In a surprise move, Amazon will shut down its Amazon Care business, a virtual and in-home healthcare service that it at first designed for its own employees and then marketed to outside companies, by the end of the year.
It was a surprise, the Washington Post suggests, because Amazon has stated that disrupting the health care business was a high priority - it recently said it plans to acquire concierge healthcare business One Medical for $3.9 billion, and has been reported to be one of the companies in the hunt to acquire Signify Health, a health analytics company with a market capitalization of $6.6 billion. CEO Andy Jassy has been very specific about the company's commitment to expanding its healthcare footprint.
The Post writes that in addition to internal employees, Amazon Care "is available to the employees of half a dozen corporate customers including Silicon Labs, Precor, Amazon-owned Whole Foods, and Hilton, its largest partner which only signed on with Amazon Care in December.
"Workers were told the service was shutting down because those customers did not see the value in the service, one of the people said. Dozens of employees will lose their jobs, with some departing as soon as October, according to the people."
The Post quotes Amazon senior vice president of health Neil Lindsay as telling employees via email that "this decision wasn’t made lightly and only became clear after many months of careful consideration. Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term.”
Amazon Care, the Post writes, "allows patients to chat with health-care providers