Hoping to win a bigger share of the growing health-care processing business, Bank of America Corp. has bought an online health payments processor.
The Charlotte company, which calls itself the No. 1 provider of treasury services to the health industry, announced Monday that it has bought HealthLogic Systems Corp., a Norcross, Ga., provider of an online service that hospitals use to manage their insurance claims. The price was not disclosed.
Jim Basinger, a business development executive in B of A's global treasury services unit, said that it has been working with HealthLogic for more than a year on automating claims for its clients in the hospital industry. The purchase will let B of A expand its services in the field, he said.
According to its Web site, HealthLogic serves more than 400 hospitals in more than 40 states, in three of the industry's largest chains.
HealthLogic, founded in 1991, offers a range of services to automate business office processes, from patient registration to following up on old accounts.
In its announcement of the purchase, B of A particularly highlighted HealthLogic's Expanded Data Capture Lockbox, which automates the processing of explanation-of-benefit documents to reduce errors and expenses.
Mr. Basinger called that offering "an extension of our existing lockbox network," and noted that it can process both checks and electronic payments.
HealthLogic's founder, George K. Floyd, a former hospital administrator and senior manager at the accounting firm Ernst & Young, will continue to run the processor, B of A said.
Many other financial companies, and the vendors that serve them, say they see opportunities in automating the complex and largely manual business of processing health payments.
Fiserv Inc. of Brookfield, Wis., and Metavante Corp., the technology subsidiary of the Milwaukee banking company Marshall & Ilsley Corp., have expanded their offerings in health payments, which they have called an important target market.
In January, Metavante acquired AdminiSource Corp., a Carrollton, Tex., provider of payment services to insurers and health-plan administrators. In July of last year Metavante paid $145 million for Med-i-Bank Inc., a Waltham, Mass., processor of card-based payments for medical transactions.
Fiserv Inc. of Brookfield, Wis., has bought a number of companies in different segments of health-payment management, including Administrative Services Group Inc., a benefits plan administrator in July 2005.
First Data Corp. of Denver set up a joint venture in 2003 with ProxyMed Inc., of Fort Lauderdale, Fla., to expedite the health-care claim, payment, and settlement processes.
KeyCorp introduced an image-based payment processing lockbox service in 2004, targeting physicians' offices, and PNC Financial Services Group Inc. of Pittsburgh has operated an electronic remittance system for the Department of Veterans Affairs since 2003.
David C. Robertson, a partner at the Chicago consulting firm Treasury Strategies Inc., said in an e-mail that B of A has bought itself "a powerful solution provider" in the health industry.
"Bank of America now has, in-house, a very powerful set of solutions for the health-care space. It will help them achieve a goal that many banks have, which is to integrate further into their customers' working capital activities," Mr. Robertson said.
The purchase could also be a threat to other banking companies, if B of A offers HealthLogic's processing services only in conjunction with its own treasury operation, he said. "There are not very many health-care partners available in the market, and if Bank of America takes this solution off the table, many banks may struggle to find alternative partners."
Susan Feinberg, the research director in the wholesale banking group of TowerGroup, the Needham, Mass., market research unit of MasterCard Inc., said the acquisition is an attempt by B of A to stand apart from competitors by deepening its expertise in a specific industry.
"Banks searching for differentiators are looking at different industries," she said. "This is one more arrow in the quiver in their attempt to say, 'This is what makes us different from our major competitors.' "
Other banking companies are focusing on fields such as pharmaceuticals or transportation, Ms. Feinberg said. But each specialized market has its own set of issues, she said. "You don't become an expert overnight in the regulatory issues that apply to this industry. You've got to develop this expertise, or you've got to buy somebody."
