July 2008
Doctors or partners?
FACING FORECLOSURE Maryann and David Jandris of Lehigh Acres, Fla., have thousands of dollars in medically related credit-card debt after paying
daughter Kery's bills.
Photograph by Brian TietzSome experts worry about blurring traditional lines of responsibility. "When you have doctors promoting cards and loans with
unconscionable finance terms as if they were sales agents for the lenders, it raises serious ethical issues, given the trust
patients place in physicians, whose first obligation should be to their patients," says Gina Calabrese, a clinical law professor
at the nonprofit Elder Law Clinic at St. John's University School of Law in New York City.
The potential conflict is underscored by how the financing plans are pitched to health-care providers.
For example, ChaseHealthAdvance says, "Patients are more likely to book full comprehensive treatment plans" because of the financing, also noting that unsecured lines of credit are "the riskiest form of consumer lending."
With 6.8 million cardholders and more than 90,000 participating health-care providers, GE Money CareCredit is among the leaders in health-care financing. Its marketing material for doctors emphasizes how offering the card "can significantly impact your bottom line."
CareCredit also allows providers to find out whether a patient will be approved for financing, "before the treatment or fee discussion," by submitting a patient's name and address for a credit-worthiness review.
Consumer Reports examined CareCredit marketing material that a New York City area dentist received when he contacted GE Money at our request. The brochure claims that patients are likely to delay treatment because "the average American only has about $300 available credit on their consumer credit cards" and urges doctors to offer the plan so they can get immediate payment.
If a patient were to finance $1,000 worth of dental work on CareCredit's no-interest, 18-month payment plan, the dentist would be paid by GE Money, minus 13.5 percent of the total as a "processing fee." The processing fee for merchants is usually 2 percent or less.
If a patient opted for an extended-payment plan over two to five years, CareCredit would take only 5 percent of the dentist's fee, and the patient would pay interest at an initial annual rate of 11.9 percent that could rise to 23.9 percent if he or she failed to pay off the balance in the specified time.
Doctors thus are given a financial incentive to have patients stretch out payments at double-digit interest rates from the start. The American Dental Association is among many professional medical groups that endorse CareCredit, adding to patients' perception that financing is a wise choice.
The prospect of swift payment from a finance company may also provide incentives for some dentists or doctors to perform expensive procedures.
When Siya Kuweza, a New York City municipal employee, took her 17-year-old daughter to a dentist for an exam in July 2007, she says she was told that the girl needed extensive dental work that wouldn't be fully covered by insurance. Before treatment began, Kuweza says she was told by office staff that she should fill out an application to borrow $7,325 through CapitalOne Healthcare Finance. She was approved immediately, and the dentist performed five root canals on her daughter that day.
"He's a doctor, so you think you're doing the right thing to follow his advice, but my daughter's mouth became so swollen and she was so sick afterward that we canceled the rest of the treatment and went to another dentist," Kuweza says. It took months for the dentist to refund most of the money that had been charged for the uncompleted treatment.
Attorneys for Kuweza's municipal employees union are investigating whether the teenager received proper treatment and are negotiating on Kuweza's behalf to have negative information about the debt removed from her credit report.
The potential conflict is underscored by how the financing plans are pitched to health-care providers.
For example, ChaseHealthAdvance says, "Patients are more likely to book full comprehensive treatment plans" because of the financing, also noting that unsecured lines of credit are "the riskiest form of consumer lending."
With 6.8 million cardholders and more than 90,000 participating health-care providers, GE Money CareCredit is among the leaders in health-care financing. Its marketing material for doctors emphasizes how offering the card "can significantly impact your bottom line."
CareCredit also allows providers to find out whether a patient will be approved for financing, "before the treatment or fee discussion," by submitting a patient's name and address for a credit-worthiness review.
Consumer Reports examined CareCredit marketing material that a New York City area dentist received when he contacted GE Money at our request. The brochure claims that patients are likely to delay treatment because "the average American only has about $300 available credit on their consumer credit cards" and urges doctors to offer the plan so they can get immediate payment.
If a patient were to finance $1,000 worth of dental work on CareCredit's no-interest, 18-month payment plan, the dentist would be paid by GE Money, minus 13.5 percent of the total as a "processing fee." The processing fee for merchants is usually 2 percent or less.
If a patient opted for an extended-payment plan over two to five years, CareCredit would take only 5 percent of the dentist's fee, and the patient would pay interest at an initial annual rate of 11.9 percent that could rise to 23.9 percent if he or she failed to pay off the balance in the specified time.
Doctors thus are given a financial incentive to have patients stretch out payments at double-digit interest rates from the start. The American Dental Association is among many professional medical groups that endorse CareCredit, adding to patients' perception that financing is a wise choice.
The prospect of swift payment from a finance company may also provide incentives for some dentists or doctors to perform expensive procedures.
When Siya Kuweza, a New York City municipal employee, took her 17-year-old daughter to a dentist for an exam in July 2007, she says she was told that the girl needed extensive dental work that wouldn't be fully covered by insurance. Before treatment began, Kuweza says she was told by office staff that she should fill out an application to borrow $7,325 through CapitalOne Healthcare Finance. She was approved immediately, and the dentist performed five root canals on her daughter that day.
"He's a doctor, so you think you're doing the right thing to follow his advice, but my daughter's mouth became so swollen and she was so sick afterward that we canceled the rest of the treatment and went to another dentist," Kuweza says. It took months for the dentist to refund most of the money that had been charged for the uncompleted treatment.
Attorneys for Kuweza's municipal employees union are investigating whether the teenager received proper treatment and are negotiating on Kuweza's behalf to have negative information about the debt removed from her credit report.
