Doctors make a lot of money, but to some bankers they are still credit risks.
After all, many young physicians finishing their residencies are still paying off hefty medical school loans, they have no real earnings histories and, even with salaries in the six figures, many will have no money for a down payment on a home for a few years.
Even so, the up-and-coming doctor was one of the key demographics Zions Bank had in mind when it opened a niché banking center - Zions+Med - earlier this year on the newly built Intermountain Medical Center campus outside of Salt Lake City. The center, Zions' first on a hospital campus, offers private-banking services to busy medical professionals - including young physicians who may be strapped for cash but whose high earning potential over the next several decades make them worth catering to now.
"They've got a lot to do when they arrive," says Ryan Christiansen, a vice president of private banking at the $18.6 billion-asset Zions. "They've got to get licensed within the state, get their board certification and settle into a home. To be effective in the medical space you have to offer convenience and competence, and that's what this office allows us accomplish."
It's not just the young doctors Zions is targeting, of course. The new Intermountain hospital is the largest in the Utah-Idaho-Nevada region. By locating a branch there, Zions now has access to a number of high-net worth individuals such as physicians, specialists, nurses and hospital administrators to whom it can offer everything from checking and savings accounts, to loans and credit cards to insurance and retirement services.
While the office has the functionality of a traditional bank branch, it has the look of a brokerage office and is staffed by workers from the bank's private-banking division.
Red Gillen, a senior analyst at the Boston consultancy Celent, who covers the health care industry, says that it's "extremely rare" for banks to set up shop on a hospital campus because the branches typically wouldn't generate enough volume to justify the investment. But, he says, Zions could find success there because the campus is so large, and because it got in early enough that it can develop and build relationships for the long term.
In fact, the Zions+Med office is profitable already, according to Christiansen, who says it is 56 percent ahead of its initial net-income goal and 31 percent ahead of its loan-balance goal. One key reason is that, with many young doctors needing near-100 percent financing on their mortgage loans, spreads are running in the 4.6 percent range, he says.
To draw in future clients Zions is already working with one of the largest physician management groups in the state, which is touting Zions' services to doctors who are completing their residencies and will be joining Intermountain. Christiansen says Zions+Med has signed up "almost all" of the physicians referred to date.
Christiansen says that the bank may consider opening branches in other hospitals at some point, but first the bank wants to perfect its services offering at Intermountain.