"Ok, Super, let's talk this through....
you have an xray machine or a cat scan or an mri machine that the hospital has bought for diagnosis.
the more people sick and in need of these, the more they will use this machine and the cost of this machine to their overall business would be less as a percentage because they would have multiple people using it, right?"
Theoretically, yes, the actual cost to buy the machine would be spread out over more patients. That is the fixed portion of the costs. But the more you use a machine, the more wear and tear you put on it. So you could also be spending more on the maintenance of the machine. These costs are variable. If a machine needs replacement every 5 years vs. every 7 years, that could send the costs right back up again.
"And the administrators and boards and all of that would also be fixed where their salary would be the same whther there were 100 patients or 150 patients.... so that too should bring overhead costs down as a percentage of over all business....right? "
Again, yes, these costs would be fixed. But the administrator would also likely be hiring more staff if the workload became too high.
"And medications, and supplies they may use or need to purchase should go down because they should be able to buy them with a bulk discount compared to a state with fewer patients and fewer sick, right?"
Not necessarily. It depends on how they are able to store the supplies.
"I can understand what you are saying with an increased demand and no supply to support it would cause the rise, but I am uncertain if this is the case....?"
Think of it this way. You have a finite amount of space in a hospital. Once you are at capacity, then you are essentially screwed. You either have to build more space or turn people away. You also have a finite amount of time. A doctor/nurse etc... can only work effectively for a certain period of time. After that period you either hire more staff or take the chances on higher incidence of malpractice.
"And if it is the case Super, in any other business model in the free market an competitor would come in and produce more of the product, to grab the extra sales, no?"
In many cases that would be correct. But in healthcare there are significant barriers to entry. If you don't have the ability to hire more doctors/nurses due to a lack of supply (which is the case) then your costs go up, because it forces hospitals to fight for their services.... which drives up labor costs.
care
ps. if you answered this somewhere already, I will look for it.
but BAN worthy? You KNOW, that I am not!
