It was late 2010, and the members of Citigroup's executive committee felt the company finally had breathing room again after a brush with insolvency two years earlier. It was time, they determined, to divert at least some of the emphasis on blocking and tackling to something a little more inspiring.
A small team of strategists was assembled. Be visionary, they were told. Start with the company's strengthsits global brand, its role in moving $3 trillion around the world every dayand apply them in new, game-changing ways.
Mobile was a natural jumping-off point, and the new "enterprise payments" group quickly got to work on a digital wallet. It also developed new services to smooth out electronic commerce for merchants with a multinational customer base, another good fit for Citi's transactions expertise and global reach.
The third area of focus was far less obvious, but arguably the most intriguing: Citi's enterprise payments group was going to dive into the U.S. health care sector.
Even before the Affordable Care Act was signed into law in March 2010, it was clear that health care would become a hotbed for disruption and dislocation. The political debateand the botched rollout of Obamacare this yearkept a white-hot spotlight on the plight of the uninsured. But the skyrocketing cost of medical care also has had a big impact on the 263 million Americans who already have insurance and are now shouldering more of the expense burden in an increasingly unwieldy system of care and coverage.
Patient obligations are quickly marching toward the $1 trillion-a-year mark. The increased pressure on household budgets doesn't bode well for doctors, who already find that roughly a quarter of their billings never get paid.
The trends raise big questions about public policy and the price of medical care. But what Citi saw was, at least in part, a payments problem.
"Every year, people like us are going to be more and more responsible for a larger percentage of our health care costs, and a consequence is that we're going to have more bills that we have to pay directly," says Deborah McWhinney, who heads Citigroup's global enterprise payments division. "There's a tremendous opportunity to simplify this, to really make it easier for families to manage their health care costs and to know what bills to pay when.
"And from a provider perspective, if they could make just a little bit of a dent by understanding how to collect the money better," allowing them to get paid faster while also improving the patient experience, "it would make a huge difference in their bottom line."
McWhinney has been a quick study on the recent trends, but health care isn't her background. A former Charles Schwab executive, she joined Citi in 2009 to run its personal wealth management business. But she soon had a new role overseeing global digital merchant acquiring, and reported to Paul Galant, who headed up enterprise payments. (McWhinney runs the payments group now, following Galant's hiring this fall as CEO of VeriFone Systems.)
What the group envisioned was an easy-to-use platform, accessible online or via mobile phone, where consumers could reconcile bills from their doctors with explanation-of-benefits forms from their insurers, go over past bills, sign up for alerts when new claims were ready to view, and initiate payments-with the privacy and security safeguards one would expect of a system involving personal health information and financial transaction processing.
The outgrowth of the vision is Money Squared for Health (or as Citi has branded it, Money2 for Health). By March of this year, Aetna had signed on as the charter benefits company in the project's development. Money2 for Health is now in pilot mode and expected to be rolled out to additional Aetna customers in 2014.
The platform is meant to be brand-neutral, not just in terms of the insurance companies involvedCiti hopes to bring on several more in short orderbut also in terms of the consumer. Users can be a customer of any bank, and they can make payments tied to any checking account or credit card, regardless of whether it is attached to a Health Savings Account.
Health care industry consultants call Money2 for Health a novel idea for a marketplace overwhelmed by inefficiencies and red tape. But they warn that the recent history of health care in America is littered with failed experiments by financial services firms that dared to step into the sectorperhaps one of the few industries that is more complex than banking itself.
Whether or not it achieves broad adoption, Citi's platform represents a new way of thinking about the nexus of health care and financial services. Other banks have services that can speed payments and deposits for doctors' groups; they offer HSA cards and investment accounts tied to workplace benefit plans. But by bringing together each player in the payments chainthe patient, the care provider and the insurerCiti has reimagined the role for banks in a crucial market aching to be reengineered.
"Concepts like this certainly have tremendous value in at least being tested and seeing if it works," says Michael Mytych, president of Health Information Consulting in Menomonee Falls, Wisc. "The unique thing about this," he adds, is that beyond potentially streamlining the billing process, "it ties it back to the payment mechanism" itself.
Shepherding the idea from concept to pilot required that the enterprise payments group secure the cooperation of co-workers from across Citi. Sometimes that meant acting more like evangelists than executives.
In a big organization, McWhinney says, "to get something done that is new or combines different parts of a company, you need to be part crazy and part just so dogmatic about how you can take a 'no' and hear a 'maybe,' and turn it into a 'yes, if you do it a certain way.'"
The group had multiple consultations with the folks in legal, compliance and risk management, of course. Industry intelligence came from Citi's market research division and investment bankers with relationships in the health care sector. Colleagues in marketing and events offered advice on the right conferences to attend in order to start drumming up interest in the concept; technology staff was instrumental to the system's design and construction.
One of the biggest contributors to the project, outside of the enterprise payments group itself, has been Citi Retail Services, the company's private-label credit card business. Its expertise on closed-loop systems aided in the design and operational workings of Money2 for Health, and it is responsible for the platform's customer service function.
