Why Are Medical Ultrasound Systems So Inexpensive?
The fallacy this author makes in his response is unfortunately very symptomatic of our society&#x27;s poor grasp of fundamental economic principles. Worth noting that despite failing to see some of the larger forces at work that the previous post mentioned the author nevertheless acts condescendingly towards that other post, which is also very similar to how society-at-large operates.<p>The one factor the author completely fails to engage in is the fact that the state-of-the-art of ultrasound production and the resources devoted to its development is entirely endogenous to the regulatory and market structure around it. He spends a great deal of time justifying the price based on the technical challenges involved in building the device, but this completely misses the point. The market doesn&#x27;t reward innovators or companies because their product is &quot;complex.&quot;<p>The matter-of-fact is that we have crazy regulations in the medical space that sharply distort both the demand and supply of these machines. On the demand side, there&#x27;s bat-shit crazy things like the fact that in order to open up a new hospital, in certain regions the existing hospitals in the area have to all agree that they are okay with that. Imagine what the technology landscape would look like if every time Apple wanted to open a store it would have to seek approval of the Best Buys that had already been there.<p>We also rarely pay directly for our own medical treatments. The fake prices we see in medicine (I was once hospitalized for &lt; 1 day and the &quot;bill&quot; came out to &gt; $40k; a juice-box in an itemized hospital list could cost $12, etc.) are a great indication of the lack of competitiveness in that space. The truth is these fake prices reveal the fact that no one actually pays them, and instead are like that so insurance companies can negotiate individually with treatment providers. Now, given all of this, who could possibly enter this space and try to sell you on the idea that they could make an ultrasound that is 10% cheaper?<p>10% cheaper, that is, on top of an already highly-inflated price. Elsewhere in medicine, the INCREDIBLY high cost of FDA drug approval is extremely well documented, costing in the billions of dollars to bring a new drug to market. I hope it wouldn&#x27;t shock the author of the post to learn that, with that incredibly high cost to play ball, the default scenario is for young medical startups to quickly sell to pharmaceutical giants, as that is really the only way to bring drugs to market. At a smaller scale, this too happens in the ultrasound arena, thus also making their price artificially high.<p>Speaking more broadly, the author&#x27;s post is symptomatic of a view of much of our society which ends up treating prices as exogenous things. &quot;College is expensive,&quot; &quot;medicine is expensive.&quot; are things you hear all the time, and said with the intent that this reveals some fundamental truth about these things. That&#x27;s garbage. College is expensive simply and only because colleges have been charging that much and people have been paying for it. Full-stop. In fact, the &quot;free college&quot; would be wise to understand that much of the increase in the price tag can be explained by the artificially low rates that you can borrow to attend them in the first place. I lived overseas for many years, and despite having Harvard Medical School-trained doctors and frequenting world class hospitals there, the actual, full cost of those treatments -- which I paid individually -- were a fraction of what they would have cost me in the U.S.