|BANKS AND HEALTH CARE Innovations in payments, treasury management drawing interest|
By John Ginovsky
Aite Group recently issued a report indicating that banks are taking a deeper look at developing health care-related lines of business to capitalize on industry opportunities.
Specifically, the analysts found that banks with existing, well-developed resources in this area offer advanced receivables and health care transaction processing capabilities and data analytics. These banks are seen as positioning themselves as a single financial services partner for health care providers. In order to do so, they are going to market with a n integrated sales approach involving treasury, investment, and lending products for health care providers.
For treasury services, strategies are evolving beyond payments receivables and into point-of-service payments and health care transaction processing.
"While Aite Group does not advocate that every bank adopt a health care vertical market approach, there are compelling reasons for banks to implement health care services or expand existing ones," says Michael Trilli, senior analyst. "These include customer demand for health care treasury solutions and legislation that places a premium on electronic receivables and payables processing for providers and payers."
As an example of the kind of technological innovations that are just hitting this area, Tech Topics recently spoke with Kevin Arner, CEO of PaySpan, which operates a health care payment network, and Jim Pratt, vice president of sales for Wright Express (now called WEX Inc.), which has developed a "virtual card" payment system now in use in the travel and fleet management industries. These two companies joined forces earlier this year to collaborate on a new approach to health care payments and reimbursements.
Such virtual card technology, they say, would replace the current practice of payers reimbursing medical providers with either electronic funds transfer or paper checks. Through the use of an open-looped MasterCard product, a payer-normally an insurance company-sets the credit limit on a virtual card and then sends that card through a proprietary network to the medical provider. The provider redeems that amount, and the transaction is complete.
"They can't overcharge, they can't undercharge. It's single use, so once they charge that card, the card is terminated and can't be used again," says Pratt. "That's one of the fraud-prevention aspects."
Arner calls the additional capability for fraud and abuse detection and control is "the first and foremost" area that this addresses, specifically by providing "a much richer set of data for fraud and abuse intervention."
He lists other advantages of such a system: "It's the leading edge of being able to handle payments differently, having greater control over the timing of reimbursement, and, longer term, it gives the payers the ability to bring in additional financial services capability into the reimbursement space."
Speaking about his experience in other industries, Pratt says organizations tend to come to prefer the virtual card over EFT or paper checks not only because it is less expensive to process, because "they are getting their payments more quickly, and they're getting them in a way that's very efficient for them to collect and process...It's easy for them to reconcile these payments back into their accounting system."
Such an approach may be just one example of innovations in an area that has lagged behind other technological advances in business.
"In the convergence point between two major industries, financial services and health care, you would think there would be a lot of innovation, a lot of focus on that technology. That, unfortunately, has not been the case," says Arner.
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