The high barriers to entry in the field make it conducive to collusion. I'm not saying there is collusion, just saying that given that the supply isn't going away and that new upstarts cannot disrupt the market, you may make more money by not competing on price.

There are some people doing this, like this surgery center in Oklahoma http://kfor.com/2013/07/08/okc-hospital-posting-surgery-pric...

For most of the market, price competition does not occur because providers will not disclose the price of a service before selling it.

That's how it should work. Unfortunately, the U.S. healthcare system isn't really a free market. There are many laws and regulations (and insurance company imposed rules) that prevent healthy competition in the marketplace.

The US healthcare system is nothing close to a free market. Every step along the way is rigged: the schools that grant medical licenses is artificially gated, you require certifications you need political clout to obtain to open a medical facility, you need to have enough money to play ball with insurers so you get paid for operations, you need to comply with thousands of federal regulations surrounding your procedures, you need to get zoning permission from wherever you are trying to set up shop to even build a medical facility (note that local governments are easily bought out by the hospital chain in their area).

There is also an incredible amount of corruption surrounding drug prescription and diagnosis to get people buying way more drugs than they need to.

It isn't anything close to a free market. I could never open a health clinic out of my garage and put out a sign saying free anything related to medicine. By comparison, India has much more volatile healthcare (because they can't police everyone trying to play doctor) but get innovation as a result.

This is an interesting film to learn more about the healthcare industry in the US. http://www.imdb.com/title/tt0386032/

Good thing there's no real free market in US, then.

What free market? What prices? Free market from price shopping you say?

You got hit riding your bike and are bleeding profusely from your abdomen. The ambulance driver asks, "There's a hospital 6 minutes away but they don't post their prices publicly (who does?) and we've never brought anyone of your condition there before. We think it will probably cost between $500-$10,000. But there's a hospital 45 minutes away that we know for sure will cost $400-$800. What do you want us to do?"

Let's suppose the government mandates that all hospitals must post their prices publicly. But you're bleeding to death. Can you really go shopping now?

We have a command-economy model with market-features.

It's not a free market, because by law, the Federal government gets the best deal. And they define what that best deal is (ie. price floor). Just like other price-control measures implemented in the late 60's and early 70's (the 1973 oil crisis is another good example), the results are higher costs.