15 ms·

Surgery requires a sterilised filtered room, anaesthesia equipment, monitoring of all kinds, and in many cases specialised tools. It costs >$100m to build a ho

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.
- tekknik 3y ago
  > And sterilising the room isn't even a capital expense at all, it is an operating expense. No, it’s both. Autoclave machines aren’t rented, they’re purchased. Then ongoing usage is opex. sterilization equipment is pretty well the core of the hospital (even called the core in some) > 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. Maybe for a vasectomy it can be done in office, now tell me how a liver transplant can be done. Also if you wait for demand to fit out a hospital, that means people are dying and you’re waiting until enough of them die to decide to expand your hospital. Also a watch can be an EKG machine? If my Dr pulled out any cheap piece of equipment to use on me I’d get off the table and leave immediately.
  - roenxi 3y ago
    1. > No, it’s both. Autoclave machines aren’t rented, they’re purchased. Eh, ok. We're talking order of magnitude single digit thousands again. I, personally and literally, can lend a friend in the medical profession that sort of money if they needed it. It isn't even close to being in the range of capital costs that would cause a monopoly to form. 2. > Livers I'm no expert here and you haven't explained why you think this is a natural monopoly. But looking at a random article [0] it is clear that no hospital is required. You need a few doctors and I'm guessing 2-4 rooms worth of equipment. There isn't much of a hospital. If you want to add in rooms for patients to stay in that would be a hospital, but the room requirements for that aren't especially demanding and can be scaled over time, reducing the up front capital cost. The equipment costs would range depending on the surgeon but even a conservative estimate of a few million dollars won't get into natural monopoly territory. 3. > Also if you wait for demand to fit out a hospital... Demand forecasting is a thing. Capitalists have solved that problem. We don't have to wait for an obvious future to materialise, people act preemptively. And it still isn't suggesting there are natural monopolies present. In fact, this "waiting until enough of them die to decide to expand your hospital" problems is one that comes with public healthcare systems, they systemically under-call demand in my view. The queue in the emergency department is typically hours long in Australia and the hospitals chronically under provide beds. We only seem to seriously expand them when people start dying and/or a major sandal occurs. One of the reasons I so like the idea of private healthcare is I'm confident that if I need care right now I will pay for it, then get it. That is not a guarantee the public system can make. Adjusting to demand is a point in favour of private healthcare; they make more money if they meet demand. 4. > Also a watch can be an EKG machine? If my Dr pulled out any cheap piece of equipment to use on me I’d get off the table and leave immediately. If you insist that your health care is expensive, that can be arranged. Good luck to you. Please also support the people who want cheap options. However it is still not evidence of a natural monopoly forming. And I'm not sure what your complaint is - an ECG machine is obviously not that difficult to organise given that it can be done for a couple of hundred dollars and also you get a watch thrown in. This is not a cost that will cripple a new doctor's clinic. If you want a fancier machine, sure. But the cost still isn't going to be that high. In industries where new business cost millions to start we still get competition entering the market, none of these borderline trivial costs like an ECG machine will stop new doctors starting practices. [0] https://my.clevelandclinic.org/health/treatments/22930-hepatectomy-liver-resection https://my.clevelandclinic.org/health/treatments/22930-hepat...

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.

tekknik 3y ago
> And sterilising the room isn't even a capital expense at all, it is an operating expense. No, it’s both. Autoclave machines aren’t rented, they’re purchased. Then ongoing usage is opex. sterilization equipment is pretty well the core of the hospital (even called the core in some) > 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. Maybe for a vasectomy it can be done in office, now tell me how a liver transplant can be done. Also if you wait for demand to fit out a hospital, that means people are dying and you’re waiting until enough of them die to decide to expand your hospital. Also a watch can be an EKG machine? If my Dr pulled out any cheap piece of equipment to use on me I’d get off the table and leave immediately.
- roenxi 3y ago
  1. > No, it’s both. Autoclave machines aren’t rented, they’re purchased. Eh, ok. We're talking order of magnitude single digit thousands again. I, personally and literally, can lend a friend in the medical profession that sort of money if they needed it. It isn't even close to being in the range of capital costs that would cause a monopoly to form. 2. > Livers I'm no expert here and you haven't explained why you think this is a natural monopoly. But looking at a random article [0] it is clear that no hospital is required. You need a few doctors and I'm guessing 2-4 rooms worth of equipment. There isn't much of a hospital. If you want to add in rooms for patients to stay in that would be a hospital, but the room requirements for that aren't especially demanding and can be scaled over time, reducing the up front capital cost. The equipment costs would range depending on the surgeon but even a conservative estimate of a few million dollars won't get into natural monopoly territory. 3. > Also if you wait for demand to fit out a hospital... Demand forecasting is a thing. Capitalists have solved that problem. We don't have to wait for an obvious future to materialise, people act preemptively. And it still isn't suggesting there are natural monopolies present. In fact, this "waiting until enough of them die to decide to expand your hospital" problems is one that comes with public healthcare systems, they systemically under-call demand in my view. The queue in the emergency department is typically hours long in Australia and the hospitals chronically under provide beds. We only seem to seriously expand them when people start dying and/or a major sandal occurs. One of the reasons I so like the idea of private healthcare is I'm confident that if I need care right now I will pay for it, then get it. That is not a guarantee the public system can make. Adjusting to demand is a point in favour of private healthcare; they make more money if they meet demand. 4. > Also a watch can be an EKG machine? If my Dr pulled out any cheap piece of equipment to use on me I’d get off the table and leave immediately. If you insist that your health care is expensive, that can be arranged. Good luck to you. Please also support the people who want cheap options. However it is still not evidence of a natural monopoly forming. And I'm not sure what your complaint is - an ECG machine is obviously not that difficult to organise given that it can be done for a couple of hundred dollars and also you get a watch thrown in. This is not a cost that will cripple a new doctor's clinic. If you want a fancier machine, sure. But the cost still isn't going to be that high. In industries where new business cost millions to start we still get competition entering the market, none of these borderline trivial costs like an ECG machine will stop new doctors starting practices. [0] https://my.clevelandclinic.org/health/treatments/22930-hepatectomy-liver-resection https://my.clevelandclinic.org/health/treatments/22930-hepat...