National Australia Bank appeared to consolidate its dominant position in Australia’s health payments market in 2023, but a blowout in management expenses crunched the profitability of its HICAPS business.
HICAPS, which provides merchant services and digital claiming services to almost 100,000 doctors and health care professionals across the country, generated an 8 per cent increase in revenue to $75 million in the 12 months to the end of September.
The top-line growth indicates that HICAPS is managing to withstand competitive challenges from Tyro and Commonwealth Bank in the niche sector.
In 2022, CBA launched an integrated payments and health claims service known as Smart Health in a bid to weaken NAB’s stranglehold of the market.
Health payments is also a key vertical for Tyro, which says it grew its merchant base in the health services industry by 3000 to more than 16,000 last year.
Bank of Queensland is also targeting doctors and allied health professionals through its BoQ Specialist division.
While NAB’s HICAPS continues to expand its presence as payments provider to health professionals and private insurers, returns from the business were undermined last year by a 72 per cent surge in management costs to A$30.1 million.
The expenses blowout resulted in the subsidiary reporting a 21 per cent slide in pre-tax earnings to $25.5 million.
In 2022 HICAPS reported a pre-tax profit of $32.3 million.
A key battleground for the banks in the last 12 months has been in the disability services sector, where NAB and CBA are moving to embed their respective platforms at online and physical points of sale.
In September last year HICAPS launched a new digital invoicing service to simplify the way NDIS participants pay for healthcare providers.
This followed CBA’s move in October 2022 to reduce the complexity of NDIS claims handling.
Payments experts say that the health payments market has emerged as the most strategic industry for the banks because the higher average value of transactions makes it more profitable.
“Payments is a volume and value equation,” said Sydney based consultant, Brad Kelly. “The health payments vertical has both.”