The payments podcast from Bottomline.

Episode Transcript

Owen McDonald: Welcome to the Paymode edition of The Payments Podcast. I'm Bottomline Managing Editor, Owen McDonald. This series of Paymode-themed podcasts looks at the hottest trends in business payments with Paul McMeekin, Vice President of Marketing at Bottomline, along with expert guests. In this episode, Paul welcomes Joe Kight, Head of Healthcare Institutional Client Group at US Bank. They explore ways that banks are optimizing payments for healthcare clients as labor costs and other expenses continue to rise in this critical sector of the economy.

Here's Paul McMeekin and Joe Kight.

Paul McMeekin: Hi. Welcome to another episode of the payments podcast as we continue our Paymode special series. And today, I'm joined by Joe Kight, head of healthcare for institutional client group from US Bank. Welcome, Joe.

Joe Kight: Thanks for having me. I really appreciate the time here, and, and look forward to speaking with you.

Paul McMeekin: Great. So, we have a very good conversation lined up today. Before we dive into it, can you give me a little bit of background information about you and your current role, Joe?

Joe Kight: Yeah. I've been in banking for 27 years, so pretty much my entire working career. And as you mentioned, I'm the Head of Healthcare for the Institutional Client Group at U.S. Bank, based out of New York. I live down in New Jersey. I have a wife and twin daughters - they're three and a half years old. So very busy on all fronts!

Just to give a little context on what healthcare looks like at US Bank. Because healthcare is so broad, it is it is really, for us, defined as three different segments:
-    We have a mid-cap segment that really focuses on what we would call emerging healthcare companies. These would be companies with 50,000,000 to a billion [US] dollars in revenue. 
-    We have a large-cap not-for-profit healthcare team, that focuses on large healthcare systems. Many of the hospitals you see across the country, we do business with. 
-    And then we also have a large-cap for-profit healthcare team, which focuses on for profit companies, greater than a billion in [US] revenue. And these would be the pharmaceutical companies, the payers, med device companies, healthcare service companies, and such.

We're a coast-to-coast, coverage model. And so, for U.S. Bank, it is a strategic importance for us from a vertical perspective. And so, we have lots of resources dedicated to, servicing the healthcare industry.

Paul McMeekin: As we were prepping for this call, I just asked you a question - I'll ask it again. What's going on in healthcare, and what's causing the industry to look at their tech stack?

Joe Kight: You know, I spend a lot of time on the road. I visit with a lot of healthcare systems. I talk to CFOs, treasurers, rev cycle management. The reality is in in today's environment, healthcare is under real margin pressure right now. Labor costs are up, reimbursements are down, and patients expect a digital first experience.

You know, that's really forcing the providers to rethink old silo systems and invest in automation data and modern payment tools. At this point, it's really about survival and staying competitive for these organizations.

Paul McMeekin: Survival and competitive. Let's dig into that a little bit. Is anything going on in the industry which would make them rethink their technology today?

Joe Kight: Yeah. You know, healthcare is a little bit similar like banking. Right? They deal with incredibly sensitive data, and they're very complicated organizations. The way money, the patient experience, and how everything stitches together, it's a very big investment to upgrade your technology to go into this automation, this driving for efficiency.

It looks tremendous on paper. It's very expensive to do, but the benefits far outweigh the cost, but it is, nonetheless, very, very intensive. And with the current backdrop of, a changing legislative, environment for these organizations, again, the cost that I just referenced, there is this real sense of urgency now to really take a look at the back office, take a look at the AR, the AP, the rev cycle, the cash conversion cycle, and really make that a strategic priority. And so, you're seeing a lot of systems really starting to lean into it. I've seen a faster pace of adoption, from a technology perspective in healthcare in the last, call it, 24 months than I probably have in the previous 20 years.

It's a very real trend right now.

Paul McMeekin: So, let me just pivot slightly to payments. Some healthcare organizations have payment strategies, many do not. In your opinion, Joe, what does a strong payment strategy look like?

Joe Kight: Yeah. It's a great question. We, and I, get that question a lot. What does it really look like? And what I always like to tell folks is a strong payment strategy, it really isn't just about cutting checks faster. Right?

It's about automating AP. It's moving away from paper and using payments to create value. And that's a really key statement. Right? "Using payments to create value".

And what does that mean? It means creating and generating rebates, improving the vendor relationships, and really importantly, freeing up staff time. When done correctly, it turns finance from a cost center into a strategic advantage.

Paul McMeekin: No. Great. I love that answer. And so, you mentioned something earlier. I just want to go back to it.

You mentioned data and sitting on sensitive data and proprietary data. So, they sit on these large/vast amounts of data. You know, they struggle to turn it into actual insights. And so how can AP automation help bridge that gap between the world we're in today of this data that may not want to touch you because it's proprietary, it's sensitive, it's confidential, to making smarter financial, decisions.

