Products are sold for prices the market will bear, which is only loosely related to the cost of making them.
Or rather - if you sell a fixed number of items and could only reasonably justify a certain margin, then you don't want to make it cheaper.
If barriers to entry are high - then you sit on your cash cow.
This issue is very prominent in healthcare for both services and equipment.
It's a very costly problem.
Insurance companies want your bill to go up, not down, so they don't act as aggressively as they could to cut costs for small items. Hospitals - same.
Because of the vast costs associated with regulation, overhead, marketing and near monopoly on many products, combined with massive 'price inelasticity' on part of the buyer (i.e. you'll pay 'whatever' to get fixed) - you get a problem.
My parents both worked in pharma, it's an industry flush with cash - they spend big on everything, offices, equipment, staff. They have a doctors sense of entitlement - after all - they are 'saving lives'. And it is serious business, you can't hack your way through most of it.
So as the underlying expenses and regulatory costs go up - so do all the ancillary costs. Add that to the misaligned market incentives and price inelasticity ...
And you get unbelievably expensive healthcare.
I firmly believe you could train a smart person to do an x-ray and to reset a bone, put on a cast and to it for under $1K. And it would cost $10K probably in a hospital sans insurance.
Now - the first 'problem' in that scenario is that doctors are often paid to be good 'when things go wrong', and to get their yield way up (i.e. can't make mistakes) and both of those things are very expensive: you need to have 10 years of 'extra training' for the 1% of the time something weird happens.
Fair enough - but I still think many of those things can be parameterized.
Costs will not come down until their is an agent forcing it: the government, or preferably, another kind of provider.
Wallmart has an approach to business like no other: they force their suppliers to open their books a bit, force their costs down - and then pass all the savings onto the consumer. It's something few understand. Their strategy is volume, and they have an ethos of sucking producer surpluses right out of the value chain.
If Wallmart could feasibly get into the healthcare game on the low end, it could send waves right through the industry, which would be good.
> I firmly believe you could train a smart person to do an x-ray and to reset a bone, put on a cast and to it for under $1K. And it would cost $10K probably in a hospital sans insurance.
Imagine that your solution is a fraction of a percentage point worse than current treatment. Imagine there's 0.1% increase in harm.
The English NHS sees 1m patients every 36 hours.
In 2012 - 2013 there were 9 million ultrasounds.
I wouldn't want to tell those 9,000 people that their treatment was, even though they got harmed, good enough.
And that 9,000 is just in England.
If you want to save money on ultrasound spending you probably want to reduce the numbers of ultrasounds being taken. Healthy pregnant women with no problems only need one ultrasound, but in some places they're offered very many more.
> In 2014, usage in the U.S. of the most common fetal-ultrasound procedures averaged 5.2 per delivery, up 92% from 2004, according to an analysis of data compiled for The Wall Street Journal by FAIR Health Inc., a nonprofit aggregator of insurance claims. Some women report getting scans at every doctor visit during pregnancy.
The way I see it, the benefit of cheaper diagnostic technology is the difference between no access (or extremely limited) to that technology and access to an inferior but otherwise capable technology.
I agree to a certain extent. I think it would mostly be useful in developing areas where you might have someone who has training to make simple diagnostic calls (should this person be put on a 2 day bus ride to a hospital), but doesn't have the tools to make the diagnosis.
Basically, places where buying $10k of diagnostic tools wouldn't be tenable, either because of the price, or because they would get stolen or damaged before they could "pay off".
Places where I think this might be useful are places like Nepal, Sudan, Pakistan, India, Niger, Mongolia, etc. Places that have low development and population densities.
I think a DIY instrument would be especially useful in India, given the fact that it has low development levels but a lot of highly educated individuals and a strong central government.
That being said, this is all speculation. I don't know enough about ANY of those areas to say whether people there would actually find tools like this useful. I'm definitely not suggesting we start filling shipping containers with cheap instruments and shipping them abroad.
Or rather - if you sell a fixed number of items and could only reasonably justify a certain margin, then you don't want to make it cheaper.
If barriers to entry are high - then you sit on your cash cow.
This issue is very prominent in healthcare for both services and equipment.
It's a very costly problem.
Insurance companies want your bill to go up, not down, so they don't act as aggressively as they could to cut costs for small items. Hospitals - same.
Because of the vast costs associated with regulation, overhead, marketing and near monopoly on many products, combined with massive 'price inelasticity' on part of the buyer (i.e. you'll pay 'whatever' to get fixed) - you get a problem.
My parents both worked in pharma, it's an industry flush with cash - they spend big on everything, offices, equipment, staff. They have a doctors sense of entitlement - after all - they are 'saving lives'. And it is serious business, you can't hack your way through most of it.
So as the underlying expenses and regulatory costs go up - so do all the ancillary costs. Add that to the misaligned market incentives and price inelasticity ...
And you get unbelievably expensive healthcare.
I firmly believe you could train a smart person to do an x-ray and to reset a bone, put on a cast and to it for under $1K. And it would cost $10K probably in a hospital sans insurance.
Now - the first 'problem' in that scenario is that doctors are often paid to be good 'when things go wrong', and to get their yield way up (i.e. can't make mistakes) and both of those things are very expensive: you need to have 10 years of 'extra training' for the 1% of the time something weird happens.
Fair enough - but I still think many of those things can be parameterized.
Costs will not come down until their is an agent forcing it: the government, or preferably, another kind of provider.
Wallmart has an approach to business like no other: they force their suppliers to open their books a bit, force their costs down - and then pass all the savings onto the consumer. It's something few understand. Their strategy is volume, and they have an ethos of sucking producer surpluses right out of the value chain.
If Wallmart could feasibly get into the healthcare game on the low end, it could send waves right through the industry, which would be good.