The Canopy Aftermath

The Canopy Aftermath
Many of our healthcare banking readers have by now heard of the recent turn of events at Canopy Financial, a tech vendor offering CDH (consumer-directed healthcare) account processing platforms for banks and health plan carriers. As has been reported in TechCrunch and the Wall Street Journal, serious allegations are being made regarding financial report falsification. It has been reported that members of senior management have resigned/stepped down and the majority of employees have been let go. The company’s web site has been reduced to a single contact page. How the allegations will be pursued and decided will be done by appropriate parties within the legal system. In the meantime, there are a number of business questions that come to mind. First, what will become of those banks that were Canopy’s publicly-stated clients? Sovereign Bank and Wachovia were listed as clients, but they have largely exited the HSA scene (Wachovia was taken over by Wells, Sovereign by Santander). Canopy’s fate will therefore be more relevant to customers still in the HSA space, such as Comerica and Fifth Third (as well as BCBS of Michigan). This news has got to hurt for such clients, as they are now in the throes of the health plan/HSA open enrollment cycle. Second, who will benefit most should Canopy permanently shut down? Competitors such as ConnectYourCare, DST, HealthEquity, Lighthouse 1 and FIS/Metavante must obviously be watching this situation closely. However, given the allegations against Canopy, the installed account base may be far lower than has been publicly stated previously. Third, will some party (a competitor? a customer?) try to acquire Canopy’s IP? As was reported in Celent’s January report, “Processing Health Savings Accounts: Paths to Success“, Canopy has strong technology — other industry reports have also looked favorably upon Canopy’s products. Surely, the platform that Canopy developed over 4 years has got to be worth something to somebody.
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