Bankruptcy

The Origins of Medical Debt

By Jim Hawkins

I?m very grateful to have the chance to spend some time here at Credit Slips.  I?ve learned a lot from reading this blog for the last few years, so it is fun to be a small part of it.

One of the things that has occupied my attention over the last year is medical debt.  I don?t mean how much medical debt people have or how much medical debt contributes to bankruptcy.  Instead, I started thinking about the mechanics of how people take out medical debt and the role doctors play in that process. 

To see how doctors influence debt, I looked at the websites of every fertility clinic in the US.  Fertility care is the perfect place to think about debt because most insurance doesn?t cover it, and it is really expensive.  People have to pay for it out of pocket, and most people don?t have enough money on hand to do so, so they have to seek credit.

What I found was surprising to me.

Mostly I was surprised by how active clinics are in patients? credit decisions.  Here is what I found:

• Clinics Offering Credit Counseling: 30.4% (n=116 of 381 total)
• Clinics Mentioning Credit: 48.5% (n=185)
• Clinics Mentioning a Limited Number of Credit Options 62.1% (of clinics
• mentioning credit) (n=115)
• Clinics Marketing Themselves Because of the Credit They Offer or Marketing the Credit 52% (of clinics mentioning credit) (n=97)

For the most part, clinics direct patients to specific lenders.  What is more disturbing is that people seem to just follow their doctors? lead.  That makes sense to me.  When you go into a used car lot, you basically expect sellers to mislead you and to try to rip you off (sorry honest car dealers out there).  But, when you?re sharing the story of how you?ve struggled for 5 years to have a child, your ?I might be ripped off here? radar is not on.  You trust your doctor?s medical assessments, so why not trust her financial direction as well? 

I?ll suggest reasons people would not want to trust their doctors in another post, but I wanted to end with one of the craziest stories I heard in interviewing people in the medical credit industry.  For me, it illustrates the ways doctors and lenders are intertwined.  It was from a sales rep for a major medical lender.  She told me how she would coach clinic staff to present the cost of fertility treatment in monthly payments instead of total cost in order to bring in more customers.  Saying ?For just $225 a month, you can have a baby? was a lot more persuasive to people than saying ?IVF will cost you $16,000.? 

The full paper is available here. 

Full post as published by Credit Slips on February 15, 2010 (boomark / email).