Special Bank Health Industry Focus
A few years ago the bank made the decision locally that its Private Banking Group would handle the majority of financial services for health-care practices and medical professionals.
“We eventually recognized that, based on the number of practices that were banking with us, that it just made sense to have some folks on our team that specialized in that piece,” recalled Beth Jolly, vice president and marketing manager of private banking.
She said Private Banking’s purpose is to provide a single point of contact for financial service for higher income, higher net worth people.
Because of the way doctors are compensated, Jolly explained, they pull all the profits out of their practices every year to avoid double taxation.
“As we were growing the business,” she said, “the more we learned, we realized that it was much different from working with a manufacturing company or a retail company because of compliance reasons and reimbursement issues and just the way the whole medical practice works.
“That’s really when we started to carve out this specialty.”
“We wanted to make sure that we were educated so that when they were telling us about their business, we could better understand their risks.”
She noted that the Health Insurance Portability and Accountability Act (HIPAA), for instance, has changed how health-care practices conduct business.
The act restricts what patient information health professionals can share.
“If you’re a banker that works with manufacturing and retail companies, you might not realize what HIPAA is or how it affects a medical practice. That’s where we think we can be different.”
For a corporate practice, for example, the bank might provide a working capital line of credit and finance the firm’s equipment, as well as the facility that houses the practice.
The bank could also offer them depository and cash management services, patient credit card processing, retirement planning, or a 401k or profit-sharing plan, Jolly explained.
“We can handle anything on the corporate level for that practice,” she said.
“Likewise, that same banker could handle any of the physicians’ individual needs. They can have one-stop shopping for anything they want to do for the business or the individual professional.”
Personal services could include a physician’s home mortgage, home equity line of credit, personal credit cards, deposits, investment management and wealth planning services, insurance and disability.
In the Grand Rapids market, four of the 10 bankers in the Fifth Third Private Banking group spend the majority of their time working on the health care side, Jolly noted.
They attend health-care industry seminars and do a lot of networking in the medical communities to stay on top of new developments and issues.
That includes holding membership in organizations such as the Michigan Medical Group Management Association.
Jolly estimates that the Private Banking group works with about 100 corporate health-care practices today and probably 300 to 500 medical practitioners.
Locally, she said, more and more medical professionals are looking for ways to diversify their investments.
“We’re seeing the docs look at opportunities with real estate, in particular.
“A lot of practices are looking at owning their own building vs. leasing. We’re seeing a number of doctors looking at owning or partially owning their own surgical center. We’re seeing practices looking at the possibility of taking their medical records from a paper file to an electronic file.“So the conversations we’re having primarily today that might be different from what we were having a year ago are tied to financing those kinds of opportunities.”