OTHER THAN A SHIFT from fee-for-service to managed care, the private healthcare financing system has pretty much operated the same way for decades: Employers buy health insurance for workers, providers submit claims to the insurance companies for covered services, and the insurance companies either pay or deny the claims.
Yet there are numerous flaws within this staid and often complicated system, not the least of which is nearly 50 million uninsured people who don’t fit the formula and fall through the cracks. Add to that constantly escalating healthcare costs, which have made offering health insurance unaffordable for a growing number of companies.
The role of health savings accounts as part of a consumer-driven healthcare system appears to be gaining favor. By 2012, an estimated one-third of the population will have HSAs as an alternative to high-priced traditional health insurance.
If this trend continues, it has the potential to radically change the healthcare payment structure, and a burgeoning concept called medical banking will be at the center of it. By the end of this year, medical banks are projected to have $10 billion in deposits. That is why organizers of the Medical Banking Institute, set for April 1-3 in Marietta, Ga., are touting the conference as a significant forum for discussing the conceptual and strategic issues behind medical banking’s evolution.
“The easiest way to describe medical banking is that it is an entirely new way of looking at healthcare,” said John Casillas, president of the Franklin, Tenn.-based Medical Banking Project, the primary sponsor of the event. “Instead of only handling money, banks and financial services institutions have become stakeholders for information and claims processing as well.”
Indeed, banks are central to “the new healthcare eco-system,” Casillas said, as their advanced electronic transaction capabilities place them in a strategic position to serve as a clearinghouse for claims submissions and other correspondence between providers, payers and patients.
“Medical banking is like biochemistry – which combines biology and chemistry – only we put medicine and banking together,” Casillas said. “We convert the tremendous healthcare paper chase into an electronic format. By stepping into the middle, the bank creates files and posts them on a patient accounting system that can save $35 billion annually. If it saves $5 per transaction, that’s a conservative estimate.”
David Harris, a partner with New York-based PriceWaterhouseCoopers, says medical banking “is a combination of activities handled by a bank or financial network in a true electronic format for processes that were previously handled manually by payers and providers.”
“Banks invented the ATM, so why not embrace the kiosk in healthcare?” Harris said. “It makes perfect sense for them to be involved.”
As the main link in the healthcare payment chain, all transactions flow through the bank, though consumers can control where the payments go. Payers have largely supported the medical banking concept – especially because insurers with financial services arms are serving as medical banks themselves.
The outlier in the equation, however, is the provider, said John Vitalis, senior principal for Falls Church, Va.-based Noblis Center for Health Innovation.
“Medical banking hasn’t been as high on the providers’ radar because they don’t see an immediate ROI or tangible benefit for them,” he said. “They want to know if medical banks will help them receive payments more quickly or reduce operating costs or make them more efficient. The jury’s still out on that.”
HSAs have the potential to relieve employers’ high healthcare costs, which is especially welcome in the heavily burdened automobile manufacturing sector. The Automotive Industry Action Group supports the Medical Banking Project’s goals, particularly on quality management, process improvement and value chain integration, said Joe Fortuna, co-chairman of the AIAG’s health steering committee.
Now in its sixth year, the Medical Banking Institute is evolving, maturing and growing, Casillas said. More than 250 senior executives representing more than 65 companies are expected to attend this year’s event.
“Medical banking’s next phase of growth is developing a community and socializing this type of thinking in a conservative environment,” Casillas said.