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There's also no reason to charge $500 when there is another place across town that manages to charge $1,500.

by Avshalom 11y ago

jsprogrammer 11y ago
What about providing more people access to the technology?
- Avshalom 11y ago
  The two problems there are: -are the enough more people to justify the loss of profit -that sounds like socialism you filthy altruist and we the board of directors will have none of that. granted both of those presume that this hypothetical hospital is being governed by a profit motive which isn't always the case but one of the things you see argued fairly commonly on HN is that insurance hiding the cost of medicine has allowed hospitals to jack up rates because the insurance companies can bear higher costs than any individual consumer... which if true and not a correlation/causation error does imply that a profit motive is at play here.
refurb 11y ago
I'm not sure that's true. Most insurance plans pay a percentage of charges with the patient on the hook for the remaining 10-20%. If I were a patient, I'd go for the $500 MRI and pay $100 out of pocket instead of $300.
- Avshalom 11y ago
  You could only go for the $500 MRI if someone gave you the choice though. If the market will bear a $1500 MRI the two or three hospitals you might have a choice between don't have any real incentive to lower prices. Neither hospital is likely to believe there's a huge untapped market for MRIs that will make up for the loss of profit and an extra $1000 per MRI of profit means they'd have to at least quadruple their volume to make up for the smaller margin.
  - refurb 11y ago
    I think the point is that there are already hospitals that have those kind of price differentials. Most expensive brain MRI is $5,560. Least expensive $218. Both in NYC. Most people can access out of network providers. If you're paying 10% in-network, the $5,560 MRI is $556. If you're paying 50% out-of-network, the $218 MRI is $109. The problem is price transparency and aligned incentives to take advantage of different prices.
nugget 11y ago
In markets where incumbents collude on prices to achieve unreasonably high margins there are usually opportunities for new entrants to enter the market, lower prices, and rapidly capture market share. Government's job is to make sure that there are no artificially high barriers to entry. Sadly, when Government is corrupted it can collude with incumbents and increase barriers to entry to the detriment of consumers.
- Avshalom 11y ago
  Yes, the question is absent a government, or at least given some theoretically perfectly business neutral government what are the barriers to entry for (in tfa) an infrastructure company or (in this thread) a modern hospital. I suspect that while compliance with various regulations do add barriers the "natural" barriers are already high enough to keep out sufficient competition to exert real downward pressure.

There's also no reason to charge $500 when there is another place across town that manages to charge $1,500.

jsprogrammer 11y ago

What about providing more people access to the technology?

Avshalom 11y ago
The two problems there are: -are the enough more people to justify the loss of profit -that sounds like socialism you filthy altruist and we the board of directors will have none of that. granted both of those presume that this hypothetical hospital is being governed by a profit motive which isn't always the case but one of the things you see argued fairly commonly on HN is that insurance hiding the cost of medicine has allowed hospitals to jack up rates because the insurance companies can bear higher costs than any individual consumer... which if true and not a correlation/causation error does imply that a profit motive is at play here.

refurb 11y ago

I'm not sure that's true. Most insurance plans pay a percentage of charges with the patient on the hook for the remaining 10-20%. If I were a patient, I'd go for the $500 MRI and pay $100 out of pocket instead of $300.

Avshalom 11y ago
You could only go for the $500 MRI if someone gave you the choice though. If the market will bear a $1500 MRI the two or three hospitals you might have a choice between don't have any real incentive to lower prices. Neither hospital is likely to believe there's a huge untapped market for MRIs that will make up for the loss of profit and an extra $1000 per MRI of profit means they'd have to at least quadruple their volume to make up for the smaller margin.
- refurb 11y ago
  I think the point is that there are already hospitals that have those kind of price differentials. Most expensive brain MRI is $5,560. Least expensive $218. Both in NYC. Most people can access out of network providers. If you're paying 10% in-network, the $5,560 MRI is $556. If you're paying 50% out-of-network, the $218 MRI is $109. The problem is price transparency and aligned incentives to take advantage of different prices.

nugget 11y ago

In markets where incumbents collude on prices to achieve unreasonably high margins there are usually opportunities for new entrants to enter the market, lower prices, and rapidly capture market share. Government's job is to make sure that there are no artificially high barriers to entry. Sadly, when Government is corrupted it can collude with incumbents and increase barriers to entry to the detriment of consumers.

Avshalom 11y ago
Yes, the question is absent a government, or at least given some theoretically perfectly business neutral government what are the barriers to entry for (in tfa) an infrastructure company or (in this thread) a modern hospital. I suspect that while compliance with various regulations do add barriers the "natural" barriers are already high enough to keep out sufficient competition to exert real downward pressure.