There are extremely high fixed costs + we require hospitals to do unprofitable work (they aren't allowed to turn anyone away from the ED, for example). In many small regional chains, their profitable hospitals in one area fund unprofitable hospitals in other regions.

Overall we have a crisis of hospitals shutting down, not a crisis of oversupply.

> competition always leads to lower prices

I don't see how this could be true for emergency visits. Would an ambulance drive you to the cheapest hospital within some fixed radius?

[dead]

I don't really get it.

If you are arguing that the customer is not paying for inefficient providers, then I strongly disagree.

Customers always end up paying for inefficient supply chains. If you end up with an inefficient allocation of hospitals/doctors (local overprovisioning), it's always gonna be the patients that are gonna pick up the bill for this in the end through higher average prices.

Inefficiencies are doubly bad because you potentially don't just pay the pure cost for the inefficiency (middlemen, waste etc.) you even pay for margins on top.

I think the assumption that such inefficiencies could lead to actual savings for customers (by magically making the providers decrease their profit margins) is highly overoptimistic.

> Where would you expect bananas to be cheaper: a town with five grocery stores, or a town with one?

I'm not defending the "Certificate of Need" regulations, but your thinking is sloppy: healthcare is not a product like bananas. That analogy will mislead more than it will inform.

If every person has to buy 10 bananas a day or they will die, the town with 5 stores may have more expensive bananas, because they can just raise prices to cover the excess capacity and people will pay.

I don't think that is a good comparison at all.

Unlike grocery stores, hospital ERs don't get frequent repeat customer interaction, so that makes the competition aspect basically completely inapplicable.

As typical ER visitor,

- You wont know what "quality" of care you are going to get beforehand

- You will have very limited capability of selecting the hospital

- You will be unable to compare prices beforehand

So why would any of those 5 hypothetical hospitals decrease prices?

More competitors won't do shit if the market is uncompetitive by design.

In the town closest to central america.

The labor to produce, ship, and shelve the banana determine it's cost along with whatever margin the store that sells the banana is willing to take. Walmart, for example, could be perfectly willing to sell a banana at a loss if they think that will get you in to buy a TV.

This is why dollar stores exist and often kill off local grocers. They can sell a lot of non-perishable goods at a loss and win back by understaffing the location and overcharging on non-perishable goods.

I live in a city with probably around 50 different clinics, but they are all associated with 3 major medical groups. It isn't a lack of buildings that's preventing competition.

My expectation on cost of banana will be more on how much it costs to ship to said town? Similarly, which town has higher tax burden to cover? Assuming any sort of health inspection on places that store food, the town with more stores has a higher burden.

Which is all to say, my gut is it is far more complicated than that allows for. Not a useless model, but also not a very actionable one.

Exactly. The more suppliers are in a market, the more competition there is. Thus lower prices and a better selection. People don't like a monopoly is other areas of life. Healthcare is no different.

The town where you can see the banana prices on the shelves, if not online, and where there's a collective refusal to pay (perhaps through an organizer payer) if the price is too high.

1. One accepts only Visa, one only MC, one only Amex, one only cash, and one only accept bitcoin.

2. One offers bananas to walk in visitors, but the others have a minimum wait time of 1 month to a year.

3. One is a mile away. One is an hour away. Still in the same county.

4. None of them offer an easy to understand menu. You can't just order a banana. You ahve to order Banana Services and meet with Banana specialists. You can't take the banana home.

5. You wake up in a banana shop and you didn't get a chance to shop around before being presented with a bill. They don't take your payment of choice, so it's 10 times as expensive.

6. Some won't let you buy a banana. Instead, you have to buy a banana service. Per banana pricing is the lowest here, but the total cost is higher if you just want a banana.

Which banana store do you buy from? A, B, C, D, or E?

I'll take the first choice you make and let you know if you picked correctly. Anything other than the correct choice is a failure.

I mean, that depends. A town with ten people and five grocery stores will be inefficient, and probably have very expensive produce as a result.