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Shared Culture of Innovation Forges Dynamic Relationship Between Hospital and Bank

May 16, 2016
Kendall Johnson, CFO Baton Rouge General Hospital
Kendall Johnson, CFO Baton Rouge General Hospital

Innovation is part of the history and culture of Baton Rouge General Medical Center, the first and only not-for-profit full-service community hospital in Louisiana’s capital city. 


The hospital has a heritage of firsts. Baton Rouge General was first in the city to perform open heart surgery and to create a diabetes program. It also established the first regional burn center in Louisiana and the state’s first chemical dependency unit. 


As the hospital’s CFO, I try to reflect that culture of innovation. I’m not afraid to challenge the normal way of doing things, and I’m always looking for ways to do things better and more effectively. 


Recently, at Baton Rouge General we forged a relationship with Hancock and Whitney Bank, a regional bank with a similar philosophy. Unlike some of the larger national banks that call on me, they have shown a willingness to partner on new, creative solutions. One of our first collaborative efforts was to develop a new electronic payables model that’s made accepting purchasing card payments from Baton Rouge General more attractive to our vendors, and returned control over those payments to the hospital. 

Partnering On Creative Solutions


Baton Rouge General provides care at two separate hospital campuses and a dozen ambulatory centers located throughout the city’s metropolitan area. We have about $450 million in annual net revenue. We do business with some large national banks, but I’ve learned that their solutions are sometimes a much better fit for their bigger, multibillion-dollar corporate clients. Typically, most big banks aren’t willing to roll up their sleeves and build solutions to meet Baton Rouge General’s specific needs. 


That was the case three years ago when I went looking to enhance the hospital’s purchasing card program. The program was thriving, but I felt it had room to grow. I viewed the traditional purchasing card program model our bank was using to be onerous for our vendors, who had the complex job of administering card payments from various clients while keeping all the card data secure. 


I also wanted us to have more control over our payments and our card number. For example, let’s say we had a statement balance with a vendor of $10,000, but we only wanted to authorize a payment of $7,500. We couldn’t do it. The vendor had our card number and could charge us whatever it wanted.


Virtual Card Solutions

I started talking about some of these challenges with the big banks that call on me. But I soon realized all of their solutions were centered on the purchasing card holder rather than the vendor. 


I envisioned a more vendor-friendly card payment model. If five hospital systems had a common vendor, what if we could push all of our payments to one location and that vendor had only one website to manage — instead of having to manage a separate log-on ID and set of passwords for each health system? The vendor could pull the single payment file down, post the file to its general ledger system, and everything would be automated. 


I pitched the concept to some larger banks but they weren’t interested. Then I shared it with David Frady, an executive at Hancock and Whitney Bank. I’d done business with David when he previously worked for another bank. I knew David was someone who would listen and was up for new ideas. 


The team at Hancock and Whitney Bank listened to our purchasing card challenges, and got right to work. They were committed to finding a solution, whether it was something they would build internally or would develop by partnering with someone else. Eventually, Baton Rouge General became the first user of their virtual card solutions.


In addition to utilizing the vendor-friendly hub concept that simplifies card-payments administration for vendors, the virtual card solution offers a buyer-initiated rather than a traditional supplier-initiated payments program. For the buyer, that means it’s more like making an Automated Clearing House (ACH) or wire transfer payment, where they initiate the payment whenever they want. However, in addition, the buyer never has to share its card number with the supplier, so the buyer controls both the timing and amount of each payment. 


Moving our purchasing card business to Hancock and Whitney Bank has contributed to the continued success of our card program, enabling the Accounts Payable Department to evolve into a net revenue center — the revenue share generated by the card program exceeds the cost of the department’s employees. 


A willingness to innovate

Hancock and Whitney Bank's virtual card  and purchasing card solutions became the first of several collaborative efforts, and the beginning of a very dynamic relationship. The bank has listened to our challenges in other areas, including payroll and medical equipment leasing, and developed similar customized solutions.

Most of the banks I work with aren’t particularly innovative, but Hancock and Whitney Bank is different. They continue to understand our challenges and find or build a solution to meet the operational needs we have as a company. It’s the biggest reason we are using them today.