When it comes to owning a medical practice, managing finances can be a little tricky.

“In health care — unlike, let’s say, retail where you’re paid at the point of purchase — you’re not paid for maybe a month or more after you provide the services or the treatment,” said Erin Gibbs of American Vein and Vascular Institute. “And it’s really hard talking about how health care finance works with most bankers.”

A medical provider needs a bank that understands its cash flow and can tailor its services

Chad Pfeif
Chad Pfeif

accordingly in order to run a successful health care business, Gibbs said. “Sometimes, it takes 30 or 45 days before an insurance company pays you, but your bills are due long before that,” she said.

Chad Pfeif, a branch president for Legacy Bank, said the financial institution started tailoring its services for certain industries, like health care, in 2004.

“Our mentality is to not make our services a one-size-fits-all but make sure that we are doing what’s best for the client and for that industry,” he said. “We want to learn about the company and what their needs are, and then we’ll come back and design something that works best for both of us.

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“And that’s not just for medical banking, that’s a common denominator amongst all our products and all the [industries] we serve.”

The company’s resident health care expert, Pfeif said Legacy has bankers trained in industries including health care, food and beverage, recycling, commercial real estate, agriculture and a few others.

“It’s just a function of having a better base of knowledge,” he said. “We try and make sure that we understand the industry in itself a little bit to really better understand our clients’ needs and provide them the best services.”

California-based First Republic Bank also tailors its business products by industry, according to its website.

“Our business bankers are committed to providing exceptional client service backed by a wealth of niche industry experience,” it said.

Industries of focus include banking for innovators; law firms; medical and dental; financial services firms; accounting firms; property management firms; private equity and venture capital firms; hedge funds and alternative investments; independent schools; and wineries and vineyards.

Meanwhile, New Jersey-based ConnectOneBank states on its website that it can customize “banking blueprints for companies in any industry.”

“At ConnectOne, we believe no two clients are alike,” it said. “That goes double for businesses. A builder has different needs than a manufacturing company or a medical practice.”

For health care, the biggest adjustment of services involves the complexity of how medical providers are compensated, Pfeif said.

“Say a person breaks a finger and the hospital bills them $1,000 for services rendered,” he said. “The patient’s insurance gets a discount of 40 percent, leaving $600 left. Insurance then covers $500 and the patient is billed the remaining $100.

“When it comes to health care, there’s about 100 more steps between submitting a claim to insurance and a business collecting payment.”

Gibbs said tailored medical banking makes it possible for an individual provider to open a practice.

“It’s because [the bank] has that unique knowledge and understanding that health care gets paid through insurance and how that cash flow works,” she said. “For instance, when there are any payment hiccups, we rely heavily on the bank either to help us navigate what’s causing them and/or how we can get through it.

“That support really makes a difference when you’re trying to run your own private practice.”

Rocky Khosla, owner of Pueblo Sports and Family Medicine, said in a Legacy press release that the bank’s tailored services helped him navigate starting his practice last year.

“Leaving the corporate structure of medicine was complex enough without having to master the finance component of opening a standalone private practice,” he said. “Legacy Bank recognized how our insurance collections and cash flow differed from other specialty practices and factored in patient load and demographics to get our clinic established.”

Pfeif said tailored banking services can be used by small, medium and large businesses.

“We really, truly do the gamut,” he said. “We have clients that are very small ‘mom-and-pop’ type shops versus clients that are in the space industry that are very large.”

Legacy has been a partner in helping American Vein and Vascular Institute grow from one location in 2009 to eight today, Gibbs said.

“They are able to assist startup businesses that are very small all the way to multi-city, multi-state, multi-location practices,” she said. “They tend to know things that we as an individual health care company may not know, such as where people are investing in real estate and where a good new location might be because they have knowledge of where businesses are moving and where money is going.”

Lori Lovato, marketing director for Legacy Bank, said the bank can provide that feedback because it plays an active role in the communities where it does business.

“We’re out in the community through volunteering and event sponsorship and so on, which allows us to sense the needs of the area and be able to adjust with what regionally is required to be successful there,” she said. “Obviously, what’s successful [in Colorado] is not going to be successful in New York City.

“There are different regional needs and cultural needs the areas that we serve have.”

Gibbs believes banks that have a local presence and the community familiarity described by Lovato are more effective.

“[Legacy] knows us; they know who we’re doing business with, which is really important,” she said. “I can call on the phone and they know immediately who I am.

“I’m able to find the right person I need without a lot of buttons in an automated system, and I usually can get my answers about things I need to know the same day.”

Pfeif said Legacy also offers its business clients some marketing support in conjunction with the tailored financial services.

“Those are basically testimonials we run in various news outlets where we highlight the client and don’t necessarily highlight Legacy Bank,” he said.

Both Kholsa and Gibbs have taken advantage of the advertising opportunity.

“It’s hard to pinpoint if that advertising created a patient appointment, but it absolutely helped with brand recognition,” Gibbs said. “It especially helped with our physicians and creating awareness about them in our different communities.”