Depends on what you mean by a doctor. If you mean someone who is on the front lines seeing patients, then 10x is a bit high for the estimate. That might be right for an orthopedic surgeon or a cardiologist, but not for your typical internist, family practitioner, pediatrician, or even a general surgeon. That number is probably closer to 7 or 8x (or less depending on which grunt you mean, a CNA?, the charge nurse on a large hospital ward?, a PA or an NP?). This is in part offset by extra debt incurred during medical school and (in many cases) residency. Those same frontline doctors also lack a “great deal of power.” Yes, ultimately we make the medical decisions, but we have little say in the financial aspects of care. Now if instead you mean someone who has a DO or MD degree but whose job is on the administrative side of things for a big insurance company rather than being a frontline practitioner, then that’s a different story.
Funny you should mention cartel and no one mentioned one of the worst businesses ever. Diamonds!
The whole thing is a joke. Their business practices have led to bloodshed and even wars. The stones are not all that pretty compared to Emeralds, Rubies and Sapphires right off the bat. The whole thing is artificially inflated, a market ploy and the origin of artificial shortages.
Then the fact they’re desperately trying to stop the artificial diamonds from crushes their bogus cartel.
Ah, yes, concierge medicine. A great idea that just does not work.
You can also buy wine, beer, and liquor at grocery stores in Iowa, although it’s shelved separately.
A nurse in my area averages ~$66,000 vs. a pediatrician or many primary care doctors, who might make ~$266,000, so only a little more than x4 as much. There is vast variation in what an average doctor makes according to their specialty.
When you are looking for industries to disrupt, be very precise in selecting the areas to disrupt. Let’s leave primary medical providers out of the disruption. Most of them still have up to $300,000 worth of educational debt to pay off. We are close to approaching disincentivizing medical students preparing for and going into primary care. We will miss them when they are gone.
Isn’t everything in a grocery shelved separately? 
I take that to mean there’s a cordoned off BeerWine section, possibly with its own cashier. Illinois is like that with alcohol in groceries.
D’oh, that’s what I meant - in a separate room or partitioned-off area, although people can pay for everything at the same counter, as long as the cashier is 18 or older.
This is true, but from what I’ve read there are 3 major factors in why our health care costs more than other nations.
-
We lack market forces, both public and private. The public sector can’t set prices or negotiate, and the private market can’t compete since prices are hidden.
-
We spend too much on administration. I think in the US we spend $2500 per person on administration vs $500 in Canada. I think in Taiwan they spend less than $100 per person and these are well run systems.
-
Our fee for service system incentivizes expensive care. If you go to the hospital with knee pain, they make lots of money from MRIs and surgery, not nearly as much income from out patient physical therapy. So they incentivize the expensive treatment.
Problem is like you said, each one of these issues if you improve them mean people lose money and jobs, and nobody wants to make the cuts. Hospitals cost 2x more than they do in other nations, but they’re barely breaking even most of the time and hospitals are closing in lots of areas due to lack of income.
A couple of relevant facts on this topic:
First, concessions is always the theater’s money maker.
The physical cinema (known in the business as the exhibitor) makes little or no money from ticket sales. Decades ago, they would take a small percentage of opening-weekend sales, sending the majority of ticket revenue back to the company that licensed the movie for exhibition (the distributor). Then, over the subsequent weeks, the proportion of the exhibitor’s take would rise, and the distributor’s cut would fall. If the movie was still playing a few months later, the exhibitor was keeping most or all of the revenue. (This is why you would have second-run movie houses offering heavily-discounted tickets to see six-month-old blockbusters.)
The business has changed a lot over the years. Movies don’t play for months and months any more, so the exhibitor’s cut never rises above a negligible fraction. Also, powerful distributors play hardball with in-demand blockbusters, sometimes demanding 100% of ticket revenue for the opening week. This results in a situation where the exhibitor puts a new release on half its screens, keeps none of the ticket money for 7-10 days, and then dumps the movie from most of its screens in order to bring in the next big new release.
