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. It is hard to imagine that at the advent of electronic banking, it was a scary prospect for many people.
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. Banking technology has given ordinary people far greater control over their financial lives.
“Banks provide established rules for information exchange, and worldwide standardization. That's why your American ATM card and credit card work when you're traveling in Italy,” Mr. Gandolfo said.
PNC Financial Services, which has assets of roughly $90.7 billion and $58.7 billion in total deposits, is the eighth largest treasury management group in the country. It is moving steadily into health care, positioning itself as a health care financial clearinghouse serving 1,200 corporate clients, including Medicare and Medicaid programs, Blue Cross/Blue Shield plans, commercial insurance carriers, and pharmacy benefits managers.
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. “It is still new, but employees are starting to take advantage of HSAs.”
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).”
OptumHealth Bank is piloting a new HSA debit card that links to a user's personal health record and facilitates transactions for both patient and physician. The “OptumHealth Bank Mastercard” gives real-time access to benefits information, as well as funds. It essentially eliminates claims forms and the attendant processing. Doctors are paid right away and no longer have to wait 60 days for reimbursement.