WASHINGTON With health savings accounts serving as a point of entry, banks and other financial institutions are rapidly moving into the health care sector, and bankers believe they have much to offer in streamlining health care transactions and bringing greater efficiency to the medical world.
In this era of e-commerce, it is difficult to remember a time when even the simplest personal financial transactions involved paper and required direct interactions with tellers, a time when cash was not available 24/7, and a world where all of one's personal financial information wasn't simply a few mouse-clicks away. In terms of the digitization of health care financing, we are still in that paper-based era, and many people feel distrust for electronic health care management in the same way they felt distrust for electronic banking when it was first introduced.
But bankers engaged in health care believe we're on the cusp of rapid change. Over the next decade, broader adoption of health savings accounts (HSAs) coupled with interoperable personal health records systems on the patient side, and wider use of electronic medical records on the physician side, will bring health care in line with nearly all other industries in terms of maximal use of electronic information exchange.
James S. Gandolfo, senior vice president of PFPC, a division of PNC Financial Services, and chairman of the American Bankers' Association's HSA Council, told attendees at the fifth annual World Health Care Congress that banks' involvement in health care could be profoundly transformational.
For one, banks can provide interoperable and widely accepted technology platforms, something the health care sector has yet to develop on its own. Banks are also very tightly regulated and standardized; they have exhaustive experience conducting rapid and high-volume data exchange in a secure environment; they provide multiple but interrelated services for millions of people.
As an industry, health care has lagged far behind other industries in terms of information technology investments. Mr. Gandolfo estimated that about $3,000/worker per year is spent on technology advances in the health care sector, while about $7,000/worker per year is spent by other private sector industries, and about $15,000/worker per year is spent in the banking industry.
He said that he strongly believes it is time for the health care sector to embrace the technology developed by the banking world, and he anticipates it won't be long before we routinely see card-based health care transactions, real-time information exchange, and real-time financial transaction settlements.
According to Chad Wilkins, CEO of OptumHealth Bank, the growth of health savings accounts is a major driver of change, and a strong magnet for banks and other financial service firms eyeing the health care sector.
Mr. Wilkins estimated that currently, financial services companies hold about $3.2 billion in HSAs, in 2.2 million accounts that cover health care for around 6.5 million Americans. According to a survey by the industry group America's Health Insurance Plans, 27% of individuals who selected HSAs were previously uninsured.
Bankers like Mr. Wilkins and Mr. Gandolfo want to see those numbers grow. "The biggest issue is education. We need to educate the market, educate consumers, educate policy makers, and educate employers," Mr. Wilkins said.
"Once employers get on board with HSAs, you need to help them roll out and implement them. You need good decision-support tools. If you do it right, you see a dramatic increase in the number of people choosing HSAs, and the amount of money going in. It should all be as simple as dealing with your 401(k)," he asserted.
One of the primary virtues of banking technology is its capacity to eliminate paper-based transactions, something health care desperately needs to do, Mr. Wilkins said. "Ninety-five percent of current payments to providers and explanations of benefits are still done on paper. That's crazy! It's a staggering amount of paper, and much of this can be computerized."
He estimated that it costs banks about $1 per paper check or provider remittance advice form, roughly $30 for each voided and reissued paper check, and about $5 per phone call to see what's wrong in a given transaction. Universal electronic claims could save up to $35 billion for health care providers and $1 billion for health care plans.
Mr. Gandolfo said savings on this order are very real. A large health care provider group that implemented PNC's E-Healthcare platform realized $2.9 million in annual cost avoidance, and 64% time savings in its accounts receivables. Electronic funds transfers cut the average time from claims submission to payment by 43%, from 49 days down to 28 days. The average time to make claims adjustments improved by 29%, and automated matching of payments streamlined the accounts-receivable closeout process.