Metavante Technologies Inc. said its planned purchase of the San Diego software vendor BenSoft Inc. would make its health account products easier for customers to manage.
BenSoft makes a program called RepayMe that helps administrators manage transportation and health accounts, including health savings, health reimbursement, and flexible spending accounts.
Metavante announced the deal Tuesday and expects it to close this week. The Milwaukee company would not say how much it would pay. The RepayMe software has already been tailored for Metavante accounts, and Metavante plans to begin marketing it to clients immediately.
"The benefits programs that are being offered are becoming increasingly complex," John Reynolds, the president of Metavante Healthcare Payment Solutions, said in an interview Tuesday. "What we're attempting to do is simplify these otherwise complex products."
Metavante normally offers these accounts with a combined payment card that can determine automatically which account to charge for a health-related purchase. What was missing was a system to help administrators manage these otherwise disparate accounts in one place, and the BenSoft purchase would solve this issue, Mr. Reynolds said.
The acquisition will give consumers "a much better experience" when working with several health spending accounts, he said. "There's demand for interoperability."
In addition, Mr. Reynolds said the purchase would help Metavante stay competitive against rivals such as Fiserv Inc. of Brookfield, Wis. He called the BenSoft program "a more tightly integrated" version of one that Fiserv offers.
Madan Moudgal, the chief operating officer of Fiserv's health care software unit CareGain Inc., said: "We've spent the last two years building a variety of integration points between a number of different products that make up the banking solution and CareGain platform." This work has given Fiserv "a lead in this space," he said.
The purchase would complement Metavante's 2005 acquisition of the Waltham, Mass., payment software provider Med-i-Bank Inc. for $145 million. Metavante renamed the vendor MBI Benefits Inc. Its software, which is used to process transactions on cards linked to health accounts, can determine which purchases should be charged to which account on a multipurse card. "Health reimbursement accounts and health savings accounts are where we see, over the course of the next few years, tremendous growth," Mr. Reynolds said, and flexible spending accounts will remain popular.
Alenka Grealish, who manages the banking group at the Boston market research firm Celent LLC, estimated that there were 1.9 million such accounts at the time, and that within a year the number would grow to 3 million, which "represents a small share of individuals with health insurance (1.9%)." By 2012, she predicted, there will be 12.5 million HSAs, which will represent 7% of the health insurance market.
Brian Riley, a senior analyst at TowerGroup, the independent research firm owned by MasterCard Inc., predicted that 15 million to 40 million flexible spending and health savings accounts will be opened in the next three years. Since card payments cut the time and tedium of seeking reimbursement through paperwork, such technology helps spur the growth of these health accounts, Mr. Riley said.
Metavante has "wonderful technology" on the back end, he said, so the front-end interface it would get with BenSoft should make the offerings even more compelling. "Having this in one cozy interface is important."
