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

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

In the report, “Banking on Healthcare: The Credit Union BusinessOpportunity,” author and health informatics expert Dr. William A.Yasnoff cited the changing health insurance landscape and theemergence of the Affordable Care Act as driving forces in creatingboth a need and opportunity for managing HRB accounts. Creditunions are natural providers for such services, the author said,based on the inherent trust they cultivate in their members, aswell as their non-participatory role in the health caremarketplace.

Moreover, given the rising cost of healthcare – it currentlycomprises 17% of the U.S. GDP, up from just 7% in 1970 – providingelectronic recordkeeping services could be a significant growthindustry, according to Yasnoff, founder and managing partner ofNational Health Information and Infrastructure Advisors, whichpromotes community repositories of electronic health informationunder consumer control.

“As credit unions struggle to increase interest and noninterestincome, they look wistfully at industries like healthcare, whererevenue growth continues apace,” Yasnoff wrote. “The industry-widemove to electronic health records means that credit unions canbenefit from the continued growth in healthcare while offeringmembers a valuable service.”

Yasnoff's phase one research study was designed to evaluatewhether credit unions could effectively manage HRB accounts,serving as secure repositories for members' individual healthrecords. Members would have direct control over their records, theconfidentiality of which would still be protected under federalHealth Insurance Portability and Accountability Act laws, and couldshare them as needed with their healthcare providers.

In return for housing members' health records, credit unionscould generate fee income from offering value-added “apps” thatautomatically contact the record's owner whenever the record hasbeen accessed and send other alerts, Yasnoff wrote. Credit unionsalso 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 eachto administrators, which broke down to about $6 in relatedinformation system costs, $10 to provide free or subsidized accessto physicians and other providers, and $6 in estimated fees paid tocollaborative health organizations of which the record's owner is apart of. At a cost to members of $26, Yasnoff noted that a creditunion would earn $4, or a 15% margin on each account.

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

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

To date, no credit unions offer HRB accounts, but CUSOparticipation in such programs is distinctly possible in thefuture, according to Jack Antonini, president/CEO of the NationalAssociation of Credit Union Service Organizations.

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

Yasnoff's study noted that other enterprises have attempted HRBswith limited to little success. An individual hospital inBellingham, Wash. tried to introduce what it called the Shared CarePlan, but after a decade of operation managed to interest only2,500 members of its 75,000-member community. The hospital recentlydiscontinued the plan.

Both Google and Microsoft attempted to offer HRB services at thenational level, again finding little interest among potentialusers. Google Health was discontinued in 2012 after a three-yearattempt, while Microsoft's HealthVault after four years was spunoff into a joint venture with GE Healthcare in 2011 after failingto attract sufficient participation.

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

“What is the break even point?” Antonini, who reviewed theFilene study, asked. “This is something that has promise, but I amnot aware of anyone who has done research and talked tomembers.”

Antonini recalled a CUSO that had once pitched a similar conceptat a NACUSO conference. However, no approach was everfinalized.

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

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

“I think any time that a primary financial institution partnercan 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 itas a huge moneymaker, but as another way to keep members anchoredto their credit union.”

Increasingly, credit unions are seeking to become communityhubs, providing services and creating an environment allowing themto become more important to members' lives and wellbeing, Bairdnoted. Electronic health records, coupled with the personalfinancial records it already houses for members, can strengthenrelationships while providing a critical service.

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

But the presence of HRB accounts increases the need for greatercybersecurity, especially since medical records fall under HIPPAprotection that could cause credit unions additional headaches ifsecurity were breached. Such possibilities add an additionaldrawback 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 anuber level of security to keep anyone unauthorized fromaccessing that information,” he added. “But HRBs fit nicely withthe whole wellness initiatives that credit unions are promoting,and I think this is an issue that will continue to gain traction inthe years to come.”