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01 / 05
What Cosmetic Surgery Innovation Can Teach Us About Healthcare Costs

Blog Post | Cost of Services

What Cosmetic Surgery Innovation Can Teach Us About Healthcare Costs

The average time price of 19 procedures has fallen by 50 percent since 1998.

Summary: Hospital services costs have surged, raising questions about the effectiveness of regulation and government intervention in the healthcare industry. To investigate the potential impact of free markets on cost trends, we examined the time prices of common cosmetic surgery procedures, which are elective and typically not covered by insurance. Our analysis reveals a significant decline in the relative time prices of these procedures, indicating increased abundance driven by innovation and market competition.


The Bureau of Labor Statistics reports that since 1998, hospital services costs have increased 61 percent faster than average wages and far outpaced consumer price index inflation. This industry is highly regulated, and government restricts supply and subsidizes demand.

Would free markets help to reverse these cost trends? To answer this question, we looked at the time prices of 19 common cosmetic surgery procedures. These procedures are elective, and insurance companies typically don’t provide reimbursements. Cosmetic surgeons also have been relatively free to innovate, and cosmetic surgery centers are globally competitive.

The American Society of Plastic Surgeons annually publishes prices for a variety of procedures. We compared the nominal prices from 1998 to 2022 against the average hourly wage rates of unskilled and blue-collar workers. This gave us relative time prices over time.

The average time price fell by 50.3 percent over this 24-year period. For the time it took to earn the money to pay for one procedure in 1998, you could get over two procedures today. Procedure abundance has increased by over 100 percent. The time price of chemical peels and laser hair removal fell the fastest by 87.7 percent and 80.1 percent, respectively. However, two procedure costs increased: upper arm lifts increased by 6.7 percent and facelifts by 1.6 percent.

Bar chart displaying Nominal hourly wage rates from 1998 to 2022

The above analysis compares categories of wage earners over time, but what about individuals? We typically start as unskilled workers and then advance as we acquire more productive skills, knowledge, and experience. Categories remain constant while individuals are upwardly mobile. If we look at an unskilled worker who “upskilled” to a blue-collar worker, cosmetic surgery procedures have become dramatically more abundant.

Graph showing nominal hourly wage rates for different groups of workers, with all groups showing increases from 1998 to 2022.

From 1998 to 2022, nominal unskilled hourly wages increased by 102.8 percent, while blue-collar hourly compensation increased by 91.2 percent. The average between these two categories is 94.7 percent. If you started out in 1998 as an unskilled worker and moved up to a blue-collar worker, your nominal hourly compensation increased by 348.5 percent.

Comparing an upskilling worker’s hourly compensation to the prices of cosmetic procedures indicates that the average time price fell by 78.4 percent. These workers could get 4.63 procedures in 2022 for the time price of one in 1998. Personal cosmetic surgery abundance increased by 363.5 percent for upskilling workers, growing at a 6.6 percent compound annual rate, doubling every 11 years or so.

This article was published at Gale Winds on 2/21/2024.

IEEE Spectrum | Science & Technology

Contract Bots Could Soon Be On Both Sides of Negotiations

“Walmart and Maersk are using AI agents to maintain and negotiate deal terms with so-called tail-end vendors, the many small suppliers whose low-value transactions nevertheless make up the bulk of a company’s contracts. Any large firm, especially one with expansive supply-chain and logistical needs, manages thousands of these kinds of relationships. As outlined in Procurement in the Age of Automation by the supply chain management experts Remko Van Hoek and Mary Lacity at the University of Arkansas, an AI bot can run 2,000 negotiations at the same time, all day and night, while allowing vendors time for bid preparation and counteroffers.

Say, for instance, a big-box retailer wants to replace outdoor furniture in front of its store parking lots. It puts out a call for bids and gets some offers. The Pactum AI system can use its large language models to analyze this requisition—and all previous requisitions of this type.

The language models aren’t generating new negotiation clauses here. Rather they are assembling information and identifying vendors. Data can be brought in from internal or external sources on factors like relationship strength and current market pricing, all using client-set parameters. A chatbot then sends a note to bidders with offered terms: maybe three varying options. Any acceptable? The vendor says yes or no. Next there’s either more negotiation, or, if terms are agreed within a target spectrum, the purchasing flow proceeds.”

From IEEE Spectrum.

National Bureau of Economic Research | Labor Productivity

Robots and Labor in Nursing Homes

“How do employment, tasks, and productivity change with robot adoption? Unlike manufacturing, little is known about these issues in the service sector, where robot adoption is expanding. As a first step towards filling this gap, we study Japanese nursing homes using original facility-level panel data that includes the different robots used and the tasks performed. We find that robot adoption is accompanied by an increase in employment and retention and the relationship is strongest for non-regular care workers and monitoring robots. The share of specific tasks performed by robots increases with the adoption of the respective type of robot, leading to reallocation of care worker effort to ‘human touch’ tasks that support quality care. Robots are associated with improved quality (reduction in restraint use and pressure ulcers) and productivity.”

From National Bureau of Economic Research.

BBC | Motor Vehicles

Up Close with the 300 Tonne Driverless Trucks

“Greater Nammuldi has a fleet of more than 50 self-driving trucks that operate independently on pre-defined courses, along with a handful that remain manually driven and work separately in a different part of the mine.

Being trialled is also an autonomous water cart affectionately known as Henry, which, along with manually driven ones, sprays the mine roads to keep the dust down…

The biggest reason for introducing the technology has been to improve the physical safety of the workforce, says Matthew Holcz, the managing director of the company’s Pilbara mines.

Mining is a dangerous occupation: heavy machinery can be unpredictably operated by people who can also become fatigued. ‘The data clearly shows that, through automation, we’ve got a significantly safer business,’ says Mr Holcz.

It has also improved productivity – to the tune of about 15%, he estimates. Autonomous equipment can be used more because there are no gaps due to shift changes or breaks. And autonomous trucks can also go faster when there is less staff-operated equipment on the scene.”

From BBC.

Bloomberg | Accidents, Injuries & Poisonings

In Warsaw, Falling Road Deaths Signal a Traffic Safety Turnaround

“Warsaw is on course to celebrate a major achievement this year: The Polish capital is due to record the lowest rate of death on its roads since it started collecting statistics in the 1980s. Reflecting the city’s avowed commitment to Vision Zero — the safety strategy formulated in 1990s Sweden that aims to eliminate all traffic fatalities and severe injuries — the number of road deaths in Warsaw has dropped by 55% in the last 10 years.

It’s a startling reversal for this city of 2 million, which was once known as one of the deadliest in Europe for both drivers and pedestrians. In 1991 — the worst year on record for traffic safety — 314 people were killed on Warsaw’s streets; 2023 saw the death toll drop to just 29, with 11 of those pedestrians. When population density is taken into account, Warsaw’s streets are now markedly safer than those of most of the European Union, with just 15 deaths per million residents.”

From Bloomberg.