N.Y. Hospitals to Use Chase System; Insurer Link Would Move Data, Money Electronically

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N.Y. Hospitals to Use Chase System

Insurer Link Would Move Data, Money Electronically

Hospitals in New York State plan to use Chase Manhattan Bank's electronic cash management system to move payments and paperwork between health-care facilities and insurers.

New York is the first state to encourage the health-care industry to abandon paper for the efficiencies of electronic funds transfer and computer-to-computer transmission of relevant documents. The technology is known as electronic data interchange, or EDI.

Chase, working in conjunction with CIS Technologies, Tulsa, Okla., expects to sign a contract with the state this summer. The program, which would streamline the dealings of insurance companies and hospitals, would begin in the fall.

Leader in Cash Management

This is a new business for Chase, which is a leading cash management bank for insurance companies and hospitals.

The deal with New York State may pay off in other ways. By adopting this method of electronic payments, the New York State Department of Health program is expected to spur the use of EDI.

Chase Manhattan, along with First Chicago Corp., Northern Trust Co., and a dozen other big cash management banks offer EDI services to corporations as a way to streamline their payments to trading partners. But the service has been slow to catch on among treasurers.

"This is a unique application of electronic funds transfer and electronic data interchange," said Michael E. Aspinwall, vice president at Chase.

Chase's ability to act as a middleman in the New York State deal is expected to be enhanced by its electronics. …