It's not even about inventory of individual items (like blood or enough scalpels) it's that they need to have every expensive machine. They need x-ray machines and MRI machines and proton beam cancer treatment and that stuff adds up very quickly. That's why a trip to the ER for stitches can cost five figures in the US, because a large amount of that bill is covering the hospital's cost to be ready not just for the stitches but also car crashes or mass shooting events or whatever

The costs of “hospital overpreparedness” should still be clearly understood (and should probably be funded by taxpayers and not by people who need elective procedures).

To make it more concrete: the lack of hospital capacity is one of the major reasons why COVID lockdowns lasted for so long after vaccines were available. Hospital capacity numbers were what politicians and bureaucrats were watching to determine when and how to ease lockdowns. If we had more excess hospital capacity, the lockdowns would have ended sooner.

When hospitals routinely operate at 120% and a major crisis doubles what we ask of them, people don't get the treatment they need.

I'm sure most of us have stories of friends or relations who needed hospital care during COVID and received less care than they normally would have received outside of the crisis.

Another problem is that one hip replacement is not the same as another. Differences in patients, complications arise, it's really hard to say you're going to need exactly X syringes and Y feet of gauze and Z liters of blood and which and how much of certain drugs for anesthesia, not to mention with procedures that involve prosthetics you may need multiple on hand, the first one you pick may not fit so you need to go to the second one but you have burned that first one

Finance guys think you're going to turn hospitals into walmart and make it up on ruthless efficiency and volume but it's not that kind of business. There's so much unknown going into any one situation that it makes this "transparency" hard to do. Plus, people want the best and whatever they need to survive so the "consumer" doesn't want transparency

And then you layer on top the huge amount of uncompensated costs from uninsured and denied coverage. It's why a single national payer system actually makes sense, if you can keep the fraud from running amok. We really should just pay for outcomes and spread the actual cost over the entire system

Is that not already baked into the cost of malpractice insurance?

Malpractice insurance is less than 1% of revenue for all medical specialties except the one that is dangerous and used routinely.

They are insured against such risks and with that the insurance costs will be another fixed post on the expense list.

perhaps, but insurance companies are very good at figuring this out and in turn amortizing the costs out.

You can do both!

There is a financial product known as malpractice insurance in which the outsized cost of a malpractice case is spread out over a risk pool of people with similar risk exposure.

In any case, this cost is not directly part of the "hospital's" cost of service since the surgeon is most often a semi-independent contractor who bills the patient "professional charges" that are separate from the hospital's "technical charges."

There is a real problem. There is a lot of overhead. You can use accounting to hide it in various places, but it still exists. I want a hospital large enough to handle disasters (think tornado destroys a large area), but that means there will be a lot of rooms that the hospital is making payments on but are never used.

It's funny because you're basically making the argument that it's not solely the insurance providers fault, but also equally the providers (which is what most reputable studies on why American health care is so expensive seems to point to).

If a hospital doesn't know what it's own costs are, and are doing creative accounting to hide charges in random places, how the hell is an insurance company supposed to know how much reimbursement makes sense, and if a procedure should be done that costs $10K at this hospital vs $5K at another down the street with seemingly no difference in outcomes.

So w/ the creative accounting, which both the provider and the insurance company knows everyone is doing, you get administrative bloat where both sides have massive billing departments dedicated to figuring out each others BS. And this bloat is a hilariously large amount of the reason why costs balloon.

Both the providers and insurance companies are aligned in driving up costs. Hospitals probably will never get their act together in knowing actual pricing, but lying about it through creative accounting hurts everyone.

I remember the Econtalk episode with the co-founder, "Keith Smith on Free Market Health Care" [0]

0. https://www.econtalk.org/keith-smith-on-free-market-health-c...

Customer/Doctor/Insurance is the classic blame triangle.

Well he has done that on Rx drugs which is equally a hot mess. So he has credibility in this space.

He’s not just some blowhard billionaire with an opinion. He’s really legit shaken things up in Rx and proven it’s a racket.

He has done a lot for affordability with Cost Plus Drugs.

The thing is he'd find a lot of the "unnecessary overhead" is necessary to deal with the payers in the system. You need a massive billing organization to make sure insurance actually pays you. You need a massive compliance organization to make sure Medicare pays you (and that you don't kill your patients and get sued)

If you reformed the whole system you could trim a lot of hospital overhead, but it's a systemic problem. More overhead and waste is happening in the insurance companies which is what needs to be cleaned out first, then you can start dealing with providers' overhead that exists to serve the rest of the system

He didn't charge "whatever the market would bear" for prescription drugs. Also there is obviously a huge difference between urgent/emergency care vs more routine procedures. If you're getting a routine colonoscopy every few years, it may be feasible to shop around.