Hospital interest rates: Taking the family farm

My patient of over 20 years knows the banking business inside and out and is considered a "go-to" man by firms across the country. His expertise is widely sought as a motivational speaker, and his commonsense approach to loan structuring and the mortgage business garners a large local following. In times past, I was flattered that he drove 100 miles one way for our office visits. He would be a perfect patient except he is a workaholic. My grand plan for his exercise and dietary program is forced to play a distant second to his professional success. Predictably, his time in our office mirrors the extreme efficiency required by a successful executive, starting with a few well-structured and concise health-related questions. He concludes his visit with a "thank-you" and often punctuates it with the proclamation, "Hey, you know, you saved my life and I'll always be grateful."

Today's visit was different, as I could tell he was deeply troubled. Our discussion quickly turned away from his health queries to the topic of an extreme injustice he recently witnessed. Embarrassingly, it was not the result of callous banking practices or armed robbery. It was at the hands of medical administrative professionals, more accurately described as "highway robbery" instead.

My patient's story began with the death of a poorly educated gentleman from a rural area 14 years ago. He suffered from multiple medical problems, including heart disease, and at the end of his battle incurred a hospital bill of around $17 000. When his land sold recently, his children stood to take home around $88 000 US. My patient, as an excellent banker and decent human being, was proud for this meager family, who, it seemed, would finally profit from their father's initial investment. "Do you know how much that family recovered from that deal?" he asked. "I have no idea," I replied. "ZERO," he said, holding up his thumb and his index finger into a circle. "They never saw one penny of it." "Why?" I asked. "The hospital charged a 14% interest rate for over a decade," he said, shaking his head in disbelief. "They received nothing. That is criminal," he lamented as he stepped from the exam table and reached for his tie. "Someone should do something about that. Someone should go to the newspaper in that town, but they won't do anything about it. The hospital in that city funds most of the newspaper's advertising revenue. It's a shame, because that kind of practice should be exposed," he said. "So much for objective journalism," I thought when he walked toward the checkout desk.

This isn't the first time a hospital has been accused of nefarious debt-collecting practices. In January of 2009 the Wall Street Journal's health blog by Jacob Goldstein reported that Minnesota's Attorney General sued Allina's Twin Cities hospitals and clinics for charging excessive interest on unpaid bills. They denied any wrongdoing but quickly lowered their interest rate to 8%. "Allina has dug a deeper financial hole for patients facing tough economic times by charging usurious interest rates of up to 18% on medical bills," Attorney General Lori Swanson said in a statement. The legal debate centered on whether or not the hospital's rate would qualify under the state's "open-ended credit plan," under which interest rates of up to 18% are allowed. They countered that because they cared for the uninsured, they should be able to charge higher interest rates to make up for it.

My question is this: If hospitals receive government funding to pay for the under- or noninsured, should they be allowed to charge such exorbitant rates under their state's "open-ended" credit plan? My secretary contacted a hospital today in a neighboring town that charges a 0% interest rate and if the debt is not collected at six months, "we work with the patient," they told her. In my book, that's a far more humane approach. Just today, a patient told me he dealt with the legal counsel for his local hospital by going the bank to borrow $3500 dollars, because he was able to obtain a loan for a far lower interest rate. Obviously, folks without good credit are forced to continue the debtor's-prison approach formerly practiced by the Twin Cities hospitals and currently followed by many institutions today.

