Credit unions seeking sources of noninterest income may want to consider a new service concept that takes them outside of the financial services industry while capitalizing on their members' trust.

The service is called health record banking, and involves credit unions and, in particular, CUSOs acting as repositories for members' personal health information, according to a January study by the Madison, Wis.-based think tank Filene Research Institute. Members would have control over maintaining and distributing their own electronic health records, the study postulated, and credit unions could earn as much as a 15% margin on each account.

In the report, “Banking on Healthcare: The Credit Union Business Opportunity,” author and health informatics expert Dr. William A. Yasnoff cited the changing health insurance landscape and the emergence of the Affordable Care Act as driving forces in creating both a need and opportunity for managing HRB accounts. Credit unions are natural providers for such services, the author said, based on the inherent trust they cultivate in their members, as well as their non-participatory role in the health care marketplace.

Moreover, given the rising cost of healthcare – it currently comprises 17% of the U.S. GDP, up from just 7% in 1970 – providing electronic recordkeeping services could be a significant growth industry, according to Yasnoff, founder and managing partner of National Health Information and Infrastructure Advisors, which promotes community repositories of electronic health information under consumer control.

“As credit unions struggle to increase interest and noninterest income, they look wistfully at industries like healthcare, where revenue growth continues apace,” Yasnoff wrote. “The industry-wide move to electronic health records means that credit unions can benefit from the continued growth in healthcare while offering members a valuable service.”

Yasnoff's phase one research study was designed to evaluate whether credit unions could effectively manage HRB accounts, serving as secure repositories for members' individual health records. Members would have direct control over their records, the confidentiality of which would still be protected under federal Health Insurance Portability and Accountability Act laws, and could share them as needed with their healthcare providers.

In return for housing members' health records, credit unions could generate fee income from offering value-added “apps” that automatically contact the record's owner whenever the record has been accessed and send other alerts, Yasnoff wrote. Credit unions also could earn income through vendor advertising to consumers and, if granted permission, using the member data for research.

The study estimated that HRB accounts would cost about $22 each to administrators, which broke down to about $6 in related information system costs, $10 to provide free or subsidized access to physicians and other providers, and $6 in estimated fees paid to collaborative health organizations of which the record's owner is a part of. At a cost to members of $26, Yasnoff noted that a credit union would earn $4, or a 15% margin on each account.

In addition, credit unions' neutral or nonexistent role in the healthcare marketplace can help avoid conflicts of interest that can occur among various stakeholders in healthcare provision and insurance processes, the study said. The inherent trust credit unions provide to their members is an advantage, as are potential economies of scale provided by CUSOs that could offer the service to multiple credit unions, according to the author.

“HRBs are a feasible and desirable business opportunity for credit unions that can be efficiently implemented through a CUSO,” Yasnoff wrote. “The business approach could be validated in collaboration with an initial group of community credit unions working closely with a CUSO to establish a successful HRB.”

To date, no credit unions offer HRB accounts, but CUSO participation in such programs is distinctly possible in the future, according to Jack Antonini, president/CEO of the National Association of Credit Union Service Organizations.

“The concepts the study lays out makes sense to me,” Antonini said. “The trust relationship does exist with credit unions. The question comes down to whether or not you can pull enough organizations together to make it cost effective.”

Yasnoff's study noted that other enterprises have attempted HRBs with limited to little success. An individual hospital in Bellingham, Wash. tried to introduce what it called the Shared Care Plan, but after a decade of operation managed to interest only 2,500 members of its 75,000-member community. The hospital recently discontinued the plan.

Both Google and Microsoft attempted to offer HRB services at the national level, again finding little interest among potential users. Google Health was discontinued in 2012 after a three-year attempt, while Microsoft's HealthVault after four years was spun off into a joint venture with GE Healthcare in 2011 after failing to attract sufficient participation.

Such failures are concerning, Antonini said. He still sees potential in the HRB premise, but realizes that more work needs to be done before credit unions or their CUSOs take the plunge.

“What is the break even point?” Antonini, who reviewed the Filene study, asked. “This is something that has promise, but I am not aware of anyone who has done research and talked to members.”

Antonini recalled a CUSO that had once pitched a similar concept at a NACUSO conference. However, no approach was ever finalized.

“Folks liked the idea and could see there was value there, but they didn't see significant enough volume,” he said. “You need enough scale to have it make sense.”

However, offering HRB accounts can be a good way for credit unions to become more holistic in the services they offer members, according to David Baird, president/CEO of the Insurance Trust and Equinox Financial & Insurance Services, an insurance CUSO that was spun out of the Maine Credit Union League in 1963.

“I think any time that a primary financial institution partner can simplify a member's life on any level, it's a great idea,” Baird said. “For credit unions to become repositories for members' electronic health records is an interesting concept. I don't see it as a huge moneymaker, but as another way to keep members anchored to their credit union.”

Increasingly, credit unions are seeking to become community hubs, providing services and creating an environment allowing them to become more important to members' lives and wellbeing, Baird noted. Electronic health records, coupled with the personal financial records it already houses for members, can strengthen relationships while providing a critical service.

“We're trying build on a focal point of credit unions becoming a community hub for members,” Baird explained. “If they saw their credit union as a one-stop resource for all those types of things, including operating as a cloud-type concept for all their medical records in a secure location, that fits nicely into the concept of people helping people.”

But the presence of HRB accounts increases the need for greater cybersecurity, especially since medical records fall under HIPPA protection that could cause credit unions additional headaches if security were breached. Such possibilities add an additional drawback to HRB account management, Baird said.

“If my health records reside electronically in my credit union, I would want to be absolutely sure that my credit union had an uber level of security to keep anyone unauthorized from accessing that information,” he added. “But HRBs fit nicely with the whole wellness initiatives that credit unions are promoting, and I think this is an issue that will continue to gain traction in the years to come.”

Instant Insights /

Health Record Banking Could Boost Noninterest Income

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