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You have your conception of profit backwards. The existence of profit is supposed to act as an incentive to competition. Profit isn't something that is added o

You have your conception of profit backwards. The existence of profit is supposed to act as an incentive to competition. Profit isn't something that is added on top of the cost; profit is the difference between the cost and what the market is willing to pay. Lots of profit attracts competition, and competition reduces the market's willingness to pay. Normally profit arises from looking at what the market is willing to pay, then figuring out how to provide that for some cost that is lower. Profits are normally increased by decreasing costs, since increasing prices is not normally an option - the market won't pay the higher costs due to alternatives. What stops the market functioning is irrational markets (e.g. people always want the best and won't settle for second-best, so they overpay; or they want treatment even if risks and costs due to treatment are worse than the probability adjusted costs of the thing being treated), barriers to competition (lots of regulation - for good reason), monopolies (e.g. drug patents), information inefficiencies (lack of pricing transparency so price isn't able to act like the signal it should), information asymmetries (doctors know more than the patients, who are actually paying for the healthcare), incentive misalignment (employer-provided healthcare being a big one), etc.

tyfon 9y ago
It's not really backwards though. There is nothing to stop a non-profit hospital from being as efficient as a for-profit one. In that situation the non-profit will always be less expensive as the for-profit one unless the investors are willing to take a 0% return on their equity. When it comes to what the market is willing to pay, what will a man that is about to die be willing to pay to be cured? Quite a lot I guess so there is nothing really to stop price gauging if the patient is paying for it directly.
- nhumrich 9y ago
  > There is nothing to stop a non-profit hospital from being as efficient as a for-profit one. Sure, but there is also no motivation to do so. NASA never even thought about having a rocket return. SpaceX/Blue Origin, that was the first thing they thought of "how do we reduce cost over time, this is wasteful"
  - motiw 9y ago
    The solution could be a government lower cost alternative to the private health care so they can keep each other in control. Same as us post office does for ups and fedex
    - nhumrich 9y ago
      I actually really like that idea.
  - greglindahl 9y ago
    NASA has had several concepts for having a rocket return, and DCX is an example of a test vehicle that actually flew.
narag 9y ago
You have your conception of profit backwards. Still he has a point. I you introduce some new actors in the chain, you should consider what incentives apply to them. Private owners might reduce inefficiencies, but at what cost? Their own profit, that they would try to maximize at all costs, and service degradation most likely.
- gravy 9y ago
  > Private owners might reduce inefficiencies, but at what cost? Their own profit, that they would try to maximize at all costs Correct, this has been the SOP for private companies since the beginning of time. This is why things get better.
  - narag 9y ago
    Except things aren't getting better, that's why we're having this conversation to begin with. I'm all for private companies and profit, but there are a few areas that I prefer the government to have control instead of private interests.

tyfon 9y ago

It's not really backwards though. There is nothing to stop a non-profit hospital from being as efficient as a for-profit one. In that situation the non-profit will always be less expensive as the for-profit one unless the investors are willing to take a 0% return on their equity. When it comes to what the market is willing to pay, what will a man that is about to die be willing to pay to be cured? Quite a lot I guess so there is nothing really to stop price gauging if the patient is paying for it directly.

nhumrich 9y ago
> There is nothing to stop a non-profit hospital from being as efficient as a for-profit one. Sure, but there is also no motivation to do so. NASA never even thought about having a rocket return. SpaceX/Blue Origin, that was the first thing they thought of "how do we reduce cost over time, this is wasteful"
- motiw 9y ago
  The solution could be a government lower cost alternative to the private health care so they can keep each other in control. Same as us post office does for ups and fedex
  - nhumrich 9y ago
    I actually really like that idea.
- greglindahl 9y ago
  NASA has had several concepts for having a rocket return, and DCX is an example of a test vehicle that actually flew.

narag 9y ago

You have your conception of profit backwards. Still he has a point. I you introduce some new actors in the chain, you should consider what incentives apply to them. Private owners might reduce inefficiencies, but at what cost? Their own profit, that they would try to maximize at all costs, and service degradation most likely.

gravy 9y ago
> Private owners might reduce inefficiencies, but at what cost? Their own profit, that they would try to maximize at all costs Correct, this has been the SOP for private companies since the beginning of time. This is why things get better.
- narag 9y ago
  Except things aren't getting better, that's why we're having this conversation to begin with. I'm all for private companies and profit, but there are a few areas that I prefer the government to have control instead of private interests.