Wednesday, September 22, 2010

Growing Opportunity for Banks in Healthcare

Posted by Mark Brousseau

The opportunity for banks in the healthcare market is growing, Aaron McPherson, practice director, Payments and Security, Financial Insights, told attendees yesterday afternoon at the Healthcare Payments Automation Summit (HPAS) in Boston. “In the short run, healthcare reform hurt bank sales as providers were waiting to see what would happen. Now, patient payments, in particular, are an underdeveloped segment of the market that will become a key focus for banks,” McPherson said.

McPherson told attendees that several provisions of the healthcare reform legislation will provide a “big boost” to banks that are marketing payments processing services to healthcare providers:

… Greater operations complexity: Healthcare reform will create many more plans for healthcare providers to “deal with” -- each with different deductibles and co-pays.

… Electronic health records: The federal mandates for healthcare providers to implement electronic health records will sap limited resources for payments processing initiatives.

… Cost cutting: “Steep reductions in Medicare payments will force cost-cutting,” McPherson said, adding that this will drive some providers to partner with banks on payments processing.

… Higher patient payments volumes: “Healthcare reform will result in an increase in patient payment volumes, which, in turn, will stress the systems at many providers,” McPherson said.

But if banks are to take advantage of the growing opportunity in the healthcare market, McPherson said they should heed the lessons learned by their peers that were among the pioneers in the space.

Dedicated focus is critical: Three out of four banks that McPherson spoke with before the conference had a dedicated sales force for their healthcare remittance offerings.

Partners are important: “The banks I spoke with said their partners were critical to their success,” McPherson said. “Most banks will want to partner with a processor or specialty service provider. Experience and integration with clearinghouses, payers and such are important differentiators in the healthcare market. One bank bought their partner after a successful year-long collaboration. Another bank only found success in the healthcare space on their third partner.”

Prepare for sales challenges: “All of the banks I spoke with said the healthcare sales cycle was long and required significant subject matter expertise on the part of their salespeople,” McPherson said. “Banks can’t rely on their existing sales staff. They need people who understand the product and the market. Banks also should look for ways to leverage their existing relationships with providers.”

Patience and persistence do pay off: “The banks I spoke with have been at this for years,” he said.

No comments: