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Comment by whiddershins | Hacker News Reader

What’s confusing is hospitals aren’t all that profitable.

So where does the money go? Is it going to treat people who end up not paying? Is it going to buy expensive diagnostic equipment?

Where does it go? No one seems to know.

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Non profits aren’t exactly virtuous or efficient with money. In fact, there are so many players involved in operating and running a hospital who want to get paid the fact that the overall hospital itself is a non profit isn’t very meaningful.

I have come to not view a given hospital as an entity. Rather, a hospital is a place (not just in spacetime, but in regulation, and in "the market") where numerous agents are at work in an opaque manner. Some are frantically billing anything that moves. Other agents are losing money on patients who will not or cannot pay and are looking for ways to balance those books so that they can continue to survive (consider the hospitals closing along the border as the "undocumented" end up in the ER). You have ambulance services struggling as people "cleverly" use them as taxis. Pharma slithers in and out, hoping to recoup their costs on nineteen failing drugs with wild sales of the twentieth. All of this occurs in the hospital "zone," and what patients see is a series of bills emitted, like push notifications out of an API.

Making all of this predictable, transparent, and detangled is only step one. Hitting people -- actual humans -- with fraud charges is also a grand idea.

A lot of it goes to inefficiency. Think of it this way. If you have a factory that makes 1 thing it can optimize around that. It can become cost effective. If you have a factory that can manufacture 10 different things, it becomes less cost effective because you need to be able to switch between the different things. If a factory can produce 100 different things it's even less efficient.

Hospitals deal with thousands of things. Their overhead and complexity are high. This leads to inefficiency which costs more.

I've read that the math around the costs map fairly well to the cost models around factories [1].

[1] https://www.amazon.com/Innovators-Prescription-Disruptive-So...

Pure inefficiency. The medical industrial complex is second only to the government in its byzantine bureaucracy. This is why we will never be rid of it. All those hundreds of billions of dollars wasted are mainly going to pay millions of middle class administrative salaries. I know 2 people whose companies would not even exist in a socialized health system. Woe to whatever politician tries to pass a bill that will put millions of middle class Americans out of work.

Also crazy large doctor salaries. The US pays way more to doctors than for example many European countries.

You can do wonders with accounting when you have control and collusion with your vertical markets.

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