Patient Easy Pay

MEDE AMERICA and Integrated Health-Net Systems today announced their technical alliance to bring Integrated’s `Patient Easy Pay’ accounts receivable elimination and cash management program to MEDE’s suite of EDI products and services.

Integrated’s automated tools address the special considerations of commercial and government reimbursement programs. In today’s complex healthcare payment system, a `one size fits all’ solution is insufficient. Integrated has various Easy Pay solutions, which can be custom-tailored to respond to each healthcare provider’s specific needs. With the Patient Easy Pay tools, such as signature-on-file, providers can get a commitment to a form of payment from those patients whose out-of-pocket expense is not known at the time of service. The payment card software system, which can be either integrated into management software systems or operated as a stand-alone Windows program, has the ability to automatically authorize card transactions when a patient’s out-of-pocket balances are finally determined. This makes collecting payments more timely and efficient for both the patient and the provider.

“Credit card processing, and especially Easy Pay, is a value-added service for our providers, enabling them to better manage patient payment,” stated Tom Staudt, Chief Executive Officer of MEDE AMERICA. “Our partnership with Integrated Health-Net Systems adds yet another dimension to the ways we can help our clients operate more efficiently and cost effectively. MEDE AMERICA’s goal i s to streamline electronic healthcare services with the most complete range of integrated transaction processing technology, networks, and databases.”

Max Young, President of Integrated Health-Net Systems, said “By combining the strength of MEDE AMERICA with Integrated’s Easy Pay system, we will bring extensive value to the services offered to the medical community. This is a program designed to be easily implemented, and with simple basic training of the provider’s staff, it can reduce their accounts receivable by at least 10% within 90 days. The program has already been implemented and proven effective in hundreds of hospitals and medical offices throughout the United States.”

Integrated Health-Net Systems is a service provider company devoted to evaluating and implementing creative payment card processing applications, along with accounts receivable management services. Integrated has assembled a network of technical, marketing, and banking expertise to form one of the finest integration teams and payment card processing programs within the healthcare industry.

MEDE AMERICA provides integrated point-of-service real time EDI solutions for all major sectors of the healthcare industry to support administrative and clinical functions. Headquartered in East Meadow, New York, the Company has in excess of 70,000 provider relationships, which generate nearly 300 million EDI transactions on an annual basis.

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Pouring It On

Capital One spent $65 million for credit card solicitations during the fourth quarter, the highest quarterly marketing level to date. Last year Cap One shelled out $52 million in the fourth quarter. Year-to-date, the nation’s tenth largest issuer invested $225 million in card marketing. The investment paid off as Cap One’s earnings per share increased 21%, from $2.32 per share to $2.80 per share. This is third year in a row the company has delivered 20%+ growth in both earnings and ROE. During the fourth quarter Cap One added 1.1 million new accounts and $758 million in outstanding receivables. At year end receivables stood at $14.2 billion and total accounts at 11.7 million. Cap One also reported declining chargeoffs and delinquency rates.

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Olympic Cards

First USA unveiled its ‘Platinum VISA Nagano 1998 Collection’ credit cards yesterday. The collection, of thirteen designs, features a variety of commemorative limited edition designs, some of which celebrate past U.S. golden Olympic moments. Upon activation, cardholders receive two Olympic collectibles a baseball cap and a lapel pin. First USA is offering a 4.9% five- month intro rate followed by a 12.99% fixed APR thereafter. Applications are available online.

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Y2K Gridlock?

What if the basic computer commands that allow a major U.S. financial institution to trade millions of dollars with a leading German institution misfired and sent incorrect information? That glitch could spark a series of disruptions that might cost the market more than $10 billion in just a week’s time. Even worse, it could cause gridlock across global financial markets based on sheer nervousness alone.

This is one finding in a new study released today by Computer Sciences Corporation (NYSE: CSC), one of the world’s leading systems integration and management consulting firms. CSC found that the year 2000 computer bug, dubbed by CSC the “Y2K Risk Factor,” may be the first example of how the computer problems of a single company could trigger marketwide trouble on the scale of the recent financial woes in Southeast Asia.

The CSC study, titled “Sustaining Stable Financial Markets through the Millennium,” was released during the Securities Industry Association Year 2000 Conference and Exhibit in New York.

The study is part of the CSC Financial Markets Y2K Initiative, a multifaceted program sponsored by CSC to raise awareness of the risks and potential ramifications of Y2K in the financial markets. CSC has complemented the research study by forming an advisory board of distinguished academic scholars and financial industry experts.

Members of the CSC advisory committee include John Panchery and Michael Tiernan, Securities Industry Association; Patricia Collins, Merrill Lynch; Dr. Edward Yardeni, Deutsche Morgan Grenfell; Prof. Frank Edwards, Columbia University; Prof. Anthony Saunders, NYU Stern School; Prof. Hans Stoll, Vanderbilt University’s Owen Graduate School of Management; Prof. Marshall Blume, Wharton Business School; and Dr. Richard Olsen, Research Institute for Applied Economics.

