The basic problem is that demand is unpredictable.
From a patient care perspective you overprovision so that pretty much any surge doesn't exceed capacity. But note that the cost to the hospital is pretty much based on what they provision for, not what they actually do. You're not paying the hospital the big bucks for actually doing, you're paying for the capacity to do it.
From a profit perspective you overprovision only to the point where the marginal value drops to zero, a point far below the peak of a surge. Unless mandated otherwise no business provisions to the biggest surges.
Agreed, it needs to be mandated. The healthcare companies fight tooth and nail against any such mandates, though, and usually get no more than a slap on the wrist even if there are rules.
I think public is worse than private in this regard, it's a lot easier to change the definition of acceptable than it is to fund what really should be done.
From a patient care perspective you overprovision so that pretty much any surge doesn't exceed capacity. But note that the cost to the hospital is pretty much based on what they provision for, not what they actually do. You're not paying the hospital the big bucks for actually doing, you're paying for the capacity to do it.
From a profit perspective you overprovision only to the point where the marginal value drops to zero, a point far below the peak of a surge. Unless mandated otherwise no business provisions to the biggest surges.