The market for consumer-directed healthcare figures to be fierce in the coming years, since it combines the elements that often spell all-out war among financial firms-namely a high potential, mostly untapped market that's suffering from a steep learning curve among a consumer base that's arriving a bit late to the party-but will soon be signing up for new offerings in droves.
Part of UMB Bank's strategy is to reach out to that future base of health finance customers with a mix of product and market information, consumer education, automated transaction capability and product offerings through a partnership with ConnectYourCare. ConnectYourCare is a consumer-directed healthcare (CDH) firm that will provide custodial, investment and health payment card services on behalf of UMB for a number of consumer healthcare products, such as health savings accounts, flexible spending accounts and health reimbursement accounts.
The partnership will include a consumer-directed healthcare portal, account administration and banking and investments priced on a single fee-and marketed to brokers, carriers and third-party administrators who want to offer consumers a CDH solution that can be implemented within a few weeks of signing on.
UMB hopes the partnership will help it stay competitive as CDHs, particularly health savings accounts, become a mainstream component of health coverage. Celent estimates that only about one percent of individuals with health insurance have HSAs, but that percentage is expected to grow rapidly as employer-sponsored plans become more expensive-driving up costs for both consumers and corporations. Celent expects the instruments to reach nearly 10 percent of all insured individuals in four years and almost 20 percent by 2015. That's likely a safe bet, considering the overriding economic factors and the political allies HSAs have in the current presidential administration and in Congress. But for now, most of the fight between institutions is focused on making employers and consumers aware of the emerging healthcare options.
"Much of the competition [in the CDH industry] is about teaching employers and health plans what the consumer-directed healthcare movement actually is, and the kind of tools that are needed to differentiate the plans from their own competitors," says Terry Hunger, CEO of ConnectYourCare, a three-year old firm with about three-dozen clients. Its strategy is to combine health plan financing expertise with tools and programs that educate consumers on the use of the growing array of relatively new health coverage finance options.
For UMB, an $8 billion regional bank that offers healthcare financing nationwide, ConnectYourCare firm will integrate its platform of consumer healthcare tools and wellness products with UMB's portfolio of financial services. The combined suite includes a healthcare account portal and claims adjudication for HSAs and FSAs, a multipurpose debit card, hospital and drug comparisons, medical research, health advocacy, wellness and exercise guides and health assessment tied to account-based incentives. "Consumers need these health education tools to use HSAs effectively, including research tools on pharmacies," Hunter says, adding the information can be particularly useful given the fact that Social Security and Medicare won't be as effective in 20 or 30 years. "This helps consumers become more educated on how to use their health dollars wisely."
These features join UMB's bank accounts and mutual funds offered through UMB financial services to allow employers to offer employees the whole range of products, services and information for a single monthly fee-with the ease of use provided by a single card that can access multiple accounts and make payments.
The bank was an early adopter of consumer-direct health finance, offering medical savings accounts as early as 1996. It hopes the integration of its products with ConnectYourCare will help it compete with the giant banks and insurance firms institutions that are also embracing CDHs, such as JPMorgan, Mellon, Wells Fargo, UnitedHealth, CIGNA, Assurant and Webster Bank through its acquisition of HSA Bank.
"The card, which is a key component of our offering, was almost a second thought just a few years ago," says Dennis Triplett, president of healthcare services for UMB Bank, which has about $50 million in healthcare funds under management. It manages these funds for a client base that includes mostly third-party administrators and health plans-who are anxious to tap into a growing trend of card usage for health payments. TowerGroup reports dramatic growth in cards as reimbursement and payment tool, with 14 percent of all FSA, HSAs and health reimbursement accounts currently using cards, up from about three percent from 2002 and on a upward spike to 71 percent in four years.
