
Undoubtedly.  In fact, it is the fact that hospitals frequently compete
for physicians rather than for patients that (in part) complicates and 
undermines a simplistic free-market analysis of the market for medical care.


Once again, there is no evidence that this is true in regard to kidney
dialysis.  Although price controls have promoted an expansion of services
to a much greater volume of patients, RD is still a profitable service.
Otherwise, one would expect to see evidence of rationing rather than the
vast expansion that has occurred.


Can you spell "loss leader?"  I knew you could.  Grocery stores do not
attempt to make up the loss on an individual product by selling more of
it.  In fact, your argument above is that kidney dialysis is a loss leader 
for other medical treatments where lost revenue can be regained.  

But the evidence does not support this contention.  Rather, it appears that
price controls have disciplined the market by forcing an expansion of
service and development of improved lower-cost technology to provide 
comparable benefits.  Providers continue to profit from RD, they simply
make less on each treatment than they would have if the price had 
risen at the rate that uncontrolled treatments have.

There is no question that had price controls forced the price of RD 
substantially below its actual cost that some or all of the doomsday
predictions of free-market advocates would have been seen -- restriction
of service, lagging technological development, etc.  Likewise, it appears
that in the VA and armed forces medical care systems, where providers 
are government agencies, some of these negative impacts may occur.  
(RD patients in the VA system in Spokane, for example, must travel to
Seattle, 300 miles away, for treatment.)  

The bottom line, however, is that this is an example of government 
intervention (of a rather extreme sort) that appears to have had beneficial
results for both providers and consumers.  Claims that "government
bureaucracy" inevitably leads to undesirable outcomes in the marketplace
should take such such cases into account.

jsh
