Good afternoon. Two weeks ago I spoke at an Advisory Board with the incoming chair of HFMA, a previous chair and a past chair of the AHA. Just prior to that, I testified at HHS at America’s Health Information Community, organized during Dr. Brailer’s reign as President Bush’s health IT czar. These groups had something in common: both were intrigued by how medical banking will impact the future of healthcare.
Many groups I address throughout the country are engaged, so I marvel at those who say it will never happen. They say well that’s impossible. It could never be. I can think of lots of examples where those kinds of people have been proven wrong. Man will never fly. We’ve been to the moon and back. A woman will never be president…could happen next year. The Berlin Wall will never come down. Today East and West Germany are united. How wrong they were!
What I’m trying to get at, is that over the past 15 years creating the thesis of medical banking, I’ve heard a lot of nay Sayers. Yet medical banking has arrived! Not just locally either. This is a global movement. Our members are in Canada, Australia and the European Union. And the key player in this global revolution is the banking community. The nay Sayers are wrong again!
Consider the slides as bonus material. Rather than talk at slides I want to engage you directly.
Now, there might be some in the audience who have been in that group of nay Sayers. Let me remind you that there was a time when 98% of the population believed the world was flat. The other 2% were burned at the stake as heretics. I feel that burning sensation sometimes, but I know we’re right. Today a growing team of cross-industry visionaries agree with us – over 50 corporate members at MBProject in banking, healthcare and policy. Many national leaders agree, who attended our Institute – HIMSS, Centers for Disease Control, National Governors Association and others. They see a brighter future by marrying banking and healthcare systems. Now some may still believe the world is flat, but I know there is one thing we can all agree on. The current system is broken, its just not working. Over 45 million good folks are uninsured and we have a rising tide of bad debt.
That’s why I’m here today – to give you 4 good reasons why medical banking offers solid footing for our healthcare system and hopefully get you involved with our movement. My reasons are based on the idea of the bank as a Trusted Infomediary in the healthcare system of the future. Now, the natural question most of you are asking is why banks? So let me respond with a question: where do you put your money? You see, most people really do trust banks, and there’s more.
A “Bank Infomediary” can do four things for healthcare: one, banks can revolutionize the revenue cycle by pushing the boundaries of automation and real time payments; in fact we will soon launch a common medical banking platform called BoardTrust, that will open up brand new possibilities; two, banks will help America to finally build a “medical internet” that uses all the bank touch points – 99% of all providers and plans on one side and 55 million plus online banking customers on the other; three, banks offer a valuable channel for educating consumers about better healthcare choices; and four, banks can assist the community to coordinate healthcare resources which helps to increase access to the underserved.
So let’s peel back the onion. In the revenue cycle, I believe that existing systems in healthcare has exhausted the cost-cutting potential of EDI, not due to lack of great technology but because of challenges in distribution of that technology. I hear this from healthcare groups all over the country. There is frustration as to why we can’t move more quickly to a digital framework, not just for the claim but eligibility, COB, remittance and more. I’ll tell you one reason why: we haven’t embraced the capabilities of the bank. Let me tell you why I think this is true.
First, the bank’s lockbox is morphing in functionality and can integrate workflows not just using the remittance but all the EDI transactions. This creates new value for hospitals and plans, and can synchronize the market. For example, the new lockbox unifies paper and electronic remittances into one digital stream and automate routine patient accounting tasks. Some national banks are working with clearinghouses like CareMedic, SSI or McKesson to provide this service. In one case, the clearinghouse is the bank – PNC. Banks cannot do this alone, so they will align or acquire. In 1996 we forecasted a wave of convergence like this, integrating banking systems with digital tools that manage medical transactions. And it’s happening today. Yet what makes this powerful is the bank’s reach. We may finally get all providers on the EDI bandwagon, and that will save at least $35 billion in administrative costs each year.
A futuristic CEO panel convened by QHR, an MBProject member, had two recurring themes. First, that medical banking can offer a return that extends well beyond payment and remittance management. This is true, because it encompasses two forms of liquidity: (2.) financial liquidity – through high value transaction processing and more access to corporate and consumer credit, and (1.) health data liquidity, through on-demand movement of electronic health records.