There are a dwindling number of repertory houses which put older library titles on their screens, and therefore make different financial arrangements to exhibit their films. There are also a handful of specialty exhibitors which show foreign and independent movies via smaller distributors that don’t have the same clout as the big studios, so the revenue-sharing model isn’t as harsh.
But for 99+% of the movie business in the U.S., the above arrangement governs. Which means the exhibitor makes all but a tiny fraction of its revenue at the concession counter. It’s a pretty bad business model, for a number of reasons. And it’s why your popcorn and soda will set you back fifteen bucks, because that’s how the cinema owner keeps the lights on.
Anyway, the point is, this helps explain why the concessions sales model is so difficult to change. Margins are razor-thin, with gross revenue barely covering operational costs. If you hire an additional person and divide the labor, with one person at the register and the other person cycling cups through the soda machine, you will make the line go faster during the boom cycles between movies, but you have added labor expense during the lulls, which cuts into your margin. At the very largest multiplexes, movie start times can be effectively staggered to even out this cycle and maintain constant demand, and I have seen division of labor in these cinemas as suggested above. But it’s not common.
Here in Europe, I see a different arrangement, more like the “cafeteria” system mentioned above. The concessions area is basically a self-service lobby, and the employees are stationed at cash registers at the exits. You enter through a turnstile, grab whatever snacks and drinks you want, and pay on your way out, through another turnstile. There are no soda fountains with cups; all drinks are bottled. Popcorn is pre-bagged and shelved.
It’s a very efficient system, but for an existing movie house, there are two barriers for adoption.
First, it requires a significant remodel of the existing space. You need to reorganize your whole interior lobby, not just to create a controlled space for self-service concessions but also to channel foot traffic of moviegoers around this space, whereas in the typical current lobby they are free-roaming on their way to the various screens. Closing your cinema and spending the money to rebuild is a non-starter if you’re running a business with extremely tight margins and very little free capital.
You would think a forward-looking entrepreneur might have taken advantage of the pandemic closure to reorganize their spaces, and it’s entirely possible this has been happening. I’ve been out of the U.S. for years, so I no longer have direct observational experience. But I wouldn’t expect this to be a major revolution, because of the second barrier: old-fashioned thinking.
The main consideration here also comes out of the razor-thin margin factor. Specifically, the issue is “shrinkage,” i.e. theft. Any time you’re letting your customers put their hands directly on the products, there’s a risk they’ll slip an item or three into their pockets. With food, also, there’s the snacking/grazing issue, especially at the bulk-candy bins. It’s a lot safer, this thinking goes, to keep the product entirely under control behind the counter. Now, my experience here in Europe shows that there’s probably a business case to be made to refute this perception. The greater efficiency of centralized, dedicated labor might make up for the losses in shrinkage, creating a net benefit. But whenever you’re arguing against someone’s beliefs, trying to dislodge long-standing preconceptions, you’re starting out with a big uphill climb. That, combined with the first barrier, has created significant inertia in the space.
Which, of course, is exactly the set of circumstances one would normally point to as making a sector ripe for disruption. “There’s an obvious efficiency waiting to be claimed, and the existing players are too stodgy to adopt it!” This is true. But— if you want to get into the movie exhibition business, starting from scratch, you have to have the capital to buy or lease enough territory to build several thousand screens worth of movie house nationwide, in order to be a viable outlet for the major distributors to consider offering their films to you. Further, you’d be entering a sector with several large existing players, meaning it’s already pretty well saturated and the favorable sites are already claimed. And you’d be getting into a business whose already-tiny profit margins are continuing to shrink, so good luck attracting investment money to your scheme. (Existing businesses would be unlikely to embrace this transformation, for the reasons noted previously.)
Now, all of this being said, I do think that film exhibition, as a general sector, is going to be significantly disrupted in the coming years. It was already teetering, due to many factors — the overreliance on a shrinking number of tentpole releases, the decreasing quality of the in-theater experience leading to a narrowing of the attendance demographic, the improvement of in-home viewing options — and the pandemic took a wrecking ball to it. I think, twenty years from now, cinemas are going to be very different. For most people, it’ll be a big special event, with gigantic screens and huge auditoriums, and ticket prices to match. For cinephiles, there will be tiny dedicated houses with a few dozen seats. The in-between of medium-sized screens and facilities will vanish. Routine viewing will be largely in-home.