The heart of Money2 for Health, of course, is Citi's well-oiled payments system. "At the end of the day, what we're really doing is moving a lot of money, and there is nobody better at moving money than Citibank," says McWhinney. But from the project's outset, it was the design and build-out of the user interface, from the ease of sign-up to the system's response times, that dominated her group's priority list.
June Yee Felix, who leads the health care business of the global enterprise payments group, says the emphasis on user experience is important not only to drive adoption of Money2 for Health, but as a marker of where U.S. health care is headed generally.
"Consumerism is a huge new word in health care, and banks are actually fairly well positioned to help there," says Felix. With patients taking on more of the obligations tied to health care costs, hospitals, which were used to collecting mostly from insurance companies and Medicare and Medicaid "all of the sudden really care about collecting from patients," she says.
The new emphasis means that care providers will need to do a better job of "knowing their customer," she adds, which "banks know how to do, not just in terms of anti-money laundering but in terms of really understanding the consumer," In the banking industry, she says, an understanding of the consumer is fundamental to the way institutions create products, provide service and build loyalty.
As has become customary in the payments space, there are plenty of disruptors at the door trying to sell the health care industry on services that would disintermediate the banks. But Felix, who was IBM's global general manager of banking and financial markets before she joined Citi as a managing director in the enterprise payments group, sees an advantage for banks here, too.
"I think the banks come to health care with a higher level of trust in some ways than some of the tech companies since we're regulated and we understand privacy and security very well and we do it at industrial strength," she says. "And that's something that matters as health care goes through this transformation."
At $2.7 trillion, U.S. health care spending accounts for nearly 18 percent of gross domestic product. It's not just the expense that has become so mind-boggling.
"When you walk into a doctor's office, 95 percent of the time the doctor or staff has no idea what they are allowed to charge you for that service under their contract" with the insurer, says health plans consultant Patrick Kennedy of PJ Consulting in Rockville, Md.
"They're worried about treating the patient; they don't even send out the insurance claim until days after they see you." At hospitals, the delay is closer to a month, he says. "The reason for the time lag is because there is so much information that needs to be sent to the insurance company or to Medicare or Medicaid in order to get the claim paid."
Research by Citi indicates that around 70 percent of consumers don't pay their health care bills until after they've matched them to the explanation of benefits from the insurer.
For consumers, bills for hospital stays are especially difficult to reconcile. In addition to parsing out what insurance will and won't cover, there often are separate bills to contend with-perhaps one from the surgeon, one from the anesthesiologist, another from the radiologist, and so on.
Perhaps platforms like Money2 for Health will bring some relief from the red tape, Kennedy says. (In August, five months after Citi and Aetna announced their partnership, UnitedHealthcare introduced an online bill-payment service for its plan participants, with transactions settled by Instamed, a health care payments specialist. A UnitedHealthcare spokesman says the service already has been used by "tens of thousands" of members, generating more than $10 million in payments since its launch.) But even if systems like these catch on more broadly, Kennedy says, the confusion baked into the health care billing process is likely to keep consumers guessing.
"Just because you make it easy to pay doesn't mean you've made it easier to understand what you're supposed to pay," he says.
Erin Hatzikostas, who has been leading the Money2 for Health initiative for Aetna, agrees the platform isn't a panacea. "I would be totally remiss if I said it solved everything," the head of strategy and business development for Aetna Consumer Financial Solutions admits.
But, she says, focus groups suggest that at a minimum Money2 for Health "lops off another layer of confusion."
Hatzikostas says she spent "a solid year" focused on developing Money2 for Health. She describes it as a substantial step up from Aetna's existing Web tools for viewing and paying claims. (The company already allowed customers to make payments using HSAs or other tax-advantaged accounts tied to their benefits.)
"The key difference in what we're building with Money2 for Health and why it trumps what we do today is that it's really important to allow consumers multiple ways to make those payments," she explains.
Kennedy, the health care consultant, questions why Citi didn't go after a Blue Cross Blue Shield health plan as a partner for the pilot. Though limited in geographic scope, these plans tend to have huge concentrations in the places they operate. Kennedy argues that care providers would migrate to the platform faster, boosting its chances of success, if they saw large numbers of their patients using it. The customer base for national players like Aetna is too diffuse to hold that kind of sway, he says.
"A doctor isn't going to care that 3 percent or 5 percent of their business can be done this way. They're going to say, 'What about Medicare? What about my Blue?'
"Having Aetna is not enough," he says. "I think it's great what they're doingit's a great idea. It's just going to be a whole lot more difficult if you don't get the Blues to participate."
But Craig Vallorano, executive vice president for business development and strategy for Citi Retail Services, says Aetna, which has 49,000 employees and $35 billion in revenue, met Citi's criteria in several important ways, including its willingness to invest in the platform's development and growth. "It's not that others couldn't fit the bill, but Aetna certainly did," Vallorano says.
"The beauty of innovation," he adds, "is there are thousands of ways to try something."