Health care banking Featured

7:00pm EDT November 24, 2006

Physicians are incredibly busy people. However, taking the time to meet with their banker once or twice a year can pay off in big dividends.

“The lending environment for health care is good right now, and will only remain that way,” says Steve Lucas, business banking manager for Wells Fargo in Beaumont. “Now is the time for physicians to make any equipment purchases they’ve been considering. But first, they have to spend time with their banker to discuss their present needs.”

Technology has been one factor that has made banking much faster for health care practices. Other factors, such as Medicare and insurance costs, are also affecting the business side of medicine.

Smart Business asked Lucas about banking issues of concern to physicians today.

How are politics and insurance costs affecting medical practices?

With the costs of health insurance spiraling out of control, national health care may be a topic revisited by Congress sooner than later. Medical and insurance costs will continue to rise, and as baby boomers age, more and more people will need medical care. Medicare follows indexed increases, and other insurance companies follow suit.

The premiums for malpractice insurance take up a significant portion of a physician’s revenues, even with the tort reform taking place in states such as Texas. These days, it’s very difficult for a physician to be in practice alone, to the point where it’s near impossible financially.

How can a banker help physicians access the capital they need to grow?

Historically, long-term interest rates are higher than prime. However, fixed rates are currently more cost-effective than adjustable rates. So now is the time for physicians to finance equipment purchases.

New doctors need working capital to get started. Many graduate from medical school with substantial debt, and if they are trying to start a practice they will need to heavily invest in assets and equipment. Their commercial banker can help. Banks want the business, and there are opportunities to finance 100 percent of the equipment that new doctors need to get started.

Established doctors may be looking for opportunities to grow. One way they were doing that in the past was by building hospital-like care facilities in conjunction with their practices, so they could receive the same level of payment that hospitals received for the same services through Medicare. This is no longer an option, so we find many physicians looking back to more traditional ways to grow their revenues.

How is technology affecting the way physicians manage their billing and banking operations?

Medicare is now on an electronic direct-deposit payment system, and many insurance companies are following suit. This allows physicians to receive payments faster.

The way medical practices are depositing money is also changing. One of the newer technologies is the desktop deposit system. The billing person has equipment on his or her desk that allows the capture of digital images of the fronts and backs of checks and processes them electronically. This eliminates deposit-slip paperwork and time spent traveling back and forth to the bank.

What types of financial products are available to physicians?

In addition to the electronic deposit and payment systems mentioned above, options include automated account reconciliation; controlled disbursement (a file is sent back to the billing staff person confirming check numbers and amounts); checks imaged on CD; complete payroll services; Wells Fargo Membership® banking (discounts for the practice’s employees); merchant services (credit cards); 100 percent financing and leases; insurance; private banking; small business 401(k) plans, and others.

How can physicians and bankers best work together?

Physicians should spend time with their bankers, perhaps once every six months — similar to the way they spend time with their CPA. It just takes 30 minutes or so. Ask what the banker can do to help. Give the banker good information so you can get better output.

Ask, ‘What do I want from a bank?’ Walk the banker through your operation. Explain how you pay your bills and deposit checks. Ask about integrating the bank’s software with your accounting software. Ask about balancing your checkbooks.

Bankers have a lot to offer and can put the doctor in the right products and services once they have a clear understanding of the physician’s needs. Developing that understanding requires a commitment to the relationship and maintaining an open, two-way dialog.

STEVE LUCAS is a business banking manager with Wells Fargo in Beaumont. Reach him at steve.lucas@wellsfargo.com or (409) 861-6362.