John Casillas

Privacy and security regulations and the rise of consumer-driven health care are changing the role of banks in health care.

At a Glance

Banks are evolving in four key areas that collectively comprise the rise of a "bank infomediary":
  • Efficient administrative processing
  • Medical Internet
  • Health information broker
  • Community care platform

For many years, banks have been considered money changers that ply their trade in between healthcare stakeholders. The emergence of data privacy and security mandates coupled with growth in account-based health plans managed by banks is challenging this paradigm. Banks are increasingly throwing off the mantle of back-room payment processing agent and taking a more active role in data management. We call this new area medical banking and define it as the latent integration of bank technology, infrastructure, and credit with healthcare administrative operations.

A framework is useful for understanding the emerging role of banks in health care. In our framework, the bank rescopes operations from funds disbursement to value-added data processing that eventually links all the stakeholders-a "bank infomediary." The bank's emerging role, occurring across a number of fronts today, is evolving in four key areas: efficient administrative processing, medical Internet, health information broker, and community care platform.

Efficient administrative processing.
This area involves implementing high-efficiency tools for claims and payment administration and evolving to a business intelligence platform that can be used to help hospital executives manage the enterprise.

Medical Internet. This area involves creating the technical connections for securing, distributing, and in some cases, holding health data that are accessible only by the customer (not even the banking staff) and those authorized by the customer. An example is an online vault for storing legal and medical records, accessible to consumers through their online banking account.

Health information broker. As consumers purchase account-based health plans such as health savings accounts (HSAs), portal-based tools are evolving that incorporate medical research that families can use to assist in making medical decisions.

Community care platform
. As the front-end process for patient registration in the emergency department (ED) and other areas moves toward real-time data and funds management, a medical banking platform is emerging to help manage eligibility and collection of funds before or shortly after services are rendered. We call this the "advanced community care platform" in anticipation that more charitable, faith-based, and/or philanthropic services will be managed by this platform.

Compliance and Medical Banking Trends

Central to the evolution of the bank infomediary is the banking industry's response to a quickly emerging matrix of complex privacy and security regulations. This is occurring on a global scale and has, in effect, created a cross-industry, feature-rich, data processing platform. Compliance "morph," spurred by multiple cross-industry regulations, has hastened the movement by banks from exchanging funds to value-added data processing services.

Although the banking industry has invested billions of dollars on a series of platforms that process various types of financial transactions, this fact alone doesn't necessarily mean that conservative bankers will design and develop an entirely new service category such as medical banking. What appears to be driving this new paradigm is the impact of medical records privacy and security regulations coupled with the advent of consumer-driven health care. These twin environmental forces have levied a broad impact on traditional banking, opening new doors for both bank and nonbank competitors, and coercing traditional bankers to defend their well-entrenched payment franchises. These dynamics have essentially rolled out a red carpet for banks to enter a highly inefficient domain-health data management-to adapt high-value data processing practices that have been perfected by the banking community to mitigate the paper chase in transaction management.

As with others, banks have wrestled with ROI when complying with a global matrix of emerging data privacy regulations. As these costs escalate, banks have made tough business decisions to either serve or exit existing markets. A survey conducted by the Medical Banking Project in 2001 found that some 30 percent of the bank's lockbox revenue is derived from the healthcare industry. Moreover, within this service type, banks often have access to individually identifiable health information. Thus the Health Insurance Portability and Accountability Act of 1996 (HIPAA) directly affects this service, and because of sheer size and the perceived need to offer the service to capture other sales opportunities, major banks are focusing their energy and investment on regulatory compliance with the prospect of seizing new competitive ground.

These facts point to the emergence of an important trend in medical banking: As compliance issues escalate in the digitization of health data, banks will increasingly specialize their healthcare services. In fact, banks are proactively implementing new privacy and security processes and controls and touting this effort in the marketplace to capture business. Thus the substantive engines banks have invested in for data processing, security systems, identity management, and their formidable marketing arsenal are being used to both streamline transaction costs in health care and create demand for new products and services (such as lockbox-based cash posting, secondary billing, and other areas).

