payment.

Innovation
     Banks have designed payment systems to transfer health care payments among participants, including HSA and health reimbursement and flexible spending accounts. Banks have introduced health care credit products to help patients handle their first dollar of exposure created by high-deductible health plans. Many products focus on imaging, digitizing or electronifying claims receipts and payments via similar technology used by banks to process and settle paper checks. Banks also are examining best approaches for electronic personal health records.
     A recent analysis by Diamond Management and Technology Consultants suggests that there are at least $40 billion in new opportunities in the convergence between health care and financial services. All major banks are staking out parts of this new territory, as demonstrated by Bank of America´s acquisition of HealthLogic in 2006 and JPMorganChase´s acquisition of Fisacure in 2007. The health care industry now invests only $1 in information technology for every $4 invested by U.S. companies across other industries. Adopting solutions developed by the banking industry is going to transform health care institutions´ cost structure and how they cooperate and compete within their extended enterprises. Based on outcomes of IT adoption across other industries, the earliest adopters of banking and other IT solutions will be those who survive and thrive in the future.

June St. John has 22 years of Treasury services product management and customer service experience. Since 2005, she has led Wachovia´s solutions development for the health care industry, from launching Wachovia´s Healthcare eBOX product to managing Wachovia´s HSA solutions. Contact her at june.stjohn[at]wachovia.com.