Hospitals are protected businesses in the U.S. To build one you need a "certificate of need" in most jurisdictions in the United States. I.e., they are government-granted monopolies. They behave like government-protected monopolists do: they rent-seek.
If you want to see affordable hospital care you have to see the protection removed and competition allowed and encouraged.
This is happening to some degree already. Nowadays we have unprotected, standalone ERs, urgent care clinics, and specialist clinics. But it's not really enough, not yet.
> Nowadays we have unprotected, standalone ERs, urgent care clinics, and specialist clinics.
In your example the tail wags the dog. Hospitals are mostly obsolete. You have outpatient surgery in strip malls because hospital beds are capped and reduced, and Medicare began refusing to pay for bad outcomes, which are more common in hospitals.
The government-allowed monopolies are the sprawling health networks the turn medicine into a sales funnel. They are labelled with hospital branding, but the monopolist actions are all about doctors. For example, in my region, 90% of renal doctors work for a single practice.
Urgent care is a whole other animal -- that's all about the reducing standards and addressing supply shortages of primary care doctors caused by restricted supply (there are caps) and higher salaries in specialities.
Depending on what you mean by "beds are capped and reduced", the opposite may be true: my understanding is that one of the major inefficiencies in US health care is that we have an unusually high vacancy rate in hospital beds. Addressing that problem is the central argument of Certificate Of Need laws.
Everyone fights hospital closures, so it's really hard to do. It's sort of like how everyone hates Congress, but loves their congressman. Certificate of Need addresses growth.
IIRC in New York, they closed something like 20 hospitals, with 10-12 in NYC. In my area (NY, but not NYC), there has lately there have been a bunch of hospital "mergers", where the lesser hospital gets converted into a sort of outpatient surgery site with urgent care, or an ER without longer term care.
I'm not even saying that CON laws are good; I have no idea. I'm just saying that the premise behind them appears to be accurate, and the argument that they are nationally responsible for lack of available hospital beds seems flawed (there are regions where there aren't enough vacant beds, but that doesn't seem to correspond to CON laws, and nationally the statistic is in the other direction).
> just saying that the premise behind them appears to be accurate
There's only one way to find out.
Indeed, we're finding out as we speak, because all those new ERs and urgent care clinics and specialist clinics and birthing centers, they did not need CONs, so they got built. And they got built by people who risked capital to do it. And it seems to be working out. I know I'm not going to any hospital's ER if something happens to me, and neither is anyone in my family -- we know the score on pricing and billing.
So the free market has found a way around the protectionist regulation of hospital construction. Is that even a surprise to anyone?
It's not working out. It obviously isn't. We pay multiples of what other countries do, and one factor in that is the inefficiency of how our health facilities are deployed.
> The government-allowed monopolies are the sprawling health networks the turn medicine into a sales funnel.
Crazy levels of regulation is one of the most sure-fire ways to make monopolies or oligopolies inevitable by creating huge economies of scale. The red tape burden is much easier for larger players than smaller ones. They can keep a staff of dedicated pencil-pushers that know the industry, its regulation, and how to deal with the bureaucrats.
With less regulation and no more "certificate of need" nonsense, it would be not only easier for competitors to start but just as importantly easier and more economical for them to remain independent. The government has created the environment in which monopolists thrive and the free market is stifled; people then complain and turn to the government to fix it? We're in the insurance mess to start with because of wage & price controls. Even the EU makes it easier to try new drugs, at least from a regulatory standpoint. The market is smarter than any pencil-pusher or congressman; let it do its job. Corrupting it is what got us here in the first place.
This ignores the fact that markets fail under certain circumstances. Removing regulation would not remove the fact that a significant portion of healthcare is a natural monopoly[1] due to the fact that a significant portion of the population cannot "shop around" when incurring medical costs and the starting costs to enter the healthcare market as a provider are high: provide adequate facilities, hiring staff, purchase of equipment
Not all medical care is emergency care, and after a while folks learn which provider is a better value. They hear other's outcomes as well. Even if they don't choose perfectly every time, word gets out eventually.
Pricing transparency is necessary to the process, however. So, the assertion that folks "can't shop around" is exaggerated and about to become less true with the transparency law.
I think US dentistry is probably the best example of US heathcare, but it’s unusual in several ways. Most notably it’s not been part of standard heath insurance coverage and it’s mostly small independent practices. Together that’s keeping prices reasonable and bureaucracy to a minimum.