As banks better understand the value of the complex UB04, a new credit market will emerge that uses the eHealth Lockbox as a business intelligence platform for unlocking $200 billion in non-working A/R assets sitting in your ATB. So medical banking offers a pathway for smarter resource utilization, starting with the digital lockbox and moving on to meet longer term organizational needs. By the way, those needs respond to community needs, which typically are the focus of investment by banks. Steering bank investment towards the hospital is good business. And that goes for banks too. A healthy community means growth in deposits, and that’s a good reason why banks are so involved in the community. Medical banking aligns incentives in the community leadership – who routinely get together at the bank or hospital board – and because of this, medical banking is evolving external to the patient accounting domain. Board members are talking about new synergies with banks. For this reason it seems prudent to become better informed about medical banking.
The second theme at QHR’s forum was that medical banking isn’t visible in the suburban or rural hospitals, and we agree. The early focus of banks is on major markets, but this will trickle down. Our mission is to convert digital savings into charitable resources, so we have a plan to get these new efficiency tools down to the level of solo practitioners, not directly, but through market mechanisms. Now, this vision may not be what you read in HFMA literature, where some hospitals had mixed reactions about medical banking. That doesn’t surprise me. But what does is how long it takes to broaden the vision. When we coined the term “medical banking”, we articulated a vision that the provider groups we talked to embraced. So we hope these roundtables and articles will lay out a broader vision.
Banks, like any business, are in healthcare for compelling economic reasons some not as obvious others. A good example of this is a hospital closure in North Dakota. Local residents were left 61 miles away from the nearest hospitals, and their most common concerns were interestingly enough, medical banking issues. Let me illustrate: poor access to emergency medical care (a quality of life community issue and thus a banking issue), the loss of local jobs, further declines in the local economy, the suffering of elderly and children and out-migration of residents. This is one example of a disturbing national trend of closures, and that’s why this is a community-wide issue. Leaders are looking beyond parochial interests to solve a deep and broadening healthcare crisis. A hospital closure has long term economic consequences for banks.
So how does this translate into the revenue cycle? Well, I’ve explained how there is a greater economic picture here, and community incentive, for a bank. Today’s health IT firms compete for a slice of the IT budget. Banks compete for the hospital’s total economic impact to the community. The bank gains multiple revenue sources from the hospital – credit terminals, ATMs, payroll deposits, loans, and more. Packaging medical transactions into their services, especially as claims processes go digital and can be incorporated into a value chain, is inevitable. It’s a new tool set the banks can deliver to the hospital to reduce their cost for serving the community. PNC: $1-10 million. In 1996, we forecasted the emergence of a unified platform for healthcare and financial transactions. We said that if this happens, banks would start to compete for your medical transactions, just like they do your financial transactions. This would bring millions of dollars of investment into the hospital community and it tends to decrease costs. I’m sure you’ve heard the saying by now: when banks compete, who wins? You do.
Today this competition is in full swing. MBProject advanced the idea of a specialized lockbox program in 2001, and starting in 2003, banks like PNC, Mellon, Wachovia, Lasalle, US Bank, Fifth Third and others issued press releases and proved our point. McKesson is forming bank alliances and others are too. It’s driving the specialized lockbox for healthcare. We are seeing a virtual tidal wave of banking investment coming into health IT, and we think the outlook looks very good, and it comes at critical time when provider margins are suffering. Today, banks are pouring millions of R&D dollars into automating patient accounting tasks, like remittance and denial management, secondary billing, automated consumer credit decisioning that can mitigate self-pay risks in consumer-driven healthcare through companies like E-Duction, that automate payroll deductions for HSA/HRA holders and more. We believe the first digital tools will be well-established, ones that you already use, but placed in new, high value banking platform that offers new cost savings. It’s a classic market development, like SABRE, the airline ticketing system that, when linked to banks, changed the competitive paradigm in the airline industry for both businesses and consumers. Today we go online for ticketing, car rentals and hotels. The banking system made this change possible, and the same kind of paradigm shift in healthcare is inevitable as medical banking models flourish.
