Fifth Third Targets Growth Medical

June 11, 2007
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GRAND RAPIDS — When Bob Wolford, CEO of Grand Rapids Ophthalmology, was looking for an institution to finance a multi-million dollar, multi-specialty ambulatory surgical center in Walker for a four-practice partnership, he decided to put out bids.

And when the dust settled, Wolford found that Fifth Third Bank Western Michigan, which already had relationships with Grand Rapids Ophthalmology and its 200 employees, came out on top.

“We ended up with great financing in terms of overall costs of the financing, and frankly,l what the overall costs will be for many years to come, and Fifth Third brought that to the table,” said Wolford, a former banker. “They suggested the bond for a project like this. Maybe they could have made more money if they would have done something different, I don’t know that, but this one was clearly beneficial to us.”

Health care is a growing sector in the nation and in an otherwise lagging Michigan economy.

“That’s one reason we’re organized the way we are as a bank, with dedicated personnel focusing on the health care industry from the individual practices up through the large systems like Spectrum Health,” said Andy Schmidt, vice president, health care services, commercial banking.

“It seems like recently it’s kind of in vogue: Everybody drives up and down Michigan (Street) and they think, ‘We’ve got to be involved in the health care industry,’” said Scott VanderLeek, vice president, affililate private banking manager. “This team has actually been here for 13 years doing this. It’s not something that just dawned on us.”

Fifth Third intends to expand its presence in the sector nationally, said Schmidt, and created a national health care team in April.

In a May article in trade publication American Banker, Fifth Third CEO Kevin T. Kabat and Senior Vice President Kevin P. Lavender said the Cincinnati-based bank with a significant Grand Rapids presence is aiming for health care’s big players even if they are outside the bank’s footprint. While still serving nonprofit hospitals, long-term care and physicians’ practices, Lavender told American Banker that Fifth Third will target “large for-profit hospital groups, rehabilitation centers and medical equipment makers.”

Schmidt now provides health care lending reports to Lavender.

Locally, the bank has six people who focus exclusively on serving health care customers. They periodically draw in other personnel from areas such as mortgage or commercial lending.

Fifth Third Western Michigan works with independent community hospitals in West Michigan to help them through state financing authority bond issues, Schmidt said. Called the HELP loan program, it is handled exclusively by Fifth Third. Schmidt, who’s handled the business line for five years, said the program is used for capital costs. He has worked, for example, with Muskegon’s HackleyHospital’s new emergency department, and with PennockHospital’s conference center, lobby and outpatient areas.

Schmidt said he works with West Michigan’s independent community hospitals and long-term care facilities in cities such as Grand Rapids, Kalamazoo, Muskegon, Grand Haven, Lansing and St. Joseph to provide letters of credit for the bond market. A candidate for a master’s degree in GrandValleyStateUniversity’s Public and Nonprofit Administration program, with a concentration in health administration, Schmidt said he expects to also be involved in Fifth Third’s reach into the larger institutional market.

On the private banking side, Fifth Third works with 40 to 50 physicians’ practices, such as Grand Rapids Ophthalmology, to provide services from merchant processing services to personal wealth management for doctors and banking services for other employees.

“We really work with physicians and medical practices for anything, going from the physician’s personal banking needs all the way up to the practice needs,” said Tim Haberling, vice president, medical services team leader.

For example, the bank provides electronic deposits for checks, allowing them to be scanned in and sent to the bank through Internet banking.

“I daresay Fifth Third was on the front edge of this technology,” Haberling said. “It not only saves time, money and effort, but also reduces the possibility of any risk with not getting that deposit in.”

Fifth Third also offers personal banking services, on the theory that doctors are too busy to go to branches, he added. The bank also provides investment-related services and wealth planning, he continued.

“We’re finding over and over again in talking to physicians and their families, they have a number of different advisers they rely upon personally, but the onus is on them to coordinate all their advisers. They don’t have time for it, or they don’t want to deal with it, or they’re given a plan of some type and it gets put on a shelf,” Haberling said. “In our wealth planning service, we bring the ability to coordinate all that.”

Mary Jane Berklich, assistant vice president, marketing manager, said Fifth Third stays active in health care associations.

“We really put the onus on us and hold ourselves to a higher standard to fully understand what’s happening in the industry and what’s coming,” Berklich said. “We’re constantly coming out with new products and services to support that.”

Wolford runs a seven-office practice involving 20 ophthalmologists and optometrists who handle an array of services from vision exams, glasses and contact lenses to glaucoma treatment, plastic surgery around the eye and botox treatments. With four locations in the Grand Rapids area and one each in Ionia, Greenville and Holland, it’s one of the largest such private practices in the state.

The latest office is located in Walker in the same building as the new ambulatory surgical center, which also will handle hand, foot, ankle and leg vein surgery.

“That one operation is actually a partnership of multiple practices in the West Michigan area,” Wolford said. “That building, as substantial as it is and all the costs of an ambulatory surgical facility, which is similar to a small hospital, actually, we utilized bond financing using Fifth Third as the letter of credit holder.”

Wolford said Fifth Third’s understanding of health care is essential to handling routine office matters, such as payments from a variety of payer sources.

“We’re getting payments from, say, a Blue Cross or Priority Health, and that payment may cover 1,000 patients,” he said. “To be able to quickly get those funds into deposit and earning interest and available for our operations, and yet still getting the information that we need so we can process those in our patient handling financial system, that’s another example where it takes an entity that knows health care, and knows what it’s like when you deal with Blue Cross and Priority Health and Medicare and other insurance entities.”    

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