By Aaron Bills
3Delta Systems Inc.
For all the advances of modern medicine, the health care industry continues to struggle with chronic and aggravating business pains; slow bill collection processes, a high rate of default on payments for services rendered and inefficient billing reconciliation because back-office accounting systems remain stuck in the Stone Age. And therein lies a huge business opportunity for you, as ISOs and merchant level salespeople (MLSs).
To fully leverage this opportunity, ISOs must first educate themselves about what it takes to do business in this massive and growing market sector.
It involves engaging in open, one-on-one dialogue with health care service providers, suppliers and distributors to better understand their pain points, and what are often complex yet highly inefficient billing and payment collection processes. It requires being well versed in patient privacy laws, such as the Health Insurance Portability and Accountability Act (HIPAA).
It also entails staying on top of the latest developments in interchange rates and credit card payment security requirements such as the Payment Card Industry (PCI) Data Security Standard, which was established to protect cardholders and the integrity of the credit card payment system from fraud and data theft.
Unlike some sectors, the health care industry is made up of a series of verticals whose lines of business generally fall into one of two categories: health care service providers, and suppliers and distributors of medical and surgical goods to those providers.
Health care service providers include hospitals and medical networks, as well as doctors' offices and clinics. Many of these providers do not have effective credit card or electronic check processing systems in place, making it difficult to collect payments at the point of service, to associate payments with patient insurance information, or to easily clear payments through their accounting systems.
The "do good unto others" mantra that permeates this industry's mindset often suggests providing care first and collecting - or hoping to collect - payment later.
In some cases, the rate of collection is so poor that a 20% discount is offered at the outset of invoicing to encourage patients to pay the full amount on time. This discounting approach not only perpetuates accounting inefficiencies, but also translates into a higher cost of doing business.
The second broad category is typically made up of pharmaceutical companies, medical equipment and device manufacturers, or distributors and agents who specialize in providing a wide range of goods.
Anything from medications to bandages and prosthetics are sent in large volumes to hospitals, medical groups or government agencies charged with delivering health care services and medical supplies to America's citizens, government employees and military forces.
In this case, supplying and distributing health care goods resembles a standard business-to-business transaction, with a majority of transactions involving the use of purchase cards (P-cards), and capturing and reporting level 3 payment data with the highest level of transaction detail.
P-cards with level 3 qualification provide explicit, line-item purchase and payment information - from product codes and units of measure to price and applicable taxes.
This data can then be sent electronically to health care providers', suppliers' or distributors' P-cards for review and downloading to their accounting systems. (For more information, see "P-cards: The payoff is palpable," by Aaron Bills, The Green Sheet, Aug. 13, 2007, issue 07:08:01)
Since the health care industry is particularly attuned to privacy and information security issues, familiarity with HIPAA is a key determinant of ISO success in this vertical.
Enacted in 1996, this federal law encourages widespread electronic data interchange by setting national standards for electronic health care transactions. HIPAA also governs the security and confidentiality of individually identifiable medical information.
With credit card data theft and fraud on the rise, ISOs and MLSs also must be knowledgeable about PCI credit card payment, know which service providers and solutions are PCI-compliant, and be able to recommend the best solutions for protecting sensitive customer information by merchants who store, process or transmit card account data. (For more information, see"Data security sells," by Aaron Bills, The Green Sheet, July 23, 2007, issue 07:07:02)
Payments professionals who excel in this vertical are not just selling merchant payment systems or credit card terminals. They are taking on a far more consultative role by finding ways for health care providers, suppliers and distributors to save time and money and by demonstrating that they understand how healthcare businesses operate.
So, listen closely to customer needs, be prepared to recommend a mix of payment solutions based on different business process flows, and use a PCI-compliant solution provider with the toolbox that allows payment processing in one system along with the ability to automate client billing reconciliation processes.
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