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Amazon plans to buy OneMedical for $3.9 billion, bringing Amazon into healthcare But the question remains whether the Seattle tech giant will grow the medical system by changing how people buy products online.
“This is a shot in the arm for the entire industry,” said Mike McSherry, CEO of Seattle digital health company Xealth.
Amazon has been getting into healthcare for years. In the year In 2018, the company acquired PillPack, which became Amazon Pharmacy. And it recently expanded Amazon Care, its primary care service originally intended for employees. Amazon’s purchase of One Medical brings the company into the field completely.
But not all of Amazon’s healthcare efforts have been successful. Last year, the company closed the Haven healthcare alliance with Berkshire Hathaway and JPMorgan Chase.
“You look at previous efforts to find a technological solution, a business model that solves all – this acquisition is the first to be tried and may not be the last,” said Dr. Joshua Liao, co-chairman. Health systems at the University of Washington Department of Medicine. “I don’t know if there is one lever that will fix health care.”
One Medical has a membership-based model and an emphasis on tech and primary care. Users can opt for a virtual-first visit and book an in-person appointment for a day. The service is an employee benefit for more than 8,000 companies, and individuals can purchase a $199 annual subscription.
A medic provides something that takes years to build: the physical infrastructure. It has more than 180 medical offices in 15 metro areas. And it branched out last year by acquiring Iora Health, which focuses on delivering care to seniors.
Amazon can pull multiple levers to increase health care efficiency, cut out middlemen and integrate One Medical into its existing offerings, McSherry said.
Some critics say the deal won’t change much in terms of health care. But given that it’s Amazon, there’s certainly potential.
“I don’t know if it’s a good idea to discount them,” said Christina Farr, a health technology investor at OMERS Ventures.
How does the acquisition fit into Amazon’s business model?
The acquisition reflects Amazon’s focus on consumers, Farr said. “You can buy anything you want on Amazon,” she said. “Then the only form of healthcare that disappeared was health care.
Farr added: “This is the idea of being the digital front door to healthcare – the dream of a one-stop shop or one-door concept that we’ve been talking about for decades.
Neil Lindsay, senior vice president of Amazon Health Services, made the announcement in a statement Thursday announcing the deal. “We think healthcare is high on the list of experiences that need to be reinvented,” he said, citing appointment bookings, appointment wait times, time spent traveling to the pharmacy and more.
“I think it’s a fantastic move for them,” McSherry said.
How can Amazon combine its healthcare offerings?
It’s an open question for Amazon to integrate One Medical into its online pharmacy and other health programs, Farr said. Amazon recently developed a Covid-19 test kit, unveiled a new Halo V health band and has a secret research collaboration with the Fred Hutchinson Cancer Center.
McSherry said he can imagine Amazon bundling a medical membership into the Prime subscription. Lindsey previously helped run Amazon’s Prime division.
Next steps may be to turn in generic medications or lab results. McSherry says getting into the insurance business will be a long-term game.
Sometimes it’s easier for them to keep building a stack of benefits until they say, ‘Hey, they’re paying me $1,000 a year. Why don’t you pay me $5,000 a year and I’ll be your insurance company,’” McSherry said.
Can Amazon make healthcare more efficient?
Health care is “fragmented” with middlemen, from pharmacy benefit managers to insurance companies, McSherry said.
And Amazon is good at cutting out the middleman, he says. “Look at Amazon’s 25-year arc. Now they’ve built their own planes and their own transports, increasingly vertically stacked.
“I don’t know how long it will take for Amazon to meaningfully take on some of these responsibilities in healthcare. But we all know the inefficiencies. And Amazon has proven to be a very successful company in eliminating marketplace inefficiencies over the last 25 years.”
Do people trust the company with their healthcare data?
A growing number of health care companies have devices that sell insurance or drugs and may have an interest in patient data, Liao explained. “If you think about those dynamics, they’re all worrisome to some degree, so it’s not just for Amazon,” he said.
Health care information is protected by federal law. But patients increasingly have the ability to access their own data and share it if they want, McSherry said.
Could Amazon ask people to hand over their health information to the broader company in exchange for discounts or other benefits, says Amazon-owned Whole Foods?
“Do I want Amazon to know if I’ve had a cancer diagnosis? Maybe not. Maybe never,” McSherry said. “But if I’m overweight and want to eat more healthily, would I be willing to share some information with them? Sure. If I get a consumer benefit from that knowledge share.”
“Amazon is one of the most trusted brands in America, and after 25 years of building that trust, I don’t think they’re going to waste it,” added McSherry. You are playing the long game here.
What does Amazon’s entry into healthcare delivery mean for equity and access?
There is a lot of activity in the primary care industry. CVS Health, which was purchased by insurance company Aetna in 2018, provides care in more than 1,000 stores; Seattle-based Vera Whole Health offers “values-based” memberships through employers. And many companies offer virtual options.
“You’ve got everybody trying to get into primary care, which is a race to capture a larger patient base, control the costs, and then bring it to lower costs and better quality care,” McSherry said.
On the one hand, this could lead to greater patient access, Farr said.
On the other hand, focusing on narrow patient segments such as employees in companies that provide such services may reduce patient access. Such concerns are not unique to one treatment, Liao said.
“How can we make health care easier, more accessible, more affordable and more convenient in the context of ethics and health care? I think those are very important,” Liao said. “When we do that, we have to balance things like equity and access.” .
“It remains to be seen,” Liao added, “but what we think as healthcare providers is changing over time and writ large.”
How will the acquisition affect other healthcare companies?
Companies that offer primary care options to employers, including new companies like Accolade and 98point6, will increasingly compete with Amazon, McSherry said.
As employers consider their primary care offerings each year, “I can’t imagine they don’t include Amazon/One Medical in that regard,” McSherry said.
The growth of services like One Medical could put pressure on traditional hospital systems by taking away ancillary revenue like blood draws, McSherry said. “Many hospital systems are becoming a kind of safety net,” he said. “The United States health care system is very weak.”
Could Amazon finally change the healthcare system for the better?
“I think it’s hard to answer if they give the best care across the board,” Liao said. There is still insufficient data on patient outcomes, and there is no single solution to providing the best health care, he said.
“It will take decades to change how health care is delivered in a meaningful way,” McSherry said. In the meantime, Amazon can package a collection of health care products into a subscription service and “provide better consumer benefits at a reduced cost.”
Different communities and populations benefit from different health care offerings, Liao said.
“It’s just helpful to have another option in the marketplace for people to choose from and say, ‘Hey, this is a set of services that meets my needs,'” he said.
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