The study focuses on the settlement of foreign exchange transactions. It provides a blueprint for potential costs of Y2K disruption in all capital markets, which are heavily dependent on technology to process and communicate trading and market information. It found that problems caused by year 2000 non-compliance could cause settlement failures in foreign exchange to jump from the current one percent to as high as five percent — a 400 percent increase.

The study found that Y2K failures could cost up to $10 billion over five days. In examining the costs, CSC posed three potential scenarios:

1. The failure or serious system disruption of a major foreign exchange player. Total market costs: US$2.4 to $3.3 billion over five days.

2. A group of smaller institutions that have similar problems. Total market costs: up to US$2.2 billion over the same period.

3. A failure of a clearinghouse responsible for processing a significant number of transactions. Total market costs: up to US$5.2 billion over one week.

“These costs cannot be examined in isolation,” warned Peter Shelton, practice director, Banking & Capital Markets at CSC. “We have to take into account the far-reaching systemic impact these failures will have.

“After all, foreign exchange underpins all international capital markets activity. Given the interdependency between foreign exchange and other capital markets, the actual costs of Y2K disruption to the capital markets as a whole will likely be significantly higher.”

“Global capital markets are virtually 100 percent electronic, making the marketplace utterly dependent on technology,” explained Adrian Sharp, senior consultant, Banking & Capital Markets at CSC. “The inability of one firm to complete its trades in a timely manner, coupled with the uncertainty of when year 2000 ‘root cause’ system faults will be rectified, will send shock waves through the whole market.”

A Y2K failure is defined as business disruption caused by computer systems that cannot correctly interpret dates beyond 1999. Those failures can occur in many ways, according to Craig Plotkin, senior consultant at CSC and an analyst for the study.

“Software that uses dates to calculate interest, exchange rates or other monetary amounts may not perform those calculations properly,” said Plotkin. “Trades may be transmitted with incorrect or missing information, or may not be transmitted at all, due to non-compliant computer systems. If one firm injects bad trades into the system, its trading partners would have to manually investigate each one, which would slow things considerably.

“These delays, and the resulting skittishness of the market, will drive up costs and result in lost profits for the entire market,” added Plotkin “Your firm’s systems may be year-2000 compliant, but that won’t protect you from the risks posed by firms that aren’t. They don’t even have to be direct trading partners to affect you.”

CSC’s study findings are based on interviews conducted in October 1997 with more than 90 individuals representing financial institutions, regulatory bodies, associations and clearing houses including Citibank, Merrill Lynch, Deutsche Morgan Grenfell, the Federal Reserve Bank and CHIPS. Respondents ranged from institutions’ bank economists and foreign exchange traders to global risk managers and operations experts.

Copies of the CSC study are available at a cost of $295. Discounts are available for group purchases, trade associations and academia. For copies, contact CSC at 973.243.7770.

CSC had $6 billion in revenue for the 12 months ended Sept. 26, 1997. Headquartered in El Segundo, Calif., the company has nearly 44,000 employees in more than 600 offices worldwide and provides clients with a wide range of professional services, including management consulting, information systems consulting and integration, and operations support. More information on Computer Sciences Corporation is available via the Internet at .

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Banks Decline- Nonbanks Surge

In 1996, commercial banks generated a record net income of $52 billion. The growth in assets has been substantial during a period when the number of banks has shrunk because of the continuing consolidation process brought about through merger and acquisition activity. On the surface all appears well; however, there are “trouble spots” which must be investigated, analyzed, neutralized and where possible, converted to opportunities by the banking community. The major areas of concern are: the intrusion of “nonbanks” which provide bank-like products causing a severe encroachment on the bank community’s revenue stream; the record number of credit card losses; a costly and inefficient banking delivery system that needs to convert depositors to the advantages of remote delivery channels, especially to the use of personal computers; squeezed revenue sources caused by many banks chasing the same customer, thereby stimulating the need for new product offerings in new markets.

According to a recently published Business Communications Company, Inc. study, RG220 Banks and Nonbanks: The Changing Industry, the number of banks in the U.S. will decrease in number, from 9,125 in 1997 to 6,775 in 2002, representing an average annual decline of -5.8%. At the same time revenues will increase at a 5.5% average annual growth rate (AAGR) of 5.2% to reach $72 billion in 2002.

Threatening this rosy picture, however, is the incursion of organizations and companies outside the banking community. They provide bank-like products, something which continues to perplex bankers. These bank-like services will grow from around $1.9 trillion in 1997 to $2.6 trillion in 2002. Primary contributors are credit cards, cash management accounts (CMA), third party processors and mortgage banking. These four areas will account for over 92% of nonbank transaction dollar volume by 2002.

The analysis points out that to counter these competitive pressures, banking revenue will become more transaction oriented and less dependent on interest differentials. More banking services will be charged for on an as-rendered basis. Banks will look also to new sources for revenues. Within the banking industry, some of this will come from the international sector, especially from the emerging market area. Several of the major money center banks have infrastructures in place to accomplish this. In that regard international net income will grow from %7 billion in 1997 to $10 billion in 2002.

