Because someone would then do it for cheaper when medicine was a trade that’s how it used to be.
And it’s somewhat how it’s still is in some fields of it primarily cosmetic, elective surgery (including LASIC and the likes) and dentistry.
There are plenty of countries where the majority of the health care is provided by private firms even if the state picks up the bill or part of it including almost all countries with universal healthcare.
The US is pretty much unique in costs and distribution of burden and it’s not because of the free market approach to healthcare.
When 9 out of the 10 most profitable hospitals in US aren’t even private/for profit you can’t simply claim that the investment firm or HMO that owns the hospital tries to suck out as much profit as possible for their shareholders.
P.S. I don’t agree that regulations are the problem anyone who thinks that you somehow would get better results with deregulating healthcare is likely very wrong, the entire system in the US is however broken and not because of simply campitalism.
Great comment; agree all the way. But I do think that it lost the specifics here so I want to highlight them:
Stitches are very easy to administer. Nobody needs a uni degree to stitch up a wound. They need lots of practice.
It is impossible for a reasonably free market to charge $5,000 for 3 stitches; because an independent doctor would set up next door with a sign saying "Stitches; $4,500!" and drive home in his Lamborghini every day. The hospital and the independent doctor would then start undercutting each other until the margins were no longer outrageous and they have to think a bit before dropping their prices any further.
If a hospital can get away with charging $5k for 3 stitches, any market freedom has long ago been exorcised.
The same as you measure the profit of any business. They're just referred to as net assets[1].
Non-profit is a misnomer - not for profit is a more apt phrase. While they can't operate with the intent of generating profit, they're perfectly allowed to actually generate profit from various activities. With the intention that the profits from that activity will be a revenue stream that funds loss-making activities elsewhere which support their nonprofit mission (such as issuing grants). Hence it's kept on the books as net assets.
They don’t even have to fund loss making activities they just aren’t allowed to share profits with investors / shareholders.
They have to reinvest their profits back into the business that can be grants but can also be increasing pay to their staff or expanding their operation.
Two thirds of US hospitals are NFP (public, community, university etc) or government hospitals.
Ironically the more money they make and the bigger they are the higher prices they tend to charge because they can negotiate higher rates with the insurance providers.
The US system is simply broken the US healthcare has a huge problem with uncompensated care which is one of the primary reasons why most hospitals lose money on primary care.
This means that hospitals are “forced” to extract as much money as possible form insurers so your healthcare costs do not only incorporate the risks of all policy holders for your specific provider but also the uncompensated care costs of the hospitals.
The insurers then extract as much money as they can from their clients which primarily are business which don’t seem to care that much as they can often write of much of that cost as operating expenses.
This pretty much causes a cycle of inflation that is unsustainable under normal circumstances and will utterly brake the entire systems under extremes like the current pandemic.
I would add those clinics to your list of places we see competition drive prices. I have 2 near my house that handle things like cuts, fractures, sprains, sinus infections, etc... They were $100 for pretty much everything included in a visit (x-rays, tests), but have started competing. They went down to $95, and may be $90 now.
And it’s somewhat how it’s still is in some fields of it primarily cosmetic, elective surgery (including LASIC and the likes) and dentistry.
There are plenty of countries where the majority of the health care is provided by private firms even if the state picks up the bill or part of it including almost all countries with universal healthcare.
The US is pretty much unique in costs and distribution of burden and it’s not because of the free market approach to healthcare.
When 9 out of the 10 most profitable hospitals in US aren’t even private/for profit you can’t simply claim that the investment firm or HMO that owns the hospital tries to suck out as much profit as possible for their shareholders.
P.S. I don’t agree that regulations are the problem anyone who thinks that you somehow would get better results with deregulating healthcare is likely very wrong, the entire system in the US is however broken and not because of simply campitalism.