The Impact of the Medical Monopsony

The Impact of the Medical Monopsony

A monopsony, sometimes referred to as a buyer's monopoly, is a market condition similar to a monopoly. However, in a monopsony, a large buyer, not a seller, controls a large proportion of the market and drives prices down. A monopsony occurs when a single firm has market power through its factors of production, like self insured employers or companies that buy sick care services directly from a hospital system.

The "Amazon effect" has even the Fed worried and we could see further adverse consequences from the Amedzon effect.

  1. Sick care prices go down further squeezing operating margins and encouraging Commoditycare.
  2. Wage stagnation for the sick care workers in the trenches.
  3. A medical school and application bubble.
  4. Hospital closures continue, particularly in rural America.
  5. The employed physician bubble.
  6. Sick care workers start pursuing non-clinical careers.
  7. Political upheaval and healthcare becoming the most important election issue.
  8. Abbreviated or alternative clinical careers.
  9. The 1099 doc doing side gigs.
  10. Physician entrepreneurship going mainstream.
  11. Businesses coalescing to demand lower sick care prices.
  12. The growth of DIY medicine.

Medical economics is perverse in many ways, given that the agents (doctors) and the end users (patients) don't pay for the services they recommend and consume and neither seems to care much as long as doctors get paid what they are used to making and patients get someone else to pick up the tab. However, medical deflation resulting from a medical monopsony will change not just the rules, but the entire playing field and that will trickle down through the talent pipeline.

Arlen Meyers, MD. MBA is the President of the Society of Physician Entrepreneurs.

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  • Chris Kelly

    Actually, many who favor monopsony do seem also to favor greater competition in one aspect of the supply side: patents. I have heard many single-payer advocates express concern that patents confer excessive profits on pharmaceutical companies.

  • Adam Twizell

    Interesting post

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Arlen Meyers, MD, MBA

Former Contributor

Arlen Meyers, MD, MBA is a professor emeritus of otolaryngology, dentistry, and engineering at the University of Colorado School of Medicine and the Colorado School of Public Health and President and CEO of the Society of Physician Entrepreneurs at He has created several medical device and digital health companies. His primary research centers around biomedical and health innovation and entrepreneurship and life science technology commercialization. He consults for and speaks to companies, governments, colleges and universities around the world who need his expertise and contacts in the areas of bio entrepreneurship, bioscience, healthcare, healthcare IT, medical tourism -- nationally and internationally, new product development, product design, and financing new ventures. He is a former Harvard-Macy fellow and In 2010, he completed a Fulbright at Kings Business, the commercialization office of technology transfer at Kings College in London. He recently published "Building the Case for Biotechnology." "Optical Detection of Cancer", and " The Life Science Innovation Roadmap". He is also an associate editor of the Journal of Commercial Biotechnology and Technology Transfer and Entrepreneurship and Editor-in-Chief of Medscape. In addition, He is a faculty member at the University of Colorado Denver Graduate School where he teaches Biomedical Entrepreneurship and is an iCorps participant, trainer and industry mentor. He is the Chief Medical Officer at and and Chairman of the Board at GlobalMindED at, a non-profit at risk student success network. He is honored to be named by Modern Healthcare as one of the 50 Most Influential Physician Executives of 2011 and nominated in 2012 and Best Doctors 2013.

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