Purchases Signal Optimism on Digital Health Payments
Bills, Steve, American Banker
In beefing up their systems for processing health-care payments, major banking companies are betting they can help move the insurance and hospital industries away from paper record keeping.
Bankers and observers agree that the use of image-enabled lockbox operations could help stimulate increased automation and, eventually, the end-to-end electronification of insurance claims and payments.
Of course, the payments industry has long aspired to that goal, and even though momentum seems to be building in the health-payments market, some experts caution that movement is likely to remain sluggish in a notoriously complex industry.
JPMorgan Chase & Co. of New York became one of the latest financial companies to demonstrate its interest in health payments this month, when it announced it had purchased the assets of FisaCure Inc. of Carrollton, Tex., a specialist in medical remittance processing services.
In September, Bank of America Corp., which calls itself the No. 1 provider of treasury services to the health industry, announced it had purchased HealthLogic Systems Corp., the Norcross, Ga., operator of an online service that hospitals use to manage their insurance claims.
In both cases, the banking companies bought small companies to which they had outsourced work, and the purchases suggested in some quarters that two of the nation's biggest cash management banks think the time for a shift in the health-payments business may not be far off.
"It's a really forward-looking investment," said David C. Robertson, a partner at Treasury Strategies Inc. of Chicago, a consulting firm that serves banks, corporations, and other large organizations. "You've got the two largest-scale players taking advantage of their scale to make fundamental investments."
Alberto Casas, a vice president at JPMorgan Chase and the leader of its treasury services business-to-business health-care unit, said as much when his company announced the FisaCure purchase. "We believe the bank has a role to play throughout the value chain," Mr. Casas said.
The lockbox gives banks a chance to add value for both hospitals and insurers, he said.
"Banks are the only player in this reimbursement chain that have both the payment and the information together," Mr. Casas said. "Strategically, the value for our clients and the value for the bank is in effecting change and driving automation."
PNC Financial Services Group Inc., a pioneer in the health-payments market, said it welcomed the arrival of high-profile competitors.
"There's a lot of movement taking place now, a lot more awareness in the community," said Paula K. Fryland, a senior vice president at PNC and the managing director of its national health-care group. "I'm happy to hear that others are recognizing that there's an opportunity for the banking industry to help."
The Pittsburgh company, which operates the third-largest nationwide wholesale lockbox network, introduced its integrated system for health payments in 2001. …