Patients Mired in Costly Credit From Doctors
New York Times
October 13, 2013

The dentist set to work, tapping and probing, then put down his tools and
delivered the news. His patient, Patricia Gannon, needed a partial denture. The
cost: more than $5,700.

Patricia Gannon, 78, of Dunedin, Fla., received a line of credit from First Health
Funding at an annual 23 percent interest rate for dental work. She was later
offered a medical credit card.

Ms. Gannon, 78, was staggered. She said she could not afford it. And her
insurance would pay only a small portion. But she was barely out of the chair,
her mouth still sore, when her dentist’s office held out a solution: a special line
of credit to help cover her bill. Before she knew it, Ms. Gannon recalled, the
office manager was taking down her financial details.

But what seemed like the perfect answer — seemed, in fact, like just what the
doctor ordered — has turned into a quagmire.
Her new loan ensured that
the dentist, Dr. Dan A. Knellinger, would be paid in full upfront. But for
Ms. Gannon, the price was steep: an annual interest rate of about 23
percent, with a 33 percent penalty rate kicking in if she missed a

She said that Dr. Knellinger’s office subsequently suggested another form of
financing, a medical credit card, to pay for more work. Now, her minimum
monthly dental bill, roughly $214 all told, is eating up a third of her Social
Security check. If she is late, she faces a penalty of about $50.

“I am worried that I will be paying for this until I die,” says Ms. Gannon, who lives
in Dunedin, Fla. Dr. Knellinger, who works out of Palm Harbor, Fla., did not
respond to requests for comment.

In dentists’ and doctors’ offices, hearing aid centers and pain clinics, American
health care is forging a lucrative alliance with American finance. A growing
number of health care professionals are urging patients to pay for treatment
not covered by their insurance plans with credit cards and lines of credit that
can be arranged quickly in the provider’s office. The cards and loans, which
were first marketed about a decade ago for cosmetic surgery and other elective
procedures, are now proliferating among older Americans, who often face large
out-of-pocket expenses for basic care that is not covered by Medicare or
private insurance.

The American Medical Association and the American Dental Association have
no formal policy on the cards, but some practitioners refuse to use them, saying
they threaten to exploit the traditional relationship between provider and
patient. Doctors, dentists and others have a financial incentive to recommend
the financing because it encourages patients to opt for procedures and
products that they might otherwise forgo because they are not covered by
insurance. It also ensures that providers are paid upfront — a fact that financial
services companies promote in marketing material to providers.

One of the financing companies, iCare Financial of Atlanta, which offers
financing plans through providers’ offices, asks providers on its Web site: “How
much money are you losing everyday by not offering iCare to your patients?”
Over the last three years, the company’s enrollment has grown 320 percent.
Another company posted a video online that shows patients suddenly vanishing
outside a medical office because they cannot afford treatment. The company
offers a financing plan as a remedy, with the scene on the video shifting to a
smiling doctor with dollar signs headed toward him.
For Discussion

Have you been offered a medical credit card or have you worked for a medical
provider who offered the cards to patients?

Please share your story in the comments below.

A review by The New York Times of dozens of customer contracts for medical
cards and lines of credit, as well as of hundreds of court filings in connection
with civil lawsuits brought by state authorities and others, shows how perilous
such financial arrangements can be for patients — and how advantageous they
can be for health care providers.

Many of these cards initially charge no interest for a promotional period,
typically six to 18 months, an attractive feature for people worried about
whether they can afford care. But if the debt is not paid in full when that time is
up, costly rates — usually 25 to 30 percent — kick in, the review by The Times
found. If payments are late, patients face additional fees and, in most cases,
their rates increase automatically. The higher rates are often retroactive,
meaning that they are applied to patients’ original balances, rather than to the
amount they still owe.

For patients, the financial consequences can be dire.

Ms. Gannon said she was happy with her dental care, despite the cost, and
there was no suggestion that Dr. Knellinger had done anything wrong. But
attorneys general in a several states have filed lawsuits claiming that other
dentists and professionals have misled patients about the financial terms of the
cards, employed high-pressure sales tactics, overcharged for treatments and
billed for unauthorized work.

The New York attorney general’s office found that health care providers had
pressured patients into
getting credit cards from one company,
CareCredit, a unit of General Electric, which
gave some providers
discounts based on the volume of transactions...
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