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> If there was a real market that people could enter, competitive pressure would force them to be cheap. If the market was, hypothetically, choked by regulatio

> If there was a real market that people could enter, competitive pressure would force them to be cheap. If the market was, hypothetically, choked by regulation then they'd be in a great position to charge absurd prices. This is a fabrication - a free market with large capital investment requirement tends towards a monopoly. Economists call These places natural monopolies. We had them in oil and in railways before regulation. This doesn’t happen in food because anyone can grow a cucumber in their yard. But that’s not gonna cut it for surgeries. And on top of that you get charlatans, snake oil salesmen, homeopathy, treating people with magnets.

roenxi 3y ago
Large capital investment? What large capital investment? Most of my doctor appointments are done by eye. Surgery needs more than a knife, but not that much more than a knife. Even expensive machines in hospitals are probably not that expensive; they certainly aren't large. A lot of them would cost single digit millions; ie, be far too cheap to allow monopolies to form. I looked up MRI machines for reference and apparently they can be picked up for around a million dollars. We aren't talking about expensive kit here.
- TheOtherHobbes 3y ago
  Surgery requires a sterilised filtered room, anaesthesia equipment, monitoring of all kinds, and in many cases specialised tools. It costs >$100m to build a hospital, and then you have staffing, maintenance, IT, and other costs. It's not at all a trivial cost of entry. General practitioner offices are much cheaper, but typically you'll still find an ECG machine, IT systems with subscription access to industry databases and insurance applications, and possibly some on-prem blood testing. All of that on top of property costs. And student fee payments. The student fees and insurance access costs are largely profiteering and could be eliminated or hugely reduced. The property costs are the result of poor macro policy, but doctors are still on the hook for that. The rest is unavoidable capex.
  - roenxi 3y ago
    Very little of that even starts to justify expecting monopolies to form in the healthcare industry. None of it is persuasive. > Surgery requires a sterilised filtered room, anaesthesia equipment, monitoring of all kinds, and in many cases specialised tools. But none of that, you'll notice, is a large capital expense. Those are what we would call "small, routine capital expenses". And sterilising the room isn't even a capital expense at all, it is an operating expense. That matters for monopolies, it isn't an up-front cost (except for literally the first patient). It is unreasonable to suggest that a business's operating costs create natural monopolies. The ease of competing with businesses with high operating costs is the big driver of market competition and exactly what people should want in the healthcare industry. > It costs >$100m to build a hospital, and then you have staffing, maintenance, IT, and other costs. Superficially that makes sense, but if we get into it a bit there are a bunch of reasons that won't promote monopoly conditions: 1) CBDs are full of buildings that cost >100MM, ie, skyscrapers. None of the businesses in them are monopolies, or even paying high capital costs - because they rent space. And most cities manage to organise their CBDs so that owning a skyscraper doesn't give monopoly power. 2) You don't need a 100MM hospital. I've seen small hospitals that would cost single digit millions, which is an approachable fee even for just a single wealthy family let alone a small group of people trying to sort something out. 3) You don't even need a hospital. I've had surgery done in some dude's office. You can start with a room and build up organically if the local demand is there. That is how most other businesses expand. Walmart didn't start with a global empire. There just isn't a need for large capital accumulations to get started in healthcare. It isn't that demanding. There are a lot of edge cases that need a hospital, but that isn't where new businesses will start. They can grow in to it. > an ECG machine, IT systems with subscription access to industry databases and insurance applications, and possibly some on-prem blood testing Again, you're listing a couple of operating expenses (subscriptions and insurance). High operating expenses have nothing to do with monopolies; they are paid for on an ongoing basis and by customers bear the cost. ECGs and blood testing aren't expensive enough to be interesting. A watch can be an ECG machine; and a good ECG machine is only a few thousand dollars. That'd be like saying a restaurant is a natural monopoly because it needs a special fridge ore one of those big fancy stoves. > All of that on top of property costs. And student fee payments. Rent then. And the limit on the number of students is generally legislative not financial. There is no tendency towards monopoly here in a free market.

roenxi 3y ago

Large capital investment? What large capital investment? Most of my doctor appointments are done by eye. Surgery needs more than a knife, but not that much more than a knife. Even expensive machines in hospitals are probably not that expensive; they certainly aren't large. A lot of them would cost single digit millions; ie, be far too cheap to allow monopolies to form. I looked up MRI machines for reference and apparently they can be picked up for around a million dollars. We aren't talking about expensive kit here.

TheOtherHobbes 3y ago
Surgery requires a sterilised filtered room, anaesthesia equipment, monitoring of all kinds, and in many cases specialised tools. It costs >$100m to build a hospital, and then you have staffing, maintenance, IT, and other costs. It's not at all a trivial cost of entry. General practitioner offices are much cheaper, but typically you'll still find an ECG machine, IT systems with subscription access to industry databases and insurance applications, and possibly some on-prem blood testing. All of that on top of property costs. And student fee payments. The student fees and insurance access costs are largely profiteering and could be eliminated or hugely reduced. The property costs are the result of poor macro policy, but doctors are still on the hook for that. The rest is unavoidable capex.
- roenxi 3y ago
  Very little of that even starts to justify expecting monopolies to form in the healthcare industry. None of it is persuasive. > Surgery requires a sterilised filtered room, anaesthesia equipment, monitoring of all kinds, and in many cases specialised tools. But none of that, you'll notice, is a large capital expense. Those are what we would call "small, routine capital expenses". And sterilising the room isn't even a capital expense at all, it is an operating expense. That matters for monopolies, it isn't an up-front cost (except for literally the first patient). It is unreasonable to suggest that a business's operating costs create natural monopolies. The ease of competing with businesses with high operating costs is the big driver of market competition and exactly what people should want in the healthcare industry. > It costs >$100m to build a hospital, and then you have staffing, maintenance, IT, and other costs. Superficially that makes sense, but if we get into it a bit there are a bunch of reasons that won't promote monopoly conditions: 1) CBDs are full of buildings that cost >100MM, ie, skyscrapers. None of the businesses in them are monopolies, or even paying high capital costs - because they rent space. And most cities manage to organise their CBDs so that owning a skyscraper doesn't give monopoly power. 2) You don't need a 100MM hospital. I've seen small hospitals that would cost single digit millions, which is an approachable fee even for just a single wealthy family let alone a small group of people trying to sort something out. 3) You don't even need a hospital. I've had surgery done in some dude's office. You can start with a room and build up organically if the local demand is there. That is how most other businesses expand. Walmart didn't start with a global empire. There just isn't a need for large capital accumulations to get started in healthcare. It isn't that demanding. There are a lot of edge cases that need a hospital, but that isn't where new businesses will start. They can grow in to it. > an ECG machine, IT systems with subscription access to industry databases and insurance applications, and possibly some on-prem blood testing Again, you're listing a couple of operating expenses (subscriptions and insurance). High operating expenses have nothing to do with monopolies; they are paid for on an ongoing basis and by customers bear the cost. ECGs and blood testing aren't expensive enough to be interesting. A watch can be an ECG machine; and a good ECG machine is only a few thousand dollars. That'd be like saying a restaurant is a natural monopoly because it needs a special fridge ore one of those big fancy stoves. > All of that on top of property costs. And student fee payments. Rent then. And the limit on the number of students is generally legislative not financial. There is no tendency towards monopoly here in a free market.