Fortunately, we have hard evidence that when a bank gets involved, costs come down. PNC presented a case study at our Institute showing how a provider saved $4 million last year using their specialized lockbox. I know there’s not a person in this room, or CEO in the country, that wouldn’t like to increase their profit margin by $4 million.
Medical banking offers a holistic view of what banks bring to the table. The ROI of a digital lockbox should be comprehensive: decreased investment for IT, (new revenue cycle applications, maintenance), lower costs for imaging and for managing consumers, seamless integration with new programs that speed third party and self-pay collections using card technologies, credit networks, real time credit decisioning and online banking. We see a community-integrated revenue cycle that optimizes all the banking assets – ATMs, credit/debit terminals and branches – to increase collections and offer compelling consumer conveniences. The bank also opens up a new channel of 55 million consumers who already do online banking. This secure gateway, “single sign on for the consumer”, can manage financial and health data needs. Forrester reports a cost of $1.17 for resolving consumer disputes online vs. $33 using manual systems. When managing commercial payments, NACHA, a bank group, reported a manual cost of $11 vs. $5 or less for EDI. New bank platforms will bring these savings within the reach of most providers.
The issue of Public Trust is vital to our vision. Our members routinely assess HIPAA and other privacy rules – and there are quite a few – and we do this to instill Public Trust in medical banking. We started an Accreditation Review Council that will assure providers that the banks they use are HIPAA compliant. MBProject drove HIPAA into the banking world to win Public Trust. We know that privacy issues will evolve so we facilitate cross-industry dialogue with policy makers, industry groups and others who strive to keep our information confidential.
Today banks are locked into an Identity Theft Arms Race. How else can they keep your trust? One privacy institute – Ponemon – did a study showing that 57% of a bank’s online consumers will bolt if there is one breach of privacy. They also asked 30,000 business leaders what institution they trust. Guess who it was? The bank is who they trust the most. So make no mistake about it, security and privacy in banking is a top concern, and this bodes well for medical banking, especially as we roll out pilots that focus on point of service access to the current deductible, funded by UnitedHealthcare, and another pilot using online banking to distribute personal health records.
In a consumer-driven world, banks are becoming an epicenter for consumer research about their health conditions – our third area of focus. 4.5 million consumers use HSAs today; they’re now being offered by 1600 banks, up from less than 100, just 2 years ago. As banks compete for this new market, new consumer tools are being linked to banking systems, from Subimo, ConnectYourCare, or Best Doctors, that help the consumer to manage their HSA, select a provider or use new “health-wealth” calculators that predict health expenses and help families to better plan for retirement.
Economically speaking, banks want HSA holders to become wise healthcare consumers, because choosing better healthcare will keep more money in the bank. We started a joint task group with the Automotive Industry Action Group that address value in health and Sanofi-Aventis is helping us in this effort. Billions of dollars are at stake. This incentive aligns well with employers who need a healthy workforce, public policy, and ultimately the individual and family, where the head of household wants better health information, and I might add, turns to online banking for convenience and simplicity. This is why banks are emerging as a health information broker, and understanding what this means to marketing hospital services is important.
Finally, we envision banks offering a way to coordinate community healthcare programs, helping safety net providers to care for the underserved, and we link this population to the 40 million unbanked households because the demographic overlaps and this is quite a banking challenge – just as much as the uninsured is a health challenge. Targeting this group can solve problems for both camps, and so we believe that banks and employers will easily see that they can’t offer HSAs while winking at the underserved. It’s not in their best interest, and there are already new employer initiatives addressing this. Our initiative in this area is called CarevilleTV, rebranded from Charitable Communities Network. We believe that serving this market requires easy-to-understand communication programs that offer objective news on consumer options in the community.
In conclusion, as they say in sports, it’s important to keep your eye on the ball. Getting involved in medical banking is a good idea as it begins to shape our common destiny. Banks working with health IT firms can increase efficiency in many ways and they offer a stable partner in your revenue cycle that can deliver long term dividends. That’s what hospital CEOs are telling us they want to see, and it’s really where medical banking shows its greatest promise. Thank-you.