Servicing the Healthcare Market

Posted by Lynn Moore

Wed, Aug 01, 2018 @ 11:00 AM


So, your financial institution (FI) wants to service the healthcare market? Here’s what you need to know ...

The healthcare industry has always appealed to financial institutions. On the surface, it seems like a great target market to gather deposits, offer remittance and business management tools, offer loans, and gain access to physicians, right? Not so fast. Bankers understand the cash conversion cycle, but the healthcare industry doesn’t operate in a strict cash conversion cycle environment.

In the healthcare world, there is not an exact understanding of “cost of goods sold” until after the service has been rendered. Healthcare providers make educated guesses on costs associated with procedures for patients based on factors like sex, height, weight, and age. This information allows providers to guess what a patient’s out-of-pocket expense should be for a procedure – unfortunately, this guess is rarely 100% accurate.

The claims process doesn’t begin until after the procedure has been performed. Sometimes it’s estimated that only a unit of blood will be needed for the service, but during the procedure the provider needs five units of blood. Add in the changes to healthcare legislation, coupled with what healthcare providers bill for their services versus what they get paid, and good luck applying strict accounting principles.

This gives new meaning to the phrase we all love to use as financial institutions, “We understand your industry …”

Do we? Do we really?

In my experience with the healthcare industry, it really is about “listening to understand.” What I mean by “understand” is truly identifying their need. Is it cash flow? New equipment? Records management? Accounting? Billing? Collections? Payment options? Or one of the many other issues faced by healthcare providers? You won’t know how you can help them until you take the time to have a real conversation and listen to the issues they face.

For example, in my previous life as a treasury professional, I had the opportunity to meet with a group of healthcare professionals that were exploring different ways to improve efficiencies within their existing workflow. When I met with them, their main concerns were related to adding staff in their mailroom to accommodate the tremendous increase of payments and paper they were receiving.

They had just purchased a new practice management system (PMS), and were aware that they now had to convert these paper items to electronic data. They had an office staff of several people manually keying data into their new PMS, but that did not eliminate the increased volume of paper being received and sorted in the mailroom.

As much as I wanted to build a case for imaging and check conversion opportunities, I remained patient and listened to their concerns and all the changes they were facing with new legislation. I, of course, thought I knew exactly what they needed. I was sadly mistaken – they really did need to address the volume in the mailroom; however, they didn’t realize there were alternatives to hiring FTEs. Luckily, I remained quiet and listened intently, which allowed me to determine their true need and demonstrate how we could help. The benefit to the prospect was avoiding the cost and effort of hiring four full-time employees and realizing the reduced expense and long-term efficiencies of outsourcing their mailroom payment sorting and processing activities. It became a win-win situation.

Process improvements aren’t always what we think they are and we don’t always understand the challenges of our prospects. The best advice I can offer to anyone who truly desires to be a financial partner to your client is simple: ask them about their business, get comfortable with the awkward silence and truly listen.

Topics: financial institution, banking, business management, healthcare

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