If I had a billion dollars and wanted to make a long-term investment, I would buy out one of the smaller failing chains — Regal, say. I’d dramatically shrink its holdings, dumping at least half of its facilities. Then I’d massively remodel what remains, looking ahead to the probable future situation, gutting the 18-plexes and replacing them with four or five oversized spaces per site. (And, yes, a cafeteria-style concessions lobby, plus even better food options for in-seat delivery.) This means the whole operation would be closed for probably two years after acquisition before re-opening. It would look a lot like the Alamo Drafthouse model, except it would launch nationally instead of slowly growing region by region, it would be heavily focused on tentpole spectacle to attract an audience beyond the habitual repeat viewer, and it wouldn’t have a toxic dipshit at the top, enabling a culture of sexual harassment. With those changes, it’s a good indication of where the exhibition experience is likely to evolve.
But (TLDR) the problems with the current cinema exhibition business go well beyond “the concessions counter is inefficient.”
I meant to add something in the “twenty years from now” section, but it’s too late to edit: Those big movie-event facilities I predict? They will be owned and operated by the movie studios themselves. Disney in particular has been slowly starving the exhibitors, because they foresaw the end of the Paramount consent decrees which prevented studios from owning movie theaters and thereby monopolizing the entire production-to-exhibition chain. That was finally overturned last year, and Disney is now looking to get into this space. I would be very surprised if they didn’t follow something similar to the game plan I laid out above.
This is essentially a disruption of the whole industry, but it’s a top-down disruption, rather than the upstart outsider that is usually implied by the concept.
Exactly. There’s definitely fat to be cut in the medical industry, but the salaries of front line physicians and front line workers (CNAs, nurses, therapists, pharmacists, technicians, dietary staff, phlebotomists, etc.) is not where the extra money is being spent. The figure that is typically cited is that the US spends at least double on healthcare than even the most expensive of the other developed countries. If you want to know where that money goes, look at the executives and stockholders of Big Pharma and Big Insurance. There’s also the large number of administrative workers who do work (billing, coding, processing claims, etc.) that is created by having a huge patchwork of various insurers. Those workers aren’t making large salaries, and it would suck for them to lose their jobs, but those jobs wouldn’t be necessary in a medical system with a lot less red tape.
Higher education. What possible reason is there for tuition costs to increase at twice the general inflation rate? Tuition costs double every nine years. And don’t get me started on textbooks.
There just happened to be a Freakonomics episode on this the other day. They mentioned that many people are looking for a change that would save 15%, while a better approach would be to look for 15-30 things that would save .5-1%.
Some factoids - mostly from listening to that ep as I was washing the floors.
- Surveys show that medical providers say 20-24% of medical procedures are unnecessary. What would it take to reduce those? Are they ordered to avoid potential liability? Or simply becase someone will pay for them.
- Why are nonprofit hospitals allowed to pay their administrators so much - over $20 million annually in some cases? The defiitio of nonprofit hospitals should be revised.
- Some sort of price fixing and cost transparency would be appropriate - so what a procedure costs doesn’t depend on who is insuring or whether you are insured. There should be incentives/possiblity for a consumer to compare prices and have providers compete over prices.
- More money could be directed towards prevention.
- I believe the program identified long care hospitals as very pricey, profitable - and often unnecessary.
- The program suggested incentivizing “improvement” of patients’ conditions, as opposed to the provision of services.
Health care - and insurance, are MONSTROUSLY huge businesses. I believe health care lobbying exceeds energy and defense combined. And - yes - they provide a lot of jobs not directly related to the provision of services. But it’s a pretty damned expensive employment program. It would not be easy to address, and it would cost some people money. But it could be done.
I personally think single payer is a great idea, but what do you do with all of the suddenly unemployed insurance folk and billing employees? And I believe in some degree of “rationing.” Hell, the insurance companies already ration - tho in a self-interested profit generating manner.