Joe Kight: Yeah. I mean, if you think about today and I spend a lot of time with the healthcare systems talking about this healthcare sits on mountains of data, but they really struggle to make sense of it. And what automation really does is it pulls that data together, and it turns it into insights. It's like, where is your cash going? How can you better manage your working capital? And where can you drive savings? 

At the heart of what we do and the heart of what we're driving towards by helping these health organizations, modernize their API automation, is really about giving the CFOs, the treasures, the rev cycle management folks, anybody that touches the cash conversion cycle, real-time visibility so they can make smarter calls.

Paul McMeekin: Real-time visibility, I think, is the key there. Right? So, I'm going to use that last piece you said and jump to a different point about silos. So, some of the large healthcare organizations we work with, they operate in silos. You have your revenue cycle, the treasury, and the AP team that don't always communicate.

How do you help break these barriers down to create a more unified financial strategy? Like, do you work with the office of the CFO often?

Joe Kight: It's not any different than large organizations. Right? So, I don't want the healthcare organizations to feel like they're being called out here a little bit because this happens with every large organization. It happens within, you know, financial institutions as much as any other organization out there. 

But large organizations can operate in silos, right? And if you think about what makes up a healthcare organization, at least from a treasury function "you've got rev cycle, you've got treasury, you've got AP. And they oftentimes won't talk to each other". Certain departments will make certain investments in technology. They'll make changes without this close collaboration/working together with the other departments.

And so, you know, what we try and do and what we really focus on is helping connect the dots. Right? If you line up the patient payments, the supplier payments, liquidity, and you create this unified financial picture, that's where the real efficiency and cash flow gains come from. And that's how we work with the financial departments within the healthcare organizations. We try and be that bridge of bringing all those folks together because when it's working all together, it is surprising how much faster you can move and how much more you can get done. 

And so, we try and be that bridge for those organizations.

Paul McMeekin: That's interesting. So, I think the moving faster is a key element there where you can access the data, bring it all together in one team, and make those decisions. So, it's not just defensive as you mentioned earlier, but also opportunistic as well. 

You mentioned regulation before. So, I would say regulation, and fraud are probably the top two concerns that we hear. I'm assuming that's the same for you, but how does U.S. Bank make sure your solutions across your offering remain secure and compliant in such a highly regulated environment?

Joe Kight: So, this is a this is an enormous topic, and this is one that I'll just hit the 50,000 foot view because there's multiple subsectors of this. But regulation and fraud are big, big concerns. Healthcare payments, in particular, are a huge fraud target, and the regulatory environment is very intense. You know, our job when we create these banking products for healthcare organizations, is to really build security and compliance in from the start with real-time fraud monitoring, encryption, and solutions that meet these HIPAA  and payment standards. The idea being that it allows those healthcare providers to move fast but safely.

And that's a really key statement. Right? Because whether it's financial data or patient data, if you think about it, those are two of the most sensitive data areas out there. And when you get into the financial side of it around fraud, some of these fraud schemes are extremely complex, and even the most sophisticated organizations can fall victim to that. And so, we really prioritize, really think about, how to help mitigate that, but then also do it in a way that instills great confidence when the healthcare organizations, so they can move, again, like I said, fast but safely.

Paul McMeekin: So that's pretty key. I'm going to wrap up the conversation with one last question, which I ask everybody, If you could give one piece of advice to treasurers and CFOs in the healthcare space about the future of payments, what would it be?

Joe Kight: Yeah. If I try and really boil it down (and one piece of advice is always tricky!), and if we're really talking around payments, and the collaboration that U.S. Bank has with Bottomline, [then] this is a really important point. It's really not to think of payments as back-office plumbing. It really is a strategic lever for liquidity, you know. It instills vendor trust, and most importantly, it creates patient satisfaction. The systems that move fast and first to automation and digital will be the ones that thrive as margins get tighter. And as I've traveled around the country visiting with very large, sophisticated healthcare systems, and sort of emerging healthcare systems, there are great examples of this. You see a lot of these larger systems through the country really leaning in on this. Right? 

And so, again, the takeaway here is not to think of your payments as back-office plumbing. I mean, that really is the key statement it really is a strategic lever. It is one that requires enormous focus and can create a lot of value for the organization.

Paul McMeekin: That's a great answer.

Owen McDonald: A major takeaway from this episode is the similarity between banking and healthcare. Both rely on massive, ultra-sensitive datasets, including an endless stream of B2B payments that need to be highly secure, cost efficient, and fast. U.S. Bank is one institution that uses this fact to mutual advantage. 

A big thanks to Joe Kight, Head of Healthcare Institutional Client Group at U.S. Bank, and to cohost Paul McMeekin. To our audience, the smartest people in B2B payments, thanks for listening.

Hit subscribe. Catch us again on your favorite podcast platforms, including Apple, Spotify, iHeartRadio, and YouTube. Bye for now.

The Payments Podcast, from Bottomline.