Metavante Corp. is trying to capture a bigger piece of the growing business for processing transactions for health savings accounts.
John M. Reynolds, who was named the president of its health-care payment solutions division last week, says that, unlike others in the market, his company is trying to be "the Switzerland" of health-care payment processing: a neutral party that serves insurance companies, care providers, and the banks that hold patients' accounts.
The market is "a natural place for banks to play," Mr. Reynolds said. "It's also a natural place for insurance companies to play. The lines are becoming very gray between banks and insurance companies."
Metavante, the technology unit of the Milwaukee banking company Marshall & Ilsley Corp., also said last week that it had rolled AdminiSource Corp. of Carrollton, Tex., into the health-care division. Metavante acquired AdminiSource last month but did not say how much it paid.
AdminiSource is the third health-care services company Metavante has acquired since 2003. It bought Med-i-Bank Inc. of Waltham, Mass., in July for $145 million, and in 2003 it acquired Printing for Systems Inc., a Madison, Conn., maker of cards and documents for health insurers.
Frank D'Angelo, the president and chief operating officer of Metavante's payments group, said that the health-care division already has a full suite of products and services, but he would not rule out additional deals as the payments market continues to evolve.
"There are some associated areas that we are looking at," he said, though he would not identify them.
Most recently, Mr. Reynolds was a senior vice president and the business director for health benefits services at Wells Fargo Institutional Trust Service. He said he joined Metavante early last month because it offered him the chance to tackle a fundamental issue in health care: spiraling costs.
"Metavante had the opportunity to go much deeper with what we can do from a technology perspective," he said. "We can solve the technology issues, but it's much broader than technology."
Mr. D'Angelo said that Mr. Reynolds' mandate is to develop the company's health transaction processing services without becoming a competitor to its customers.
"We made a strategic decision to stay in the consumer money-movement part of the business and the provider space," Mr. D'Angelo said. "My role as a processor is to sell to all those guys. I sell to insurance companies. I sell to banks."
Metavante does not act as a third-party administrator, which manages insurance claims on behalf of employers, he said. "But I do sell to third-party administrators. We don't think it makes sense for us, in our business model, to be a third-party administrator."
Though he did not name any competitors, that point was an apparent reference to the Brookfield, Wis., core processor Fiserv Inc., which acquired the Lexington, Ky., benefits plan administrator Administrative Services Group Inc. in July.
Several other financial companies are positioning themselves for future roles in the nascent HSA market. Blue Cross and Blue Shield Association said in December that it plans to charter a bank to administer high-deductible health plans. Such a bank could be in operation by this summer.
Fidelity Investments has developed an account that it plans to offer to its customers, and big banking companies such as Bank of America Corp., JPMorgan Chase & Co., and Wells are developing their own HSAs.
Webster Financial Corp. of Waterbury, Conn., is the current market leader, with 125,500 accounts and $220 million of deposits as of October, according to statistics compiled for American Banker by Information Strategies Inc. and Inside Consumer-Directed Care.
The reason for all the interest is the anticipated explosion of high-deductible health plans, which also let people put pretax earnings in HSAs. Financial companies began offering the accounts in 2004, and demand for them is beginning to take off now.
The Boston research and consulting firm Celent Communications LLC predicted in September that 15 million Americans would be covered by HSA-linked plans by 2010, and more than 30 million would be covered by 2015.
"At this stage, it is a land grab," said Octavio Marenzi, Celent's managing director. He predicted that consumers would put money into deposit accounts that they control rather than continuing to pay high insurance premiums. As a result, "the banks are going to gain, to the detriment of the insurance companies."
Metavante's health-care division says it has more than 120 financial institutions as customers, including one of the nation's largest banks (which it would not name). It says 17,000 employers are using its MBI Benefits debit card for their employees, and nearly 1.5 million of the cards have been issued.
Last month Metavante announced that Cigna Corp. would use the card to access their flexible spending accounts, a different form of tax-advantaged health account.
Mr. Reynolds said small and midsize banks are a natural market for Metavante, which provides core processing services to many such banks.
However, "we have a very strong opportunity now to market these same [HSA] capabilities to the top 50 banks," he said. "For speed to market, they are better off in many respects to partner with a company like Metavante."
Other insurers, like Cigna, will likely see the value of offering policyholders a "multi-purse" card like MBI Benefits, which can used with HSA, flexible spending, and other types of accounts, such as child-care and transportation benefits, he said.
"The card is going to be a key enabler to affirming health-care coverage," Mr. Reynolds said. "Insurance companies are very important clients for Metavante, as well. We think that is a key competitive advantage that we offer."