The last thing I’d try to cut is the income of the actual care providers. Doctors and nurses. When I underwent surgery on my ankle a while back, I was shocked that the surgeon was paid less than the cost of the plates and screws he installed. I’d probably subsidize med school so it is not reserved to the wealthy, and does not create such an incentive to make back those costs thru billing.
Like I said, there are plenty of ways to address this by chipping off a little here and there. I find it surprising that anyone would suggest otherwise given the amount we pay on health care and the results we receive (compared to other countries.)
College teacher here. I have always felt that the textbook industry is a giant racket. Fortunately, the disruption is happening. I can only speak for the math department at my college, but there are a couple of ways I’m able to give the textbook industry the finger.
-
For most of the classes we teach, I have the option of using an open-source textbook, which is free to students.
-
For those classes that don’t have an OER option, I suggest to my students that they rent the book from Chegg for $12, rather than purchasing a copy for ten times that amount.
Theoretically it would be fantastic to be able to buy liquor, beer and wine at any grocery, convenience store or dedicated liquor store. And be able to buy online directly from the vintner, distillery or brewery as well.
But the US has a lot of hundred year old Prohibition-era laws that prevent this, most of which are religiously motivated. For example, there’s no mail-order alcohol sales in Texas. Nor can you buy actual spirits anywhere but a specifically licensed liquor store. Beer and wine require different licensing, but can be sold in groceries. And on top of that, there’s this sort of three-tiered retail model with producers, distributors and retailers that’s mandated by law.
I have no doubt that in most places that retain this nonsense, it’s driven by religious and/or pearl-clutching blue-hairs. Here in Dallas, due to the way that the blue laws were written nearly 100 years ago, the city was part wet and part dry until a while back. The original votes for wet/dry were made back when the city was much smaller and the parts that were dry were part of the County. But because of the way the laws were written, being annexed into the otherwise wet city didn’t affect the wet/dry status of those areas, necessitating some kind of strange referendum to make those parts wet nearly 100 years later.
At the time of the referendum, the amount of pearl-clutching, breathless stupid was so thick you could barely see through it. Lurid claims of public drunkenness, rampant crime, decreasing property values, athlete’s foot, violent flatulence, etc… were relentlessly proclaimed by the dry side. Nevertheless, it passed, and what happened? Zilch. Zip. Nada. Except of course, we can have liquor stores that are closer than 5 miles away, and we can buy wine and beer in grocery stores. Otherwise it was a total non-event, and the city makes quite a bit more tax revenue that was previously going to the suburban cities adjoining Dallas proper.
I guarantee that at a state level, these people would completely lose their shit if someone suggested we be able to mail order booze, or buy it in a mere grocery store, despite the evidence of other states and nations.
Some of that is driven by lobbying from the liquor distributors and retailers more than religion.
The emotional enthusiasm comes from the bluenoses and Baptists. The money to publicize the enthusiasm (and to foment more of it) comes from well-positioned industry insiders.
Thanks for the excellent explanation.
In the snip above and your next late edit post you raise the idea that exhibition will become much more of an “experience” than just watching the film. Certainly a plausible idea, and about the only way to compete against ever fancier home theaters.
What’s difficult from the studio POV is under that transformation the movie itself just becomes a teaser to get you to spring for the experience.
Movie studios have long since stopped being about “art” or even “entertainment” and are all about “profit” now. Whatever puts butts in seats is what we’ll make. But it’s still the case that lots of influential people are in the biz because of what product they make.
The locally owned multi-plex here used to do something like that years ago. The place was H shaped with the lobby/concession stand in the crossbar and 25 theaters up and down the legs. Two smaller
‘satellite’ stands were put into the junctions and were much like you said. You’d enter at one end, make your way past the boxed candy and such, and pay a cashier at a register on your way out. There was a second employee popping and bagging the corn before putting in a shelf before them and two fountains for getting a soft drink – Americans are quite used to getting a cup drink from a fountain.
One of the two was removed after about a year and, while the other remained in place, I never saw it in use years before COVID hit. This possibly was because I avoided seeing a movie on Friday and weekend evenings.
Agree! @Cervaise, great info in your posts regarding an industry I know very little about. Thank you!