Banks today are tailoring their approaches and products to meet the unique needs of their health care provider clients who, regardless of their specialties, have several commonalities; such as their need for enhanced revenue streams, secure information transfer systems that conform to government privacy rules, and customized and flexible credit services.
Until recently, the clients relied to a great extent on their own resources to finance their operations and transmit patient data, which inhibited their growth and income. Today, a growing number of banks are providing an expanding variety of innovative financial service packages and secure patient data transmission systems to health care businesses that will increase their cash, decrease their receivables and streamline operations.
Smart Business spoke with Maureen Carson, a first vice president in Healthcare Finance, and Juwana Zanayed, a vice president in the Healthcare Division at MB Financial Bank, to learn how owners of health care service provider businesses can take advantage of these state-of-the-art programs.
What innovative approaches are banks using to serve health care service providers?
Banks are providing an integrated, one-stop approach to helping health care providers with their financial needs. They focus on three major themes: relationship management, technology and credit services.
Generally, the bank designates a relationship manager (RM), who is the coordinator on a specific account. We’ll use a hospital administrator or physician as an example. The RM serves as ‘go-to’ person who knows the client’s business and needs and serves as the point person for the various business and personal banking needs of the physician or hospital. As a result, the client does not have to search throughout the bank for the right person.
What are the benefits of a relationship management approach?
First, the RM has an in-depth understanding of the health care provider industry and can suggest best practices in cash management and financing vehicles. The RM’s in-depth knowledge of the industry allows the bank to look at the customer relationship as a whole. Thus, it can price and structure various services efficiently. Credit facilities include lines of credit, letters of credit, working capital, personal banking and investment needs, wealth management products and cash management. Services like those are a major change from what health care providers could expect from their banks just a few years ago.
How do banks adapt their technology competencies for health care providers?
Banks have invested millions of dollars in their treasury management products and services in order to provide their clients sooner cash availability; for example, lock-box, remote capture check and point of service collection (POS). Tailoring treasury management services to the health care provider sector by understanding their need to reduce accounts receivable as quickly as possible and providing creative solutions is a great benefit.
Technology advancements allow for transmitting certain data directly from the health plan’s remittances to provider’s patient financial system, thus bypassing input or the posting process. This capability results in streamlined operations and improved cash flows, and makes it possible for the health care provider’s employees to perform other functions.
How does the credit part of the package fit in?
As far as credit services go, banks consider the entire relationship that they have with their client. This makes it possible for them to offer competitive ‘relationship’ pricing on credit facilities. That is predicated to some extent on the RM’s deep understanding of the health care provider’s business and its unique reimbursement and collection process, which involves third-party payors like Medicare, Medicaid and commercial health plans’ payment structures. It is important for bankers to understand the health care provider’s business and cash flow, because the cash flow is the source of repayment for the loan. Bankers, therefore, can work with their clients to structure the loan in the most advantageous way.
Banks also offer a wide array of credit facilities, including accounts receivable financing, taxable and tax-exempt bond transactions, equipment leasing, medical office building and ambulatory surgery center financing, and interest rate management products.
What criteria should health care providers apply when looking for a bank?
Four key criteria are the bank’s willingness to work with health care providers of all sizes; the banker’s in-depth knowledge of the industry; the sophistication of the bank’s information transfer technology systems; and the spirit of enthusiasm and cooperation to allow specialists to work hand-in-hand.
MAUREEN CARSON is a first vice president, Healthcare Finance, with MB Financial Bank. Reach her at (847) 653-1038 or firstname.lastname@example.org.
JUWANA ZANAYED is a vice president, Healthcare Division, with MB Financial Bank. Reach her at (630) 203-2717 or email@example.com.