Doctors as Bankers: Evidence from Fertility Markets

In a variety of medical contexts, doctors play a prominent role as bankers, lending directly to patients or arranging for patients to obtain loans from third-party lenders. I offer evidence of this activity from fertility markets based on an empirical study of virtually every fertility clinic's Web site in the United States and on interviews with key market participants. I find that doctors play an important role in patients' decisions about credit, discussing credit with patients, and even recommending and promoting specific lenders to patients while excluding consideration of other potential lenders. Despite the prevalence of this conduct, the law generally does not regulate doctors as bankers. Patients largely are left unprotected by current regulations, but they face significant problems when doctors act as bankers. Patients, vulnerable to their physicians' suggestions, often uncritically accept financial advice from their doctors. Instead of shopping for the best loans, they take the loans their doctors select for them. But, doctors face a conflict of interest when choosing which lender to recommend because different lenders charge physicians different amounts when patients pay for services with loans. Also, patients often are left confused when doctors present piecemeal information about lenders, and patients end up taking out loans with unfavorable terms.

In light of these problems, I offer a potential regulatory framework to regulate doctors acting as bankers. I suggest that regulations should require doctors to disclose the basic loan information that the Truth in Lending Act currently requires lenders to disclose. Moreover, policy makers should require physicians to disclose the financial arrangement between themselves and the lenders they recommend and, if they recommend lenders, to recommend to patients at least three potential lenders to encourage price shopping.