Patients with few resources figured out the hospital debt legacy scam long before providers. Around 15 years ago, a 50-year-old gentleman refused a cardiac cath and rarely allowed me to admit him despite frequent exacerbations of angina and heart failure. I thought he was a bit strange and certainly a difficult man, leaving against medical advice frequently. Before he died, he refused to consider formal embalming because of the debt his family would incur, so from dust he came, to dust he returned, with no help from the local funeral parlors. Another gentleman died in our ER from an acute MI. He would not allow EMS to be contacted although he and his family knew he was experiencing a heart attack. When he fibrillated and lost consciousness, they called 911. He arrived pulseless after more than 40 minutes in the field, a goodly portion of which was without CPR. We could never establish a pulse and quite frankly were afraid we might. He'd been down too long. The family knew there was a good chance they would be left with only a vegetative patient instead of the person they knew and loved. They also had extreme guilt about pursuing a prolonged hospital and rehab admission that was obviously against his wishes. More aggressive measures would definitely have run counter to his phobia about incurring medical debt,

These two cases taught me that the fear of debt for some actually takes precedence over the love of life. Unfortunately, the fear of medical debt is not just some irrational psychiatric diagnosis. It is becoming a common concern.

How can a hospital that advertises itself as a "not for profit" position itself to profit from an unsophisticated, uneducated sick human being with a meager income? And if the practice is legal, is it necessarily moral? I liken it to someone who picks their nose in public. It's legal, but it's distasteful . . . repulsive really, not unlike what happened to this man's legacy. It is a trespass on the same level as the Old Testament example of the family who had one beloved lamb they kept as a family pet. It was slaughtered for the king's dinner party, when in fact the King had thousands of sheep from which to choose. Similarly, it was neither moral nor ethical to inflate the posthumous debt left for this family who suffered the premature death of their loved one and the loss of their primary wage earner. Religious zealots as well as unbelievers will likely agree that judgment in this world should be harsh for such practices. I believe that in the hereafter, the punishment should and will be far worse indeed.

