Consumer Reports: Patients 'Overdose' on Debt As Lenders, Doctors, and Hospitals Push Risky Credit to Pay for Me...(es of patients and some are even offerin...),Health

But for consumers, these financing plans can turn out to be the medical equivalent of subprime mortgages, according to medical and credit experts CR spoke to. They may appear attractive: Medical credit lines of up to $40,000 are being offered with no interest if the balance is paid off within the promotion time. If consumers fail to pay off some loans within the promotion time or miss a payment, they can be hit with retroactive interest rates of up to 27.99 percent.

DOCTORS OR PARTNERS?

"Consumers have to be wary," said CR senior editor Andrea Rock. "Often they're in a vulnerable position when they receive these sales pitches - in a doctor's office or a hospital - and they don't understand what they're signing up for. Furthermore, some consumers have said that they felt pressured by their medical providers while sedated or recovering from treatment."

By persuading patients to use these financing plans, doctors, dentists and hospitals benefit because they get paid right away. In fact, doctors and dentists have financial incentives under these arrangements to encourage patients to sign up for more expensive treatments and to steer them to extending financing plans that take a smaller cut of the practitioner's fee.

For example, if a patient were to finance $1,000 worth of dental work through GE Money CareCredit, the dentist would be paid by GE Money, minus 13.5 percent of the total as a "processing fee." Usually such fees for merchants are 2 percent or less. But if the patient opted for a two-to-five-year plan, CareCredit would take only 5 percent of the dentist's fee, and the patient would pay an initial annual interest rate of 11.9 percent that could rise to 23.9 percent if he or she failed to pay the balance on time.

When hospitals persuade patients to pay for care with a credit card or loan, patients lose their power to bargain for discounts or even
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