Predatory lending comes to hospitals?

It looks like Big Medicine may be getting into bed with Big Banks.

Laura Cameron, then three months pregnant, tripped and fell in a parking lot and landed in the emergency room last May — her blood pressure was low and she was scared and in pain. She was flat on her back and plugged into a saline drip when a hospital employee approached her gurney to discuss how she would pay her hospital bill.

Though both Cameron, 28, and her husband, Keith, have insurance, the bill would likely come to about $830, the representative said. If that sounded unmanageable, she offered, they could take out a loan through a bank that had a partnership with the hospital.

The hospital employee was “fairly forceful,” said Cameron, who lives in Fayetteville, Ark. “She certainly made it clear she preferred we pay then, or we take this deal with the bank.”

Hospitals are increasingly offering “patient-financing” strategies, cooperating with financial institutions to offer on-the-spot loans to make sure patients pay their bills.

. . .

But the loans can be a band-aid solution, leading vulnerable patients to sign up to pay far more than they should, said Kathleen Engel, a research professor of law at Boston-based Suffolk University and an expert in consumer credit and mortgage finance.

“The hospital potentially is charging the patient the full, what I would call ‘whack rate’ for their care,” she said. “They try to collect the debt.”

Since many of these loans come without credit checks or affordability tests, the odds are higher that a loan could be financially unwise, experts warn.

There’s more at the link.

I can only regard this as “predatory lending” in the classic sense of the term.  If you’re lying on a stretcher or a hospital bed, in pain, scared, not knowing what’s facing you, that’s the worst possible time to be thinking about financial options and loan terms and conditions.  You simply aren’t in a proper mental state to make such decisions.  For hospitals to try to force you into taking out a medical loan, then and there, is unconscionable.

I understand that these hospitals are trying to ensure they get paid for the care they provide.  On the face of it, there’s nothing wrong with that – but such methods can only be described as manipulative, to put it mildly.  I think there’d be a good case for challenging any such agreement in court, on the grounds that the patient was not in a fit mental state to understand what he or she was signing.

If you should find yourself in hospital unexpectedly, and confronted with this sort of aggressive approach, I suggest you tell them to talk to your significant other, or ask them to wait until you’re in a proper mental and physical and emotional state to make such decisions.  If they persist, tell them what they can do with the paperwork.  After all, they’re in a place where it can be extracted once they’ve done that!



  1. Last December I had a bit of experience with two hospitals in two different citys as well as the local(ish) flight for life .
    Everyone of them has been great working with us on the bills . Possibly it is the area I live in but they have been compassionate and understanding of our financial situation, at least so far .

  2. This is the first instance that I've heard of which seems to deserve the name "predatory lending" since that term was invented in '08. Confronting someone in emotional trauma, literally in a bed in an ER and holding their care off until they sign is pretty rough.

  3. Ancient English Common Law said that contracts signed on ship in the English Channel were null and void – because the sea could be so rough that unscrupulous ship captains might take advantage of seasick passengers.

  4. Wonder how such a contract would stand up in a fair courtroom. A document you were pressured into signing, possibly under the influence of mind altering drugs and in an extremely vulnerable position. I can think of a couple of attorneys with some serious "acting" chops who would have a field day with this in front of a jury. You'd probably walk out of court with the hospital owing YOU money.

    On a related note, a hospital in my region has instituted a policy that ER visits be paid up front. You've gotta pay your copay or if you're uninsured you pay 100% upfront or make some payment arrangement with them. I don't think they're doing it with car crash victims or stroke patients but with people coming in with the flu, colds, the clap and other things they should be going to their primary care doctor or going to one of the numerous walk-in clinics that have popped up. You'd be astounded how many people use the ER as their doctor or otherwise abuse it. People who have like weekly or multiple weekly visits for minor or imagined stuff. For attention, something to do or hoping to get admitted for a few days of free tv and food for them and their hangers on. It's crazy but it's not uncommon.

  5. Such a loan is clearly "under duress", by definition, so @$$hat General Hospital, Tire Shop, and Beauty Emporium of Pignuckle AR, in the example, evidently just hasn't been sued into oblivion yet to get them to knock that crap off. They're about to crapped on from a great height for that, both civilly, and by the feds.

    Under the evil unfunded mandates of EMTALA, we are legally forbidden to discuss insurance or payment for services until after you've been medically screened, and any emergency condition(s) condition stabilized. Which includes broken arms set, babies delivered, etc.
    If you're still writhing in pain, groggy from being concussed, etc., that doesn't apply, yet.

    It also means that once a doctor &c. has determined that you're just a lazy slug using the ER for your own Urgent Care, the hospital can demand payment in full, or you can decamp to your doctor's office or said Urgent Care, where they'll do the exact same thing when you walk in the door.

  6. "Charging the patient IN FULL…" (emphasis mine)

    Yeah, that's even worse. The nominal bill, and what an insurer, or the government pay, are VERY different. The TL;DR is that what is actually paid is typically much, much less (like 25% or even less than that) of the nominal "price".

    To give a fairly concrete (exact numbers are made up to protect the guilty) example, say Mr Smith comes in to have an echocardiogram (heart ultrasound) done. Our hospital bills him $1500 of which $1200 is the "technical fee" (essentially the hospital's cut which pays for the amortized cost of the scanner and maintenance, the technologist who does the actual scanning, the electricity, laundry, janitor, etc) and $300 of which is the "professional fee" which goes to the MD who interprets the study.

    Do we collect $1500? Hell no, because Mr Smith has health insurance. Medicare, or BlueCross etc, has already dictated to us in prior "negotiations" that they will reimburse us $225 for the technical fee and $50 for the professional fee. We take that, because they control so many patients and if we don't play ball they'll find another hospital that does. And the next round of negotiations we claim the package needs to cost $1700 now, and Medicare (or BC,whatever) says, yes yes, we understand, we'll give you $245 and $60 and you'll like it.

    Okay, so it's a game with fake numbers, but who gets hurt? Here's the problem: Mr Jones does NOT have insurance. He comes in for an echocardiogram, paying out of pocket because he's a stand-up working guy. Well, poor Mr Jones gets hit with the full $1500 bill because Medicare (etc) has no interest in his case.

    So if these ER financing vultures are trying to serve up the full (non-discounted) bill to people with insurance they're even more vile and deceptive than you might think.

  7. @Aesop: this isn't quite duress, in a legal sense. It does smack of unconscionability, though, which is also a defense to contract. See Wikipedia's article. The general rule in the US is that to be found unconscionable, there must be elements of both procedural and substantive unconscionability in the contract, but there's no required "amount" of each–a lot of one can make up for having only a little bit of the other. An excellent example of an unconscionable contract is the one the rat bastards at BP made the rig workers sign waiving their rights to sue before being allowed to board the helicopters back to the mainland after the Deepwater Horizon incident. I was actually taking Contracts at the time, and we spent most of a day on that very situation.

    As for Anon's hospital refusing to accept ER patients, you're correct about EMTALA prohibiting such practices if it accepts Medicare. His "patient on drugs" example is an example of an entirely different defense to contract, namely lack of capacity to enter into a contract.

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