Another new source of revenue will come from outside of normal banking channels (i.e., the nonbank sector). These revenues will come from brokerage firm-type products, trading and advisory services, security underwriting and asset management services. A number of banks are already engaged in acquiring niche-related securities firms. This practice will continue to expedite entry into the brokerage securities sector. In addition, the marketing of insurance coverage will also accord additional revenue.

Retail banking delivery systems will continue to stress banking via remote means. To this end, banking via personal computers will be continually stressed and marketed. The elimination of front end costs (i.e. tellers, and attendant services) causes a PC-based transaction to be one hundredth that of a teller generated banking transaction. Clearly, this is the route banks must follow to complete effectively with banking competitors as well as nonbank predators.

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Glendale’s New BusinessCard

Glendale Federal Bank, California’s leading community bank, expanded its growing list of products and services for small businesses with the announcement that it will offer the MasterCard BusinessCard, a new comprehensive corporate credit card.

The BusinessCard is designed to significantly reduce the cost to businesses of purchasing and invoicing. With it, companies will gain a readily accessible credit line, as well as an easy to use expense management system. As with standard credit cards, only one check is required to pay for a variety of purchases and pay a host of vendors, eliminating the need, and expense, to issue multiple checks. The Glendale Federal BusinessCard is accepted around the world at more than 13 million locations.

“Our BusinessCard offers a simple means for companies to manage the procurement of products and services from one source and eliminate much of the overhead and related paperwork involved in purchasing, accounting and invoicing,” said Glendale Federal Executive Vice President Terry Hess, director of Business Banking. “Charges by one, 10 or even 20 or more employees appear on a single statement and the company issues only one check to pay for those charges. These are the types of services our business customers demand. We have listened, and will continue to improve and expand the line of products and services offered to our customers.”

The BusinessCard can be used to order office supplies, entertain customers, pay for fuel and company vehicle maintenance, pay airline and hotel expenses and more. The card is flexible and businesses can

— establish individual spending limits for each card issued; — select from a choice of payment due dates that best coincide with monthly accounting cycles;

— get detailed analysis of spending by individual cardholders;

— authorize purchases, track payments and reconcile small purchases;

— access the available credit line with cash advance checks to     pay vendors who do not accept credit cards or pay other debt     obligations;

— receive transaction information in an extensive reporting     package that presents information in a concise format to track     spending patterns and trends; and

— track business tax deduction and preparation information.

Glendale Federal has increased the value of its BusinessCard by adding several important benefits, including worldwide common carrier insurance, discounts on car rental and overnight delivery, liability protection for unauthorized card use, car rental insurance coverage, travel assistance, legal referral service and much more.

Glendale Federal Bank is California’s leading community bank, serving the business and consumer banking needs of Californians through 181 banking offices and 26 loan offices. Customers can reach the bank by calling 1-800-41FEDUP, or get information through its Internet site at .

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Card Bond Decline

Standard & Poor’s Structured Finance report says new public asset-backed securities volume for 1997 exceeded $170 billion, about a 15% increase over 1996. However the only sector to decline last year was credit card ABS, while the best performing sector was the home equity loan ABS. S&P says credit card ABS was down 23% and is attributed to an increase in chargeoffs, a slowdown in portfolio growth, and increased merger and acquisition activity among card issuers. The dip reflects a shift in consumer behavior toward borrowing through lower-rate home equity loans at the expense of credit card borrowing, and has thus fueled the explosion in the home equity loan securitization market.

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Chasing Growth

Following its fourth quarter acquisition of Bank of New York’s credit card portfolio, Chase Manhattan broke through the $30 billion mark in receivables and racked up nearly $40 billion in year-to-date volume at the close of 1997, according to Bankcard Update/CardData. For all of 1997 Chase Manhattan grew its card portfolio by 29%. About 62% of this growth has come from acquisitions while the rest has been driven by its three major co- branded programs Shell MasterCard, Wal-Mart MasterCard, and the NYNEX/Bell Atlantic VISA/MasterCard. Chase also entered the platinum card segment in September.

                            CHASE  STATS 
           RECV   Q-VOL    Y-VOL      ACCTS     ACTVS      CARDS
3Q-97*     $31.6b $11.2b   $32.3b     21.6m     13.5m      29.1m     
4Q-97      $32.5b $11.7b   $39.8b     21.5m     13.5m      30.1m
      *third quarter figures combine Chase & BONY data

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Nagano ATMs

VISA said yesterday it has now placed 17 international ATMs on and off the venues at the ‘1998 Olympic Winter Games’ in Nagano, Japan. Of the 130,000 ATMs throughout Japan, only 700 accept international cards and just a handful of those are located in the Nagano metro area. The Japanese ATM system utilizes an invisible mag stripe on the front of the card instead of the standard, visible stripe on the back of the card. VISA says twelve of the seventeen international ATMs are located in Olympic Games’ venues, and since VISA is the exclusive payment system for the ‘Winter Games’, the venue ATMs will only accept VISA cards. Proprietary ATM cards and even those with the ‘PLUS’ mark will not work in the venue ATMs.

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