Dr. Amazon Will See You Now
Source: Axios, by Tina Reed
Amazon’s latest move to further entrench itself in health care will stoke heated competition by other major retailers to capture new customers by delivering primary care.
Driving the news: Amazon announced Thursday, a $3.9 billion all-cash deal to purchase One Medical, which would add a brick-and-mortar network of clinics to a health portfolio that already includes wearables, an online pharmacy and virtual care.
- * Amazon is part of a cohort including CVS, Walmart and Walgreens, that have been building consumer-centric digital health care delivery platforms, as well as primary care clinics across the nation.
What they’re saying: Amazon will face plenty of regulatory hurdles and some challenges in gaining consumer trust. But it’s positioned to capitalize on its ability to cater to consumers’ whims, as well as patients’ frustration with the status quo.
- * “If you ask the majority of American consumers what they think of the current health care system, their experience is terrible. They don’t trust the system anymore,” said Elizabeth Mitchell, the president and CEO of the Purchaser Business Group on Health.
- * “Self-insured employers are paying the bill for our health care system and they simply don’t get the value they should and, to date, it’s been frustrating to try to work through the existing players and the big incumbents in the market,” Mitchell said.
- * “I do expect to see more of this because frankly, the industry hasn’t been responsive.”
State of play: One Medical has an enthusiastic patient base with its membership-based services, attractive offices and tech-enabled connectivity to doctors. But its viability has been called into question after it posted heavy losses quarter after quarter.
- * This deal gives One Medical a massive war chest to further expand its reach nationally, Forbes reports.
- * And it gives Amazon a bigger foothold into health care delivery and patient data, including access to One Medical’s employer relationships and its book of Medicare business.
Between the lines: This is part of a bigger puzzle Amazon has been piecing together.
- * “This definitely gives Amazon a leg up and gives them enough assets to begin to really impact a different care model,” said Jim Fields, a partner in the health and life sciences practice at consulting firm Oliver Wyman.
- * “If you could align that with the PillPack delivery model of getting you the drugs with the Whole Foods better healthier food model and health care information and smart prompts, that starts to deliver on this vision of a connected health care world.”
Reality check: In the short term, this won’t shake up health care but will kick up sparks in financial markets as people “grossly overreact to the news kind of like they did with Haven,” Fields said.
- * “You saw a trillion of value wiped out from health care stocks overnight and, within three years, Haven doesn’t exist,” Fields said, referring to Amazon’s defunct health care partnership with JP Morgan Chase and Berkshire Hathaway.
- * Despite Amazon’s behemoth status in the U.S. economy, it’s still a relatively minor player in health care. And, Fields said, “while One Medical has a decent presence in the major markets around the country, this is a gnat within the scale of health care.”
Yes, but: “Typically when you see Amazon innovate, it changes whatever industry they’re in. Whether it’s mail order medication or grocery delivery, they have a track record,” Mitchell said.
The bottom line: Convincing self-insured employers to buy in and put One Medical in-network will make the difference in whether this deal is transformative or just a blip.
- * “If it works, they’ll be very successful. If it doesn’t, they’re not,” Robert Andrews, the CEO of Health Transformation Alliance said.
Filed Under: ACA/Health Reform