Eastern Bank has jumped into the consumer-directed health-care business with card-based spending accounts and has been able to sign up 30 employers in its first three months.
And because the $6.8 billion-asset Boston bank has partnered with a turnkey platform provider, a single executive has been able to run its program thus far.
The deal with ConnectYourCare, a Hunt Valley, Md., unit of the St. Louis pharmacy benefit manager Express Scripts Inc., allows the bank "to be entirely focused on sales and marketing," Douglas Whitney, the vice president of treasury services for Eastern, said in an interview.
ConnectYourCare's platform supports health savings accounts, flexible spending accounts, and health reimbursement arrangements, all of which are used to fund medical care tax-free. Eastern Bank offers all three products, Mr. Whitney said.
He joined the bank a year and a half ago to help it expand its health offerings. From his previous job, with a company that helps medical practices manage their revenue, Mr. Whitney knew that patients' bills were growing dramatically.
As a result, he expected demand for HSAs, FSAs, and HRAs would increase.
Those products fit well with the small businesses that are predominantly based in Massachusetts, and they complement Eastern's employee benefits group, whose referrals helped the bank get the initial group of employers on board, he said.
J. Marc Palmer, the chief executive officer of ConnectYourCare, said its products and services range from health payment cards to financial claims adjudication to investment options within health savings accounts.
Its distribution partners have 800 employer clients and cover as many as 150,000 individuals.
Those distribution partners alreaday include four banking clients: Eastern, Florida Capital Bank in Jacksonville, LaSalle Bank, a Chicago unit of Bank of America Corp., and PNC Financial Services Group Inc.
It is shooting for more following the October acquisition by Express Scripts from the privately held Revolution Health Group LLC of Washington.
Mr. Palmer, an Express Scripts veteran who took over as ConnectYourCare's CEO following the acquisition, said that he wants business through banks and other partners to double or triple in each of the next four years.
Earlier this year, his company conducted a study on why industrywide predictions that products like health savings accounts would be adopted more widely had not come true.
"We found that there was a lot of confusion about what the accounts do or don't do, as well as how to use them," Mr. Palmer said. "The net effect was that we weren't getting the kind of adoption we had been hoping for."
In response, ConnectYourCare has put more employees in the field to help with that learning curve. Since his arrival it has added 14 employees, raising the total to 54. Express Scripts also has over 20 other employees who are focused on the consumer-directed health business, he said.
"We've tried to recognize that service is a very important part of what has to happen here," he said. "We must take concepts that individuals and employers don't understand well and simplify them, then create strategies to make people act, and then execute those strategies."
Mr. Palmer said that his unit is agnostic about which product — health savings accounts, health reimbursement arrangements, or flexible spending accounts — employers might eventually coalesce around.
Information Strategies Inc., a Ridgefield, N.J., company that studies consumer-directed health care, has predicted that the health reimbursement model will eventually prevail, but the debate continues about which flavor — HSA, HRA, or FSA — will succeed.
JoAnn Laing, the president of Information Strategies, said that there are some indications that certain employers may favor HRAs, because they prevent employees from taking the money with them if they leave the company. With HSAs, "once you give an employee the money, it's theirs, and they can leave."
Flexible spending accounts, available since the 1970s, remain popular in part because many third-party administrators are set up for them and are used to using them, Ms. Laing said.
Many banks have entered the consumer-directed health-care business in the last few years, especially through HSAs.
Mr. Whitney said that Eastern's experience shows that it is still possible to make a quick entrance. His bank signed on with ConnectYourCare in late September and was able to begin offering the products to customers Jan. 1.
All of Eastern's current clients are in Massachusetts, but the bank wants to use referrals from its employee benefits business and from outside brokers to expand its consumer-directed health-care base throughout New England and perhaps beyond, he said.
