Problems with medical bills?

Over the past few months, my wife gave birth to our 2nd child and my first one needed to have a procedure done. All of this left us with a few heavy medical bills. After sitting down to evaluation the situation, we proceeded to contact our hospitals to work out a payment arrangement. Each was able to offer a discount to pay off the account, or a monthly payment plan. The problem is that not only are we unable to take advantage of paying off the reduced bills, but even the monthly payments that they are offering to workout with us are too high! I tried explaining to them that we will honor the debt, but we need more time. Still, they said that they have strict rules that they need to follow, and that the payment arrangements they offered were as flexible as they could get them to be. If we pay less, then the bills will go to collections.

What happens now? If they go to collections, will our credits be ruined? Keep in mind that we have insurance, so they got paid post of the bill already.

how will my credit be impacted if I am current with my mortgage and car loans, but am unable to pay the medical bills? How many points will I loose?

I am a person who stands by honoring his debt, but this just got very unreasonable. The hospitals are asking for too much.
Don't know what to do

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