4 ms·

Emergency departments basically never make money. When they are economically viable, emergency departments effectively function as a loss leader to get patient

Emergency departments basically never make money. When they are economically viable, emergency departments effectively function as a loss leader to get patients admitted to the (sometimes profitable) inpatient facility. You therefore can't really build an emergency department unless there is also demand for inpatient facilities in the area.

ginko 7y ago
The idea that hospitals are supposed to make a profit at all seems ridiculous to me.
- lotsofpulp 7y ago
  Voters don’t want to pay for it via taxes so that doesn’t really leave any other options. Employees and vendors need to get paid somehow.
- AnthonyMouse 7y ago
  It's not really a matter of making a profit, it's a matter of covering costs. Emergency rooms are really expensive because you want enough capacity to cover a bus accident but that implies having more capacity than you need at most other times. (And "profit" is just the cost of capital in general.) Markets can handle this, but the answer is to have the specialists standing around waiting for something to happen and then charge enough when it actually does to cover the idle time, and use insurance to spread the risk of being the one to incur that high cost. But this handles people without insurance poorly. This is also the same basic issue that causes cities to have fire departments, and could be handled the same way, i.e. the city operates an emergency room the same way it operates a fire house and then pays for it from local taxes. But then emergency rooms are still really expensive to operate and meanwhile the feds still have a bunch of tax provisions encouraging employer-provided health insurance so most people do actually have health insurance, which creates a lot of pressure for the city to stop funding it and let the insurance companies pay for it, and we end up back at the first option. So ironically, the problem is caused by too many people having health insurance.

ginko 7y ago

The idea that hospitals are supposed to make a profit at all seems ridiculous to me.

lotsofpulp 7y ago
Voters don’t want to pay for it via taxes so that doesn’t really leave any other options. Employees and vendors need to get paid somehow.
AnthonyMouse 7y ago
It's not really a matter of making a profit, it's a matter of covering costs. Emergency rooms are really expensive because you want enough capacity to cover a bus accident but that implies having more capacity than you need at most other times. (And "profit" is just the cost of capital in general.) Markets can handle this, but the answer is to have the specialists standing around waiting for something to happen and then charge enough when it actually does to cover the idle time, and use insurance to spread the risk of being the one to incur that high cost. But this handles people without insurance poorly. This is also the same basic issue that causes cities to have fire departments, and could be handled the same way, i.e. the city operates an emergency room the same way it operates a fire house and then pays for it from local taxes. But then emergency rooms are still really expensive to operate and meanwhile the feds still have a bunch of tax provisions encouraging employer-provided health insurance so most people do actually have health insurance, which creates a lot of pressure for the city to stop funding it and let the insurance companies pay for it, and we end up back at the first option. So ironically, the problem is caused by too many people having health insurance.