What is Amazon’s $3.9B purchase of One Medical really going to change about healthcare?

Amazon sent out shockwaves with its acquisition of the hybrid physical-digital primary care provider, but will the strategy get to the heart of what’s hurting healthcare?

By admin

Jul 25, 2022, 8:00 AM

Whenever Amazon sets its sights on a new industry, incumbents start getting nervous. The massive company has a well-deserved reputation for disruption and a high success rate with quickly and effectively muscling its way into any new area it chooses.

Except, maybe, for healthcare. Like most other Big Tech brands, Amazon has struggled to make its healthcare efforts stick in recent years. Despite acquisitions of PillPack and Health Navigator, and the opportunities presented by owning hundreds of Whole Foods grocery stores, the company hasn’t really made a major dent in the status quo.

On top of that, the unceremonious failure of Haven, the Amazon, JP Morgan, and Berkshire Hathaway partnership that promised big systemic changes, has made industry observers question whether Amazon really understands the complex, fragmented, inertia-filled world it’s stepping into.

However, with the $3.9 billion acquisition of One Medical, Amazon is setting off the sensors once again. One Medical provides concierge-style telehealth paired with real-world offices to offer on-demand services for primary care.

The move will significantly enhance the reach of Amazon Care, the virtual health service that launched in 2019 as an employer benefit offering. In addition to Amazon Care’s existing physical locations in big cities like Boston, Dallas, Los Angeles, and Arlington, the One Medical deal will give the program access to other metro areas, including Raleigh, San Francisco, New York, Austin, and Atlanta.

It’s a fresh restart for Amazon, and it may bring more convenient care to some lucky communities. But are we off to the races on the total “Amazonification” of healthcare that pundits anticipate every time a big consumer tech player makes a move? Not quite – or not quite yet, at least.

The end game for the digital behemoth isn’t clear, and it’s not certain how much this endeavor will really impact patient experiences more broadly or affect the trillions of dollars in wasted spending that plague the healthcare system.

How big of a bite can Amazon chew?

For one thing, the project’s scope is limited by its very nature. This “phygital” approach largely focuses on digitally connected, insured people who live in densely populated areas, can advocate for their own health, and can afford the yearly subscription fee and other costs. People who, coincidentally, often have a lower average disease burden and better outcomes than their more rural, less affluent counterparts.

It would be an astronomical investment to expand the current version of Amazon Care too far from this core audience. Consider the costs of scaling up to reach even a portion of the 76 million Prime subscribers in the US, let alone the tens of millions of additional residents of urban transportation deserts or rural areas, most of whom will never live close enough to an Amazon Care facility to take advantage of the real-world care component.

These patients may hail from disadvantaged and underserved communities, struggle with one or more chronic conditions, or experience insecurity with food and housing, internet access, health literacy, and interpersonal safety.

People with these characteristics tend to require more robust, personalized, and long-term relationships – not just with primary care providers, but with a diverse medical team and an array of community-based partners who can address the social determinants of health.

Managing these populations isn’t easy. Amazon Care will face the same problems as every other primary care provider when it comes to poor interoperability across disparate systems, provider shortages, the difficulties of coordinating care, and the challenges of continuously engaging patients in preventive care and proactive self-management.

Let’s not forget all the other bloated costs of American healthcare. Excessive prices, fraud and abuse, administrative inefficiencies, and overuse of services suck up between 17 and 53 percent of total spending every year, sending trillions of dollars down the drain and making it even more difficult for patients to get the care they need when and where they need it. Not even Amazon is immune to these factors.

What would it take to create a real seismic shift?

Better primary care is an important part of solving these concerns, but it’s not the complete answer. For Amazon to disrupt the American healthcare experience the way it changed online shopping, it would have to execute a much bigger, more comprehensive plan with a strong focus on shifting incentives and equipping providers with tools to reduce complexity and streamline workflows.

Amazon tried to make a start on some of these broader, deeply rooted issues in healthcare with Haven but abandoned the effort after just three years and no clearly articulated results.

If the One Medical purchase can only scratch the surface of transforming primary care, it begs the question of how the retail giant will really be able to make its mark across the industry.

Provider-facing solutions could be the answer, and they might very well be coming soon. This foray into primary care will probably be very enlightening for the company’s leaders and could inspire additional investments that would boost the financial and clinical return of Amazon Care, Amazon Pharmacy, and any future care delivery initiatives.

After all, Amazon has built its business on creating frighteningly efficient logistics, has enormous expertise in data management, and can harness the vast machine learning and cloud resources of AWS, all of which could contribute to some very interesting and potentially revolutionary new products.

If that happens, it will definitely change the Amazonification conversation and start to put the squeeze on health IT vendor competitors and healthcare providers who can’t keep up.

Making measurable progress alongside the big names in technology

Just because the One Medical deal is relatively narrow in scope doesn’t mean it’s a bad move for the company or for patients. It’s likely to be a positive development for the people who have access to it. It will provide an aspirational blueprint to healthcare organizations who rightly need to work on their patient experiences and digital integration. And it will undoubtedly put pressure on the newly invigorated telehealth space, forcing even more innovation to emerge.

However, unless Amazon decides to invest as much money in healthcare as it has in its core business segments, the company is unlikely to singlehandedly achieve the multi-trillion-dollar results that healthcare needs to become an efficient, effective industry.

It will take much more than just one entity, even one as influential as Amazon (or Apple or Google or Oracle), to truly alter experiences, costs, and outcomes for hundreds of millions of people.

That’s probably for the best, because monopolies are rarely good news for the average consumer. But it does mean that established industry partners will need to stay the course on collaborative innovation and mutual efforts to realign incentives, exchange information more freely, increase the value of their services, and focus on creating consumer-friendly experiences.

They must also try to temper their fears – and their expectations – whenever one of these large players makes a move in healthcare. Some disruption is inevitable, but so far, the giants haven’t quite lived up to their hype.

Instead, stakeholders can harness lessons from Big Tech’s efforts to improve experiences at the top of the market. Entities with less capital to burn on risky ventures can learn from the mistakes of their larger peers, adopting changes that make sense while dodging the pitfalls.

They can use the money saved to make greater investments in health equity and clinical efficiency for underserved populations at the other end of the spectrum. That way, the industry can attack its problems from both sides and hopefully meet somewhere in the middle.

This will create the best opportunity for reducing waste, improving outcomes, and maximizing the value of long-term investments in seamless, data-driven experiences for the entire care continuum.

SHARE YOUR THOUGHTS about how Amazon may, or may not, influence healthcare in the next 5 years. Join the conversation on DHC >>

Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry. Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.