Giving credit where money is due. How to get a charge out of patients.

It took a while, but hospitals are finally catching on to what major retailers discovered more than 30 years ago: Americans love to charge. When presented with a bill for socks at Bloomingdale's or lunch at Lutece, they pull out the plastic. Now, many can do roughly the same thing when presented with a hospital bill for treatment of a herniated disk. To shore up financial reserves, reduce bad debt, and increase cash flow, hospitals are turning to revolving consumer credit plans to help patients pay the self-pay portions of their hospital bills. Consumers like it because it gives them an affordable monthly payment over a long term, a good credit report reference, and a means to satisfy the self-pay obligation in a dignified, responsible way. And it seems to be working. A study of a 43-hospital chain that used a revolving charge plan for patients for a 23-month period showed that finance charges to patients more than covered the cost of the program; bad debts for receivables financed were cut to 29 percent, a 44.2 percent reduction; and consumers accepted the program because it was familiar, legal, binding, and, most important, affordable.