Seemed Like A Good Idea At The Time...
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18 August 2009
Just last week, the Blue Cross Blue Shield Association (BCBSA) announced that it was looking to sell its Blue Healthcare Bank operation. BCBSA originally chartered the bank in 2007, mainly to capture a share of the HSA market. Back then, this seemed like a really smart move and received considerable industry attention. At the time, United Healthcare had already proven the viability of an insurer-owned bank model with its Exante (since renamed OptumHealth Financial) Bank. Combine this model with the very widely-known Blue Cross Blue Shield brand and voila, it looked as the healthcare banking industry had a major player on its hands. This obviously did not turn out to be the case. Some of the missing components of Blue Healthcare Bank's strategy can be found in Celent's report, HSA Acquisitions: Hare-Like Market, Tortoise-Like Dedication. The bank got off to a slow start due to the fact that many of its member organizations/owners (i.e., the independent Blue Cross Blue Shield health plans around the country) had already partnered with faster-moving HSA custodial banks. Also, it was easy to wonder about Blue Healthcare Bank's commitment to the market. There was little to no presence at industry events and I can't tell you how many times I got a blank stare when I asked well-connected industry players whether they knew about the bank's activities. From this, it's probably safe to assume that awareness of the bank within the broker channel was extremely low. So, a good idea gone wrong. More importantly, this is a strong signal other health plan carriers (e.g., Wellpoint) that starting one's own bank is probably something best avoided.