The bank that carries hospitals' and physicians' lines of credit may one day serve their electronic data interchange needs as well.
Like other vendors of EDI services, banks see vast market opportunities in automating providers' claims submission, processing and payment procedures. Bankers may have a better chance of selling EDI products than other vendors because of their existing relationships with healthcare clients, experts said.
Commercial banks' involvement in healthcare EDI is just beginning, "but it will become widespread," said Bruce Nelson, vice president of Zimmerman & Associates, a Hales Corner, Wis.-based consulting firm specializing in accounts receivable. "The banks have already scouted out the number of transactions that take place (in healthcare)," he said.
It's estimated that some 4.5 billion healthcare claims are submitted for payment every year. Hospitals are spending 2.5 cents to collect each dollar, Mr. Nelson said. Automation of business and admitting office functions will halve that cost, he said.
Some banks are providing EDI services themselves, using in-house technology and expertise gained by processing automated teller machine and credit card transactions. But many more are relying on outside vendors for some or all EDI services, from eligibility verification to claims processing.
In addition to being a valuable service for clients, EDI is a revenue generator for the banks. But none were willing to discuss their profits. "Financial institutions want to find a hook or a way to maintain or expand their relationships with physicians and hospitals," said Robert Strickland, vice president of sales for Alpharetta, Ga.-based Community Healthcare Networks, a provider of EDI services.
As banks attempt to stake out turf in the healthcare EDI market, they'll face plenty of competition, including insurance and telecommunications companies.
"The jury's still out on who's going to win," Mr. Nelson said. There will likely be some "growing pains" as banks become accustomed to healthcare clients' needs, but banks will probably land on top because they already have experience in setting up EDI systems, he said.
Dan Rode, administrator of the policy services group of the Healthcare Financial Management Association, said banks can offer some services that can significantly benefit healthcare firms.
For example, instead of waiting for a check to clear, funds can be directly deposited in a provider's account. In addition, he said, banks may offer to reconcile claims with payments that come in, eliminating another cost and hassle for providers.
First Interstate Bank, Los Angeles, began offering a reconciliation process as part of its EDI service just two months ago. The bank initiated the service in response to numerous provider requests, said Vince Hruska, vice president and product manager of EDI and automated clearinghouse services.
United Jersey Bank just began offering EDI services to New Jersey healthcare clients through a relationship with Community Healthcare Networks. "It seemed to be a natural tie-in as a product we could sell," said Thomas P. Ferris, regional vice president of United Jersey's healthcare financial services group.
United Jersey already provides banking services to 33% of the state's hospitals, more than 200 physicians and several HMOs. More than 100 healthcare providers, mostly physicians and group practices, have expressed interest in EDI.
Speeding up payments will reduce the amount hospitals need to borrow, lowering capital costs, Mr. Ferris said.
United Jersey also is planning an accounts receivable financing program. Once it's known how much an insurance company will pay on a claim, the bank could advance that amount against the receivable, he said.