Why Are Ultrasound Machines So Expensive?
Products are sold for prices the market will bear, which is only loosely related to the cost of making them.<p>Or rather - if you sell a fixed number of items and could only reasonably justify a certain margin, then you <i>don&#x27;t want to make it cheaper</i>.<p>If barriers to entry are high - then you sit on your cash cow.<p>This issue is very prominent in healthcare for both services and equipment.<p>It&#x27;s a very costly problem.<p>Insurance companies want your bill to go up, not down, so they don&#x27;t act as aggressively as they could to cut costs for small items. Hospitals - same.<p>Because of the vast costs associated with regulation, overhead, marketing and near monopoly on many products, combined with massive &#x27;price inelasticity&#x27; on part of the buyer (i.e.  you&#x27;ll pay &#x27;whatever&#x27; to get fixed) - you get a problem.<p>My parents both worked in pharma, it&#x27;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 &#x27;saving lives&#x27;. And it is serious business, you can&#x27;t hack your way through most of it.<p>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 ...<p>And you get unbelievably expensive healthcare.<p>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.<p>Now - the first &#x27;problem&#x27; in that scenario is that doctors are often paid to be good &#x27;when things go wrong&#x27;, and to get their yield way up (i.e. can&#x27;t make mistakes) and both of those things are very expensive: you need to have 10 years of &#x27;extra training&#x27; for the 1% of the time something weird happens.<p>Fair enough - but I still think many of those things can be parameterized.<p>Costs will not come down until their is an agent forcing it: the government, or preferably, another kind of provider.<p>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&#x27;s something few understand. Their strategy is volume, and they have an ethos of sucking producer surpluses right out of the value chain.<p>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.