HSA Bank, a division of Webster Financial Corp. in Waterbury, Conn., says it plans to sign a contract with WorldCare Independent Medical Consultation Services in an effort to differentiate itself in the crowded health savings account market.
The Cambridge, Mass., unit of London's WorldCare Inc., through its affiliation with top-ranked hospitals nationally, offers physician consultations that can produce recommendations for less expensive and less invasive medical alternatives.
Kathy McCormick, the senior vice president of business development at HSA Bank in Sheboygan, Wis., said the contract with WorldCare is in its final stages and will be signed within a month. The bank would offer WorldCare Independent's service as an option to its customers in an effort to take a competitive edge, she said.
"I think that this will be real value-added service for us," she said. "I have not seen a lot of services of this type being offered by other HSA administrators to this point."
Ron Mastrogiovanni, the president of WorldCare Independent, said HSA Bank is his company's first potential bank partner but that he plans to target other banks that offer health savings accounts. He predicted up to 20 banks would contract for his company's service in the next 12 to 18 months.
"We are trying to find the right partners," he said. "Whether that means 10 or 15 or 20, I don't know yet, but we certainly don't want to flood the market. We want to insure that the banks that we are partnering with have a level of uniqueness and differentiation in the market."
Mr. Mastrogiovanni was an executive vice president at FundQuest Inc., a Boston company that specializes in separately managed accounts and was sold to BNP Paribas in June 2005. He said he met with executives at WorldCare last year to "bring this service to North America."
WorldCare Inc., which was started in 1992, has offices in 31 countries. It has two million members overseas and has generated more than 16,000 independent medical consultations of individuals worldwide. The consultations have resulted in revisions to 15% of the original diagnoses and 70% of treatment plans, the company said.
In the United States, Mr. Mastrogiovanni said, WorldCare has partnerships with Massachusetts General Hospital in Boston, Duke University Medical Center in North Carolina, and UCLA Medical Center in Los Angeles. For a fee of $25 annually, members' records are evaluated by a team of physicians at one of these facilities for a second opinion that is produced within four days.
"What they are offering is [a] second opinion from some of the largest medical facilities in the world," Ms. McCormick said. "If our customers went for this on their own, it would cost quite a bit. For individuals with HSAs, this will allow them to keep money in their account longer."
Mr. Mastrogiovanni said he expects to have one million to two million lives covered within 12 to 18 months. This type of service is advantageous to people with health savings accounts, he said, because it lets people take more control of how their health-care money is spent.
"Basically, this helps protect account balances," Mr. Mastrogiovanni said. "This is like having triple-A for your car. It is designed as a safeguard."
As health savings account offerings proliferate, analysts said, it is crucial for companies to find a way to stand out.
Last year the number of financial companies offering the accounts grew sixfold, to 600, and deposits had surpassed $2 billion by this March, according to Information Strategies Inc., a Palisades Park, N.J., company that tracks the product.
Other health savings account providers have taken other initiatives to enhance their platforms. On Tuesday Thrivent Financial Bank announced that it had chosen CashEdge Inc. to supply online opening and funding services for its HSAs.
The TowerGroup unit of MasterCard International has projected an HSA revenue opportunity for financial companies of $308 million a year by 2010. And an "e-health study" by PNC Financial Services Group Inc. said that 40% of insurance executives think their organizations could save $1 million to $10 million a year with billing and payment systems improvements.
Ms. McCormick said HSA Bank does not plan a partnership with WorldCare just to stand out. "We were really interested in trying to find ways for individuals to save money and make better decisions," she said.
WorldCare welcomes a deal with HSA Bank because it is a recognized leader in the field, Mr. Mastrogiovanni said. It has been ranked No. 1 in HSA deposits since the product got its start from legislation that took effect Jan. 1, 2004.
"HSAs are a great cross-selling opportunity for banks," he said. "As a product they get people to think about issues such as insurance and retirement. In order to compete with private banking services, banks need to be offering health savings accounts, and they should offer this as a premium service embedded with other services."