You get some shopping around, but many people will stick with the same dentist for years if not decades.
Nice, a down-vote without addressing the content and the reference to support said content. But hey, what do actual economists know about markets and monopolies.
Haha, down-vote to that one too. Feel free to address the original criticism, I'm waiting to have an actual debate instead of an naive emotion fueled down-vote fest.
Got it, you're admitting you were wrong through your actions. Thank you for that, it's refreshing to see people that are willing to accept a different viewpoint and adjust their own beliefs when new information is provided.
I upvoted your first comment and downvoted the next 3. It’s not a question of what your saying, but how your saying it. Try actually reading though the guidelines and thinking about what makes a comment worth reading. Ex: Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
I didn't downmod your original comment; even had I wanted to, I couldn't as it was a reply to my own (same applies to your reply to that one). You really can't believe that more than one person disagrees with you? I did downmod the second two because they were snarky and rude; someone not replying instantly is not an indication of abandoning debate. It's not as though there's a notification system on HN, and people sometimes get busy.
With respect to your natural monopoly argument, they typically occur when there are very high start-up costs. There are other cases where economies of scale are significant, but very few where they are infinite. Even Amazon, a company that occupies much of the e-commerce market and is well known for its highly-efficient supply chain, is having trouble maintaining them indefinitely. I think we're in violent agreement that the high start-up costs of medical practices and hospitals prevent competition, and I was advocating for removing most of the regulation on the medical field. Another example: the AMA is a horrible gov't-sanctioned monopoly that hugely increases medical costs; most procedures can be done by someone with a few months' training (see the military). Healthcare is one of the few industries that hasn't mastered "mass production" of procedures in spite of the fact that many surgeries are similar.
> healthcare is a natural monopoly due to the fact that a significant portion of the population cannot "shop around"
Except that doesn't mean there is a natural monopoly. If there are a dozen hospitals and you get in an ambulance you'll get rushed to the nearest one that has the right doctors (most major hospitals have most urgent stuff covered). While consumer choice is probably reduced here, it's not as though the ambulances all take patients to a certain place.
The point I think you were getting at is that most people have limited choice because they are often treated in time-sensitive situations. However, about two percent of healthcare spending is on such emergency care [0]. Most procedures give people at least some time to find options, get second opinions, etc.
Natural monopolies (aside from those caused by regulation) are caused by lower long-run average total costs than someone else, industries where economies of scale are nearly infinite. Even those that can't be "disrupted" by building a competitor that sells the same product can be supplanted by newer technology. For instance, many people and companies are exploring setting up solar-powered, battery-backed microgrids that would create serious competition with the government-sanctioned monopolistic utilities. In other words, while high start-up costs will certainly delay competition, they won't prevent it.
> I'll file this one away to remember in the future.
First, thank you for responding and second don't take my idiotic self-amusement with the downvote/upvote nonsense as anything other than my own failure in that moment.
> Care to elaborate?
This was in response to the comment by Retric calling out my idiot behavior. Which, I agreed with.
> Another example: the AMA is a horrible gov't-sanctioned monopoly that hugely increases medical costs; most procedures can be done by someone with a few months' training (see the military). Healthcare is one of the few industries that hasn't mastered "mass production" of procedures in spite of the fact that many surgeries are similar.
Very good point. Reducing costs through other measures definitely are a valid approach. This is one I agree with.
>The point I think you were getting at is that most people have limited choice because they are often treated in time-sensitive situations. However, about two percent of healthcare spending is on such emergency care [0]. Most procedures give people at least some time to find options, get second opinions, etc.
This is true in part. However, mobility and access are often very limited to a significant portion of the population due to ability to travel, lack of time to take off work to travel, as well as the type of insurance a person has. If our society was more inclined to provide the ability for people who financially would struggle if they took a day let alone multiple days off of work to shop around to reduce medical costs this would make sense. But that is not the society we live in.
> mobility and access are often very limited to a significant portion of the population due to ability to travel, lack of time to take off work to travel, as well as the type of insurance a person has.
True enough. I do think allowing a market to develop will give us the tools to shop around with less hassle, e.g. online ratings and comparison based on hard data people will have to disclose to compete in a free market. Similar with transportation, changes in the way we get around will change this and make life a lot easier, hopefully.
If you want to see affordable hospital care you have to see the protection removed and competition allowed and encouraged.
This is happening to some degree already. Nowadays we have unprotected, standalone ERs, urgent care clinics, and specialist clinics. But it's not really enough, not yet.