The Buzz This Week
Since Amazon announced its agreement late last week to acquire primary care disruptor One Medical, speculation has abounded—what will this acquisition mean for the healthcare industry, for traditional provider organizations, and for patients?
Nervous patients have voiced concerns about what a big tech company like Amazon will do with their health data now that the self-professed “customer-obsessed” company will have access to data encompassing nearly every facet of their lives. Business commentators have pointed to the advantage this will give Amazon in buying up primary care physician practices. Others are wondering whether the federal government will act on calls (including from Sen. Amy Klobuchar and Sen. Bernie Sanders) to place the deal under scrutiny.
Still others, including primary care physicians and professors Katherine A. Gergen-Barnett, MD, and Russell S. Phillips, MD, have stated that they believe the takeover has “massive implications for the future of primary care.” They believe the acquisition “not only perpetuates health care disparities but threatens the stability of other primary care practices nationally” as these companies cater to those of means in urban centers—leaving those with limited resources out of the mix.
A Far Cry From Giving up Because Healthcare Is “Too Hard”
Despite the swirl of speculation, many questions remain. But one thing is quite clear: This is just the beginning.
As Amazon has closed out some of its previous healthcare ventures without achieving their initial stated objectives, the tech giant has far from given up on healthcare as simply “too hard.” Rather, Amazon is clearly advancing its march into the healthcare space.
The company’s earlier investments and ventures (including PillPack, Halo, Amazon Care, and even Haven) seem to have provided learnings and building blocks. At nearly $4 billion, the acquisition of One Medical is Amazon’s third largest—a commitment that dwarfs its previous efforts in healthcare. The acquisition represents a longer-term play beyond the opportunity to purchase an innovator in need of a large-scale partner. One Medical brings important assets—including nearly a million patients spread across the country who are affluent, technologically savvy, and engaged—and a highly effective, proprietary electronic health record (EHR) with 15 years of rich patient data.
What We May See From the Deal in the Short and Long Term
In the short term, the acquisition is accretive to both One Medical and Amazon Care. It gives One Medical an entrance into new markets; the option for home-based services for its patients (theoretically allowing it to further differentiate its consumer-centric primary care offerings from the traditional primary care competitors); the ability to charge more for its subscription; and capital to scale and more effectively manage risk for its Medicare Advantage (Iora) patient population. For Amazon Care, the acquisition brings the care delivery footprint to target employers in new markets and allows it to bundle One Medical into its employer offerings.
The longer-term play presents the real potential for industry disruption. This is where integrating Amazon’s technology ecosystem, advanced data insights, artificial intelligence (AI) and automation capabilities, and consumer-centric healthcare offerings will come into play and deliver the real opportunity for substantial value creation and disruption.
With a “consumer-centric” (i.e., health system-agnostic) EHR and a million “healthcare consumers” on the platform, Amazon can focus on rapidly advancing its platform. It can deploy new digitally enabled, consumer-centric capabilities—both acquired and internally developed—to better manage and serve health needs. Those offerings can leverage the myriad adjacent Amazon capabilities, such as PillPack, Halo, Alexa’s healthcare skills, Prime delivery of healthcare products, and Amazon Care nurses in the home, seamlessly integrated and orchestrated with advanced care model AI. These integrated digital solutions will allow Amazon to reduce reliance on the costly, high-touch, human-dependent care model and proactively diagnose and manage disease at a structurally more sustainable cost while reducing overall utilization. With that, Amazon has created a fundamentally disruptive healthcare offering and is positioned to accept risk on patient populations through aggressive direct-to-employer contracts, or even an Amazon-owned insurance product, unlocking full access to the multi-trillion dollar U.S. healthcare economy.
Why It Matters
Healthcare organizations should all take note. Not because things will change overnight, but because this acquisition confirms that a new avenue of healthcare innovation and transformation is coming.
Amazon’s move lies at the nexus of consumer needs, digital transformation, and broad-reaching business opportunities in healthcare—an intersection that should raise serious questions for all healthcare organizations in the healthcare ecosystem (health systems, physician groups, payers, and technology companies) to carefully consider. These include:
- Who should own the consumer relationship, and what should that relationship look like?
Amazon has demonstrated enormous appetite across multiple industries to own the consume relationship (e.g., retail, consumer electronics, food), and now it is clear that healthcare is in its sights. The acquisition of One Medical allows Amazon to scale consumer-oriented offerings and build consumer loyalty by offering both healthcare technology and brick-and-mortar options in building out its own provider group, in much the same way it has integrated Whole Foods into the digital-first retail Amazon ecosystem.
- Who will own consumer data, and how can that be leveraged for better healthcare delivery?
With One Medical’s proprietary EHR, Amazon has a foundation upon which to build and scale a consumer-centric EHR, with national (and global) reach that is not linked to any single traditional health entity. Patients have voiced valid concerns about protecting their privacy, especially when it comes to their health information. At the same time, there’s no question that opportunities exist to better leverage holistic consumer data for a better and more seamless consumer experience, stronger health outcomes, and more affordable care. With its acquisition of One Medical, Amazon will be better positioned to scale a broad-based health plan platform and analyze and integrate rich sources of consumer data across its businesses. In the delivery of care itself, Amazon may continue to partner with health systems but will have the tools, data, and relationships to push them to meet certain expectations (e.g., related to access, referrals, and care coordination) or step into the void to provide those services directly.
- What might primary care look like going forward?
In their op-ed for STAT, Dr. Gergen-Barnett and Dr. Phillips point out the impact of well-executed primary care when it comes to equity, life expectancy, and value. However, “well-executed” primary care today is challenging to access, even for commercially-insured populations (for many, especially those without commercial insurance, it is simply inaccessible). Amazon will strive to transform traditional primary care models by focusing on an offering that leverages data and analytics; patient self-service; a personalized, seamless experience; and multi-modal, digitally-enabled care options to create scalable, high-quality, lower-cost healthcare. While the initial target populations may be the commercially insured, high-quality, low-cost care models can ultimately benefit all patient populations.
- What might this mean for the healthcare business model?
Amazon doesn’t “do” small. Acquiring One Medical is about much more than simply serving an affluent subset of the healthcare industry. Amazon has repeatedly shown that where there is enormous market opportunity, it will seek to disrupt industries at scale. What that ultimately means for healthcare is simple: owning the healthcare consumer relationship—and with that, significant influence over what constitutes, and who garners, the premium dollar. With a differentiated option that is consumer-centric and structurally lower-cost—and a rapidly growing channel of direct-to-employer relationships across the country—Amazon will be positioned to disrupt the entire legacy healthcare financial model.
For all healthcare organizations, now is the time to actively explore paths forward on two fronts: first, charting the course forward in personalizing the care experience, innovating how consumers access care, and reimagining approaches for robust primary care and value-based care. Second, actively assessing and exploring future investments and non-traditional partnership opportunities in a healthcare delivery ecosystem that is becoming both ever more integrated and pluralistic.
One Medical Acquisition Reveals Amazon's Healthcare Strategy
The Wall Street Journal
Amazon Faces Fierce Competition in Health Ambitions After One Medical Deal
The Washington Post
Amazon Just Bought My Doctor’s Office. That Makes Me Very Nervous.
Editorial advisor: Roger Ray, MD, Chief Physician Executive.