The packaging of hybrid services that link a bank's cash management area with health data management operations is now experiencing high growth. Multiple banks have announced new relationships with health data management firms. Indeed today, traditional healthcare stakeholders are finding highly capitalized banks sitting at the table, actively participating in legislative efforts and making an increasing number of acquisitions.

This fact points to a second rising trend in medical banking: Banks will increasingly invest in healthcare IT as they build out new services, and this will lead to broader utilization of electronic healthcare services as banks exercise economy of scale. This trend will affect things ranging from the number of physicians who submit healthcare claims to the very structure of health data transactions. In fact, banking engagement is already affecting health data standards organizations and industry consortiums, as traditional healthcare groups invite banks onto workgroups seeking to streamline claims processing (e.g., National Council for Prescription Drug Programs, Workgroup for Electronic Data Interchange, and Council for Affordable Quality Healthcare). (Read more about both trends.)

Benefits of Convergence

Convergence of banking and healthcare systems is yielding new ways to rationalize healthcare administrative costs. Imagine being able to send healthcare claims and eligibility inquiries and perform checks on claim status, secondary claims, and perform denial and contract management through the bank. Because of the bank's position in the revenue cycle, delivering a streamlined process is possible and can fundamentally reduce claims processing costs.

In advanced digital economies such as the United States, much of the paper chase in health care comes not from sending a claim out the door but from managing all the venues for receiving a payment and its associated data (specifying why payments were made, not made, or partially made)-the remittance data. These data, used by the business office to develop follow-up plans for each account, are the cause of some 70 percent of the cost of business office operations, according to research by the Tennessee Hospital Association Solutions Group. The data provide a road map for collecting payments and/or resolving account balances and thus organize workflow. As such, the data contain inherent value if accurate and expertly organized and deployed among hospital staff.

Banks are progressively moving toward this part of the revenue cycle, leveraging their first-in-line position to capture remittance data and speeding the use of these data to re-engineer healthcare receivable management operations, much as they do with everyday check processing and collections in the financial world.

A major product innovation and thrust today focuses on using the bank's computational and imaging capability, embedded in mail transport systems (the lockbox), to proactively secure payments, reconcile payments with bank accounts, and categorize denial and/or adjustment reason codes, as well as present images within a logical, computer-assisted workflow. Loosely configured services on a banking platform targeting these areas have proven to reduce costs and expedite cash flow. Future services will feature much tighter linkage between traditional banking functions and patient accounting tasks to further rationalize costs. Concomitantly, banking platforms are helping health insurers to ramp physicians onto a digital way of doing business, creating significant savings in payment processing for all parties.

Point-of-Service Payment Processes

Another area in the revenue cycle that is receiving attention by banking and financial services firms is real-time payment processing. Imagine typing your ID into a kiosk much like using an ATM and gaining immediate access to your HSA financial status, making payments, and accessing and forwarding your current demographics so you don't have to fill out those forms over and over again. This idea is being tested in various U.S. markets. It's not hard to imagine kiosks being used as a global model in the wake of medical tourism that requires on-demand access to healthcare funds and personal health records anywhere in the world.

Compliance across industries and geographies invokes not just HIPAA, but also the Gramm-Leach-Bliley Financial Modernization Act, Fair and Accurate Credit Transactions Act, other U.S. laws, the European Union Directive on Data Protection, and others. Within this context, banks have cross-industry, compliant platforms for complex forms of data management, which could include access to personal health records. Many academicians, regulators, and commercial leaders agree that the application of eHealth tools to these platforms could represent a natural product.

A Medical Internet

Given the activity to implement administrative transaction solutions, it's not hard to imagine a complementary build out of the bank infomediary-the distribution and storage of health records for requesting online banking customers. The online banking channel is becoming increasingly secure as banks respond to global threats in the area of identity.