Your comments

	Hospital interest rates: Taking the family farm
	# 1 of 11	April 26, 2012 01:58 (EDT)
	Lucky to be a Canadian	In the Province of British Columbia, Canada (that's north of Washington State), all citizens are covered for medical and hospital fees by our medical plan called Medical Services Plan of BC. The cost for this is $64 per month single, $116 for a couple, and $128 for a family of 3 or more. Low income people can get this subsidized by the Province right down to $0 for the very lowest income people. I'm so glad I'm a Canadian!
	# 2 of 11	April 26, 2012 06:02 (EDT)
	anand	The cost of healthcare in the US is truly frightening. I am a PhD scientist, gainfully employed with decent health insurance. I never needed to use it much until three years back when I discovered I needed a stent. The amount paid out was > 25 k for two nights in the hospital for a uncomplicated procedure. Not to mention the various medications that I am supposed to take which have become part of my annual cost. I am sure my insurance company was not pleased. I do try my best with diet and exercise and medications but seem to have FH combined with extremely elevated Lp(a).
	# 3 of 11	April 27, 2012 10:29 (EDT)
	Keith	Fear of debt and refusal of care has all too been common since I became part of US healthcare in 1979. It will get worse. I see employing aggressvie debt collectors is also being utilized in Minnesotta within ER's and as I read in the International Herald tribune in Labor and Delivery.
	# 4 of 11	April 27, 2012 10:56 (EDT)
	Steve Soldo, MD	Dr Walton, Your commentary here is heartfelt.  Hospitals can be some of the most mercinary businesses in all of America.  If their business practices were exposed, perhaps they would change their behavior. Having said that, the "opposite" phenomenon is a far greater problem.  When patients and families are completely insulated from the cost of care, they abuse it like any other entitlement.  Out of sight, out of mind.  How many times have you seen that families wanted "everything" done in a futile setting, keeping someone alive in units for days to weeks?  If they had to pay 10 dollars a day of their own money, they might act differently. Accountability works both ways.
	# 5 of 11	April 27, 2012 10:56 (EDT)
	Alan	Dear Melissa, First of all, I truly enjoy your essays. You pretty much convey my feelings exactly. With regards to this, the Hospital may control the local media, but not the other social networks, where there are plenty of "digital ears". May I suggest to your friend to initiate a campaign through sites like Change.org, or by posting in Facebook, Twitter, etc. I think he may be contacted very quickly by national media about the story. In our current trying economic times, a story of yet another Corporate Hog taking advantage of the small makes for great headlines and a quick reversal of the minds by these heart-less individuals. Just my 2 cents Keep up the good fight! Best, Alan
	# 6 of 11	April 27, 2012 11:59 (EDT)
	Tom Baker MD	Hello Melissa:    I like your articles.Well written and right on target. How about the padded hospital bills ?(I was charged for two ace bandages for a neck injury.Thank heaven they didn't put them around my neck.They didn't put them anywhere.) Also,$60 for a "dressing change" [spell that "Band-aid"]. What a bunch of crooks! The hospital administrator more or less asked the doctors at our monthly staff meeting to put as many "codeable" diagnoses as possible on the discharge chart sheet.Especially encouraged was "stretching out"  lab results that were a little- off normal to diagnose a "disease".Needless to say,the medical staff refused to go along with this criminal act.And they required us to sign a statement ,under penalty of law,that the diagnoses were true and valid. I am so glad I am retired.
	# 7 of 11	April 29, 2012 08:18 (EDT)
	Dr. Jeffrey Williams	Like the writer from British Columbia, I also live in Canada.  Although we have a national healthcare system, it is administered by each province and so there are some differences. One that really benefits seniors in Ontario is subsidized prescritpion drugs. All cost the patient only $6.11 no matter what the real cost is. I had 15 heart attacks about two years ago and my monthly drugs have a retail value of about $3,500.  All covered by the system (and they are not generics).
	# 8 of 11	April 30, 2012 01:49 (EDT)
	Melissa	Thanks for your posts everyone. This issue should be "outed" in every city in America. Hope some large print outlet will also give it a look. Perhaps publicity will shame those institutions who take advantage of clients into doing the right thing.  Melissa
	# 9 of 11	May 9, 2012 11:12 (EDT)
	ajarrett	I am reminded of a patient with hemophilia who was admitted due to a fall, resulting in a coma for several months.  Surprisingly, he survived.  I was horrified to see that the hospital had documented the value of the family's home, cars, land, and bank account.
	# 10 of 11	May 14, 2012 10:04 (EDT)
	Edward	Where else can I run up a $425,000.00 bill and the hospital settlement with the insurance company is about $0.30 on the dollar.  Or better yet who here buys a service and will spend tens of thousands of dollars from a system without knowing the final cost before services are rendered? When healthcare billing practices necessitate triple and quadruple charges to arrive at an acceptable compensation point is beyond ridiculous. Yet sadly very common practise throughout the healthcare system.  So when the poor and indigent show up for treatment.  These folks are charged the rates used to negotiate with insurance providers and rack up that inflated bill and are overcharged 3 to 4 times a reasonable rate.  Who negotiates with the "system" for them?  Who protects the Farm?  It did not  have to be this way and yet here we are.  The absurdity of this is beyond fixing and a piece meal approach of gradually changing things wont fix it.  By the way not sure how many hospitals sit on a debt for 10 years and havent written it off on a tax form.  I smell tax fraud and large settlement during discovery.  Have a nice day.
	# 11 of 11	July 23, 2012 08:21 (EDT)
	Dr. Disgruntled	Do they have the same scavenger lawyers doing television commercials to sue doctors and hospitals in Canada as in the U.S. driving up health care costs? How about the cost to people studying medicine and trying to just recoup that cost? All this goes inyo the price of healthcare which is ignored and why hospitals are closing all over the country; how about in NYC where no govt. agency helped private hospitals stay open but they helped build 2 new baseball stadiums instead; the city wants people with private insurance to go to the city hospitals - so no conflict of interest in not helping private hospitals is there? and why if we have city hospitals in ny funded by taxpayers why isn;t that care free to people without insurance who pay taxes; how come nyc is giving free medical scholarships for students to go to FOREIGN medical schools - why isn't that being investigated;

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