Reduce liability for losses on commercial accounts by adhering to four requirements.
Financial Remedies for Doctors and Dentists
Banks that focus on serving medical and dental practices have a lucrative niche because of the sector’s steady income from treating patients and continued needs for deposit and loan services. And they are very loyal, say the bankers that cater to them.
“Doctors and dentists are long-lasting customers — they’ll stick around for a while,” said Tom Woolway, a senior vice president at Torrey Pines Bank in San Diego. “They also tend to be a close-knit community, so a satisfied customer can become a very good referral source.”
Torrey Pines, a $1.6 billion asset unit of Western Alliance Bancorp. in Phoenix, in 2010 enhanced its business line by launching its “Healthcare Industry Professional Banking Team,” a group of bankers with expertise in serving doctors and dentists.
The endeavor has been worth it, Woolway said.
“The medical and dental community is a lucrative opportunity for Torrey Pines because they run profitable operations and their businesses tend to be time-consuming, such that they rely on competent financial advice and management,” he said.
The bank offers them operating lines of credit, commercial real estate loans to buy their offices and loans and leases for equipment such as X-Ray machines and dental chairs, through Western Alliance’s equipment financing group. The bank also provides cash management products and deposit services such as remote capture.
The bank reaches doctors and dentists mainly through referrals from their accountants or attorneys who partner with Torrey Pines, said Crystal Watkins, senior vice president and director of marketing.
Moreover, the bank, in conjunction with healthcare provider Sharp Healthcare, has developed a direct marketing program for members of Sharp’s physician alliance. The bank also works with the American Heart Association, joint-sponsoring events such as receptions for business owners to learn how to better handle employee healthcare issues.
“We’re conveying a message to the community that we’re concerned about health issues and it helps build the Heart Association’s activities in reducing healthcare costs,” Watkins said.
California Bank & Trust, a $10.9 billion-asset unit of Zions Bancorp. in Salt Lake City, in May launched a bundled package of products and services for doctors and dentists, including several new types of fixed-rate SBA 7(a) loans, merchant services so patients can pay with credit cards, and equipment loans with longer terms of 10 years or more. The bank also allows customers to finance the “soft costs” of purchasing equipment, such as taxes and installation fees, for as much as 25 percent of the loan amount.
“We’re able to offer a really complete solution, so dentists and doctors don’t have to go to different sources for equipment financing, merchant services or operating accounts,” said Susan Brown, a senior vice president and group marketing manager. “By bundling all of those, we offer a one-stop solution.”
Part of the bank’s marketing initiatives include participating in medical and dental trade shows, which enables its bankers to more clearly explain the benefits of its products and services, Brown said.
The $42 million asset West Valley National in Avondale, Ariz., last year formed two professional community boards and a special president’s council, each comprised of a cross-section of health professionals, to assist in the growth of the bank, said Candace D. Wiest, president and chief executive. The bank, which opened in 2007, also has several medical professionals on its board of directors.
“We opened up at the start of the real estate crisis and we knew we wouldn’t lend into that market, so we explored other markets that might fare well,” Wiest said. “We have doctors and others with medical expertise on the board, so we thought it was a good alternative and it really has worked out great.”
West Valley National offers operating loans, CRE loans and term loans to electronically upgrade medical records to take advantage of tax breaks, she said.
“We’re also finding that in order to protect themselves against shrinking revenues, a lot of these professionals are looking at reducing their expenses and we’ve been able to help them do that by offering SBA 504 loans to buy their building,” she said. “Prices on buildings are really good now because it’s been a buyers’ market, and they can get good long-term fixed rates.”
One of West Valley National’s marketing initiatives includes holding dinners with older dentists, Wiest said. A broker who sells dental practices then discusses how they can transition from their practices into retirement.
West Valley National sets itself apart by going the extra mile in serving doctors and dentists, who typically require “a lot of personalized attention,” she said.
“One cardiologist called me and told me that he needed to see me personally, but the only time he could meet is on a Saturday at Starbucks by his house — could I be there at 10 a.m.?” Wiest recalled. “I’ll do things like that because it’s a good market differentiator for us.”
Katie Kuehner-Hebert is a contributing writer based in San Diego.
Copyright (c) January 2012 by BankNews Media