National Australia Bank and Westpac Banking Corp are attacking the $100 billion national health market by separately investing in two medical technology start-ups which are making it easier for patients to book and pay for allied health services and simplifying financial management for doctors.
Through its corporate venture fund NAB Ventures, National Australia Bank has invested in Medipass Solutions, a new company created from the start-up Localz, which will roll out a customer-facing application for booking health services like optical or therapy.
Westpac, meanwhile, has taken an equity stake in Surgical Partners, which has built middleware for GPs and specialist doctors to help them integrate medical services payments with their own accounting systems.
Nether bank would disclose the size of their investments but both are examples of banks taking a deeper role in the digital ecosystems of business customers, as payments become more deeply embedded in services arranged over smartphones.
While Medipass and Surgical Partners are focused on different parts of the medical market, each start-up came to the banks' attention via internal competitions: Localz won NAB Labs' inaugural Hackathon two years ago while Surgical Partners won last year's Westpac/Blue Chilli Innovation Challenge.
NAB is already a player in health through its Hicaps (Health Industry Claims and Payments Service) product and Westpac has a presence in medical financing through its white-labelled ProLoan product, sold through the Bongiorno Group. But both banks want to clip larger tickets as medical spending grows.
By using Hicaps, Medipass will link to private health funds to ensure customers pay only their out-of-pocket expenses rather than waiting up to a month for costs to be reimbursed by their insurance. Medipass co-founder Pete Williams said for patients, practitioners and health funds the entirely digital process will be simpler to navigate and instantly accessible.
The 58,000 Hicaps payments terminals in the allied health sector are a big income earner for NAB, given their monthly subscription fee of around $30. Jon Davey, head of NAB Labs, said Medipass will disrupt NAB by "totally removing" that income source in time as payments shift to mobile phones (NAB will continue to levy a payment and claim fee). To compensate, NAB is hoping the app will be adopted by a significant portion of the 60,000 allied health professionals that don't currently have access to electronic payments.
Medipass – which will compete with WhiteCoat, a similar offering via a joint venture between the health funds NIB, HBF and Bupa – is currently being tested as NAB works with Medibank to create links into the health insurers. It will be officially launched in the first half of this year, initially targeting Hicaps customers and then services through GPs and the National Disability Insurance Agency.
While NAB's primary focus is healthcare customers, Westpac's target is providers.
Surgical Partners is a data manager that splits the various components of medical payments into practice and individual doctor accounting systems. Its chief executive, Marcus Wilson, a former Macquarie Group healthcare analyst, said the product is "the only thing currently moving money between the point of sale practice systems and the accounting ledger". He reckons the system, which will also enhance data for business planning, could cut $1 billion from the administrative cost base of healthcare delivery.
"Nothing talks at the moment," Mr Wilson said. "Healthcare spending is growing so fast but it is so inefficient. Reconciliation is such as massive problem and there is lots of fraud." Westpac's national head of healthcare, Leon Berkovich, said through collaboration with Surgical Partners "we are combining our expertise to fill the gaps and deliver tangible solutions for medical practices".
Mr Davey said NAB Ventures' non-controlling stake in a new company "is the best model to allow us to truly and rapidly innovate the product and get to market as quickly as possible".
"We feel this model allows us to be unencumbered by some of the policy and process that a big organisation like ours adopts, and the commercial arrangement makes sure NAB is able to capture a huge amount of the value."
