Tangentially related, Russ Roberts of econtalk had a good interview a few years ago with the founder of a free market hospital in Oklahoma. Super interesting.
I think of this every time I encounter a healthcare worker who talks about how it’s “impossible” to estimate and brings out some edge case of a routine $50k procedure costing $500k with complications and leaving out the part how there are many instances where it only costs $25k.
It’s like hospitals pretend to be idiots when other industries can estimate a median cost and price accordingly. And they have estimates good enough to be profitable.
Even barbers charge $30 for a haircut when some take 5 minutes and some take 30. If a barber didn’t post prices because it’s impossible to estimate how many minutes it takes to cut hair I wouldn’t use them unless my life depended on it.
It's much easier to offer estimates for specialist clinics.
In hospitals? The honest answer is they often don't know the true costs. They'll know the costs specific to a department, but the "shared" costs of the hospital, staff (who work across departments), etc are a major shit show.
That's not to say they can't find out, but it's not easy and frankly they don't do it because they don't have to.
You might get an operation in a hospital and stay one night. They could tell you the cost of the bed, but what about the lab tests (which is another business unit). Then you've got nurses who might work across two different units. Then imaging which is another unit.
My friend who worked at a major hospital said it's a massive shit show. For simple out-patient procedures, they have the costs down pretty clean. But for in-patient stays, they often have no clue at all what the real costs are.
They know on average. How else would they project how big of a hospital to build?
It’s a massive shit show because they don’t care. There’s no cost incentive to be efficient. And many healthcare providers are cost plus so if they have higher costs it actually results in higher absolute pay.
It’s like hospitals pretend to be idiots when other industries can estimate a median cost and price accordingly. And they have estimates good enough to be profitable.
Even barbers charge $30 for a haircut when some take 5 minutes and some take 30. If a barber didn’t post prices because it’s impossible to estimate how many minutes it takes to cut hair I wouldn’t use them unless my life depended on it.