business news in context, analysis with attitude

by Kevin Coupe

There have been a couple of pieces in the media over the last few days that have raised some significant questions that may be asked - in fact, ought to be asked - as regulators consider the move by Amazon to acquire One Medical for $3.9 billion, a move designed to give the e-commerce behemoth a footprint in the primary healthcare space.

Ironically, the questions are being posed as the Wall Street Journal reports that Amazon "is among the bidders for healthcare company Signify Health Inc., joining other heavy hitters vying in an auction for the home-health-services provider."  The other heavy hitters include CVS - which was beaten out in the race to acquire One medical by Amazon - and UnitedHealth, as well as "another corporate buyer."

At the same time, as the Washington Post writes, Amazon has been expanding its internal Amazon Care primary- and urgent-care initiative, with telehealth services now "available in all 50 states and in-person services in at least seven cities, including Dallas, D.C. and Baltimore. It also has signed up a half-dozen other companies, including Hilton and Amazon-owned Whole Foods Market, becoming a major piece of Amazon’s aggressive ambitions for health care."

The Post writes, however, that some medical professionals who have dealt with Amazon on various health-related initiatives suggest that "Amazon sometimes prioritized pleasing patients over providing the best standard of care. Six former employees and managers said the company’s efforts to rapidly build Amazon Care led to clashes with some medical staffers, who felt the company sometimes ignored their concerns about its approach to health care. All six spoke on the condition of anonymity, either because they are subject to nondisclosure agreements or because they still do business with Amazon.

"Amazon has come to dominate industries from logistics to cloud computing to entertainment by being fast, frugal and obsessed with delighting customers. The early tensions within Amazon Care underscore the challenges inherent in bringing the Amazon mentality to medicine."

To be fair, there are medical professionals who argue that Amazon is making healthcare more accessible, helping to disrupt what can be an impenetrable bureaucracy.  And, the Post writes, "patients who have used Amazon Care largely have loved the convenience, reviews, ratings and interviews with employees suggest."

You can read the Washington Post piece here.

Meanwhile, the Los Angeles Times has a column by Michael Hiltzik that raises a different issue:

"In announcing its newest foray into the healthcare field last month — the $3.9-billion acquisition of the primary care firm One Medical — Amazon explained its interest in the industry this way:

'We think health care is high on the list of experiences that need reinvention.'

"There are two ways to think about that statement. For one thing, it’s indisputable. For another, when you hear Amazon talking about reinventing how you get medical treatment, you should be afraid. Very afraid.

"That’s because of what we know about Amazon’s corporate expertise. The giant company doesn’t know much about delivering healthcare — that’s obvious from the checkered record of its previous healthcare ventures.

"What Amazon does know about is how to snarf up personal data from its customers and exploit it for profit."

Hiltzik notes that "Amazon has issued assurances that it will adhere to the privacy mandates set forth in the federal Health Insurance Portability and Accountability Act, or HIPAA, which prohibits healthcare providers from sharing personal medical information without a patient’s permission … But pledging to comply with the law is not much of a concession, as the consumer advocacy group Public Citizen observed in a letter urging the Federal Trade Commission and other agencies to closely scrutinize the proposed deal, which is subject to regulatory approval."

You can read the entire Hiltzik column here.

It is an interesting and Eye-Opening debate to which every American - and every company competes with Amazon, which rapidly is becoming every company - ought to pay attention.

I don't think many people would argue with the notion that healthcare in this country, for many people, is a hard-to-navigate bureaucracy … and that a little disruption would do it good.  Amazon has a history of that, but it also may be that an expertise in which the Post called "frugality and speed" may not necessarily be the values that one always wants in the healthcare system.  Sometimes the fastest and cheapest solution isn't the best solution, and algorithms don't make for a good bedside manner.

Interestingly, the way that the Journal describes Signify makes it sound like a neat fit for Amazon, saying that it "uses analytics and technology to help employers, health plans, physician groups and health systems with in-home care. It offers in-home health evaluations for Medicare Advantage and other government-run managed care plans."

At the same time, I think the privacy concerns that are being raised have to be taken seriously - the moment may come when Amazon simply has so much power and information and capacity that regulators simply won't have the tools and resources to rein it in.  And at the same time, we're going to see competitive companies like Walmart, Walgreen and CVS work hard to blunt whatever advantages Amazon may have, creating their own systems that, in order to survive, need to be fast and frugal and algorithm-based.

Some of this may work.  Much of it may be necessary to address the holes in our healthcare system - a study by the University of California Los Angeles (UCLA) concluded that "the United States healthcare system ranks 22nd out of 27 high-income nations when analyzed for its efficiency of turning dollars spent into extending lives."

It may be that Amazon's traditional long-term focus - making innovation and investment higher priorities than short-term profit and investor satisfaction - may work in favor of its healthcare play.  But in the end, people's lives are what are being gambled with here, not corporate philosophy or shareholder gratification.  

Attention must be paid.  Questions must be asked.  And priorities must be examined.