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ATM Pioneer Seeks Opportunity in Healthcare Payments

True or False: Banks Are to Merchants as Insurance Companies Are to Healthcare Providers

It's too bad that they dropped the analogy section from the SAT because the power of analogy has opened up an enormous opportunity for one of the pioneers of the electronic banking system.

In the mid 1970s, Joseph Wolfson founded Metroteller Network, one of the earliest electronic banking and ATM networks to succeed in the marketplace. Then, after launching, growing, and selling a wireless device company, Wolfson came back to the banking industry to found Cartel, another electronic banking and transaction network. He sold Cartel to Fifth Third Bank (Cincinnati, $94 billion in assets) in 2000.

Now, as president and CEO of his latest venture, HealthTransaction Network (Williamsville, N.Y.), Wolfson is building a brand-new electronic transaction network from the ground up. But this time, it's not for banks -- it's for the healthcare industry. "The parallels between what I did 30 years ago [and my current work in healthcare] are incredible," he says.

Thirty years ago, the challenge was to create a hub to connect many banks with many retailers, so that a consumer could enter a store, swipe a card and have funds deducted from a given bank account. Now, the insurance companies are where the banks used to be, and the healthcare providers are in the position of the retailers.

Press '1' for Stitches, '2' for Aspirin

But there's a big difference between debit networks and healthcare networks, in that the holder of an ATM card can only withdraw funds to the extent of the total balance in the account. In healthcare, a very sick customer bearing false credentials can conceivably rack up limitless charges without the ability to pay.

A typical example, relates Wolfson, is the case of a patient needing emergency surgery who handed over a Blue Cross/Blue Shield card upon admittance. The man immediately received the surgery at a price of $6,000. Then, the hospital discovered that his insurance had expired three years prior.

One solution is biometrics. "Phase one is a smart card tied in with fingerprint and signature recognition," says Wolfson. "We're going to match them, and we'll know that that's 'John Doe' standing in front of you."

"We then have online, real-time eligibility, right through to the insurance company, through our switch," adds Wolfson.

Just as banks issued ATM cards, insurance companies would issue these biometric healthcare cards, explains Wolfson. Then, similar to the deployment of merchant terminals at retailers, card terminals would be deployed at the offices of healthcare providers and in the emergency departments of hospitals.

In the early stages, Wolfson envisions the card allowing the patient to make a co-payment. "Say you're in for your annual physical," says Wolfson. "They want their $10 or $20 -- it's the only thing they get quickly.

"There's a great opportunity to do the simple, routine transactions," notes Wolfson.

From there, Wolfson plans to tackle claims processing. "Why does it take 45 to 60 days for the insurance companies to pay?" he asks. "We're going to determine what are the routine transactions and standardize with the insurance companies and the providers." Although Wolfson expects resistance from the insurance companies, he feels that the market power is shifting to the providers.

Finally, there's an opportunity for a central hub to act as a switch for information contained within electronic medical records, an idea championed by Dr. David Brailer, National Coordinator for Health Information Technology for the U.S. Department of Health and Human Services.

"We're not talking about doing it," Wolfson says. "We're doing it." HealthTransaction Network intends to start its national network in the Buffalo area and has signed letters of intent with several payers, providers and physician groups.

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