Providing poor service and still making money isn't capitalism. That's a lack of competition. Plenty of countries have poor government run services and there's no alternative. Same deal - no competition.
Besides, hospitals will never be more competitive than an oligopoly in most cases, simply because only so many are built in any given geographic area, and most people can only travel so far for medical care. There are some services the “free market” simply can’t deliver efficiently.
We could give capitalism and free market a try.
You complained that "only so many are built in any given geographic area", and I pointed out that this is for a very non-capitalist reason. Regulation prohibits opening new hospitals.