Freeconomics

Will “low-cost” ever come to healthcare? You bet it will. Free is what citizens want — and free, increasingly, is what they are going to get.

The idea that you can make money by giving something away (or by selling it at an incredible low cost) is no longer radical. We live in the age of “free”. Cheap travel, cheap entertainment, cheap car rentals… cheap everything. But until recently, in healthcare practically everything "free" was really just the result of what economists would call a cross-subsidy: you can get for free any product that forces you to pay for something else, as for example, when a private healthcare chain offers a free first visit and makes the money when patients need to be operated. The one is giving away the good for free is making the money in “capturing” the client and charging him/her for different things.

But the model can (and will) get more deeply into the system. Healthcare doesn't feel free when you're paying for the infrastructure that it needs (ask the governments). Yet if you look at it from the side of the patients, the economics change. Those expensive resources (fixed costs) can serve tens of thousands of users (marginal costs). Healthcare, when looked from the point of view of entrepreneurs, is all about scale, finding ways to attract the most users for centralized resources, spreading those costs over larger and larger demand as the technology gets more and more capable.

Basic economics tells us that in a competitive market, price falls to the marginal cost. Healthcare has the potential to become a very competitive market in the XXIst century. After all, we all need it, demand is huge. The opportunities to adopt a free business model of some sort have never been greater. Expect it to come to healthcare in the next years.