As the number of families using online banking increases, estimated at 55 million U.S. households today, the use of this highly secure gateway into the American home is becoming a viable option for implementing a national infrastructure for on-demand healthcare records. Not only will the portals be used for sensitive health data, but new platforms are also aggregating consumer tools that help to keep people on track with medication regimes, helping individuals to compare the long-term benefits of weight reduction with their "healthcare spend," and providing adoption incentives by showing how much more money could be amassed at retirement by taking off those extra pounds-all based on real data. WebMD Health Services offers an example of how data are being personalized to empower consumers to make healthy lifestyle choices. Banks see an opportunity to present these emerging tools in an identity-theft-resistant portal that is continuously and rigorously monitored. HSA Bank, as the name implies, is an example of this growing phenomenon. Banks understand that losing money or data to theft is tantamount to losing public trust-a cornerstone to a bank's existence.

In addition to presentment of records, banks may be able to leverage their relationships with physicians to offer electronic record programs. These systems, offered as part of a private banking portfolio of services, could authenticate onto a banking platform and thus link online banking customers to their records in real time. Thus the bank can help to speed adoption of health data tools that many believe will increase the quality of health care and reduce redundancy of tests and excessive costs. This fact is finding more banks lining up with their employer-customers, who are seeking to optimize "human capital."

Banks as Health Information Brokers

To meet the increasing market demand for high-quality medical information and online consumer tools, banks are increasingly linking to data sources.

As the need increases for information about quality to be delivered through portals, we envision banks teaming with well-known brands in academia, provider groups, and even pharmaceutical manufacturers that know how to break down complex biomedical research into consumer-friendly info-bites. Preference will be given to organizations that offer consumer-friendly research that can be easily accessible to online banking customers. A special feature of this service will likely enable personalization of research, automatically pulling data that the online banking consumer wants to "clip" for future reference.

Within this context, medical banking can help shape a broader understanding of human capital. This exciting area offers a value-centered view of health care as opposed to focusing on cost alone. The Medical Banking Project's Joint Taskgroup is drafting a medical banking toolkit for employers that will outline how banks could evolve into new ethical roles in health care. In this line of reasoning, banks, now amassing new HSA deposits, will seek to provide quality health information to account holders that can help customers make better lifestyle decisions. The primary reason: Banks that have healthy HSA holders will retain more assets and tend to have larger profits from this line of business. In fact, Booz Allen suggests that major banks will yield more than $1 billion in net revenues in part by meeting this key challenge (Bessler, et al., "Health Meets Wealth," strategy+business, Summer 2007).

Coordinating Better Care

Banks are scoping a broader platform play to enable robust front-end processing for care providers. This system will categorize patients who come into the ED, for instance, into an action-driven platform that coordinates care resources in a community. This "advanced community care platform" will provide awareness using social networking programs, as well as provide an underlying processing engine for data and funds between the community healthcare stakeholders.

The benefits to the bank in this area include transaction processing revenues, the ability to contribute to the health of the community, and the potential to augment public relations in an area that is viewed as critical to the everyday consumer. Imagine the scale of a major bank, serving millions of consumers. The healthier the community, the more vibrant it will become and the more opportunity for increased deposits-a mainstay in banking. We envision that employers and banks will team to evolve new community care platforms that engage the employee/consumer.

The Road Ahead

As the "health wealth" equation evolves, linking everyday banking to decisions about lifestyle choices, banks will increasingly team with employers and consumers to promote quality and convenience in our everyday lives. Consumers will drive the emergence of the bank infomediary, stretching it in ways that are hard to imagine today. Meanwhile, banks are already investing heavily along this product pathway, creating increasingly sophisticated infrastructure and platforms that are well suited to reduce transaction costs in health care.

John Casillas is founder and executive director, The Medical Banking Project, and chair, The National Medical Banking Institute, Franklin, Tenn. (

Hoping to Save

A survey conducted by an independent organization, commissioned by PNC Bank, showed that many leading healthcare providers believe they can save up to $10 million annually through a medical banking system.

Publication Date: Friday, August 01, 2008

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