“We think health care is high on the list of experiences that need reinvention,” Neil Lindsay, senior vice president of Amazon Health Services, said in July. Directly, Lindsay was talking about Amazon’s $3.9 billion all-cash purchase of One Medical. As the statement implies, though, Amazon does not intend to stop there. As it does with just about everything it touches, the tech behemoth might very well change the healthcare model dramatically. It was less than 30 years ago that Jeff Bezos founded Amazon in a garage, selling books online. Now look where it is, on the verge of half a trillion dollars in annual revenue. We’re only just getting a glimpse of where it might take healthcare tech.
Ease the Pain
The big reason Amazon has so many customers (there are more than 148 million Amazon Prime subscribers in the U.S., about 44% of the population) is how frictionless the company makes things. Practically any good you want to buy, you can summon it from an app – or an Alexa if you don’t want to go to all that trouble of lifting your phone and pressing a couple buttons – and have it arrive at your door the next day.
To take an experience that is often a pain, like a visit to the doctor, and remove a lot of the hassle is a valuable proposition. Amazon evidently saw enough that it liked in One Medical, which had 767,000 members at the time of the offer, to pay a 77% premium for the company at $18 per share.
“Amazon is obviously making decisions based around assets in the market at the right price. Frankly, (the One Medical acquisition) is one of the more foundational ones for them because this is where you are touching the patient. This is likely going to be the largest driver for them to be able to execute the rest of their strategy,” Brad Haller, a senior partner in West Monroe’s mergers and acquisitions practice, said in an interview.
One Medical’s healthcare tech: 24/7 on-demand virtual care, easy booking platform, and in-app prescription management, plus a network of nearly 200 clinics nationwide offers the right opportunity for the reinvention Lindsay spoke of. One Medical works with 8,000 companies as part of employee benefit packages, too.
“I think (Amazon) was having some difficulty in penetrating the employer market with Amazon Care. With One Medical, it’s a huge shortcut to accelerated growth,” Michael Abrams, managing partner at Numerof and Associates, told Fierce Healthcare.
Where One Medical struggled was customer acquisition cost. Amazon solves that problem with a massive built-in market.
All That Data
What might make consumers a bit wary is the thought of combining how much their doctor knows about them with what Amazon knows about them. Given HIPAA requirements, there are protections in place that should put minds at ease.
“As required by law, Amazon will never share One Medical customers’ personal health information outside of One Medical for advertising or marketing purposes of other Amazon products and services without clear permission from the customer,” an Amazon spokesperson told CNBC’s Ari Levy. “One Medical customers’ HIPAA Protected Health Information will be handled separately from all other Amazon businesses, as required by law.”
As a testament to how well this will work in practice, emocha Health CEO Sebastian Seiguer pointed out to Healthline that most healthcare tech startups already use Amazon Web Services for hosting, and patient data is fiercely protected.
“The fact that Amazon owns these business lines does not change the obligations of either One Medical or Amazon Web Services to abide by HIPAA,” he said.
That doesn’t have everyone convinced that customer data will be fully protected, however. In a letter urging the Federal Trade Commission to block the deal, Minnesota Sen. Amy Klobuchar wrote, “I also ask that the FTC consider the role of data, including as a potential barrier to entry, given that this proposed deal could result in the accumulation of highly sensitive personal health data in the hands of an already data-intensive company.”
One-Stop Healthcare Tech Shop
While Amazon might not be able to use patient data for its other verticals, Amazon is definitely aiming to be a healthcare tech company. It took Amazon Care, a service with 24/7 text and video telehealth consulting, nationwide this year. It bought online pharmacy PillPack in 2018 and used that move to springboard Amazon Pharmacy, which offers free, two-day delivery to Prime subscribers, in 2020. The Amazon Halo wearable tech tracks health and fitness. And if the doctor prescribes a healthier diet, well, guess who owns Whole Foods. With the addition of One Medical, Amazon is further integrating its health verticals.
“The question is, as you sort of put all of these pieces together, could they create a much more convenient, holistic health care experience for people?” healthcare tech expert Dr. Aaron Neinstein of the University of California-San Francisco, told NPR. “What Amazon has become known for is they really understand as a consumer what you want and how to get it to you really easily.”
That’s likely to force other healthcare providers to offer a similar level of customer service to compete.
As for Amazon’s quest to dominate another space, healthcare, we can only guess where it might lead. It is working with the Fred Hutchinson Cancer Research Center on clinical trials to develop cancer vaccines, so let’s hope it’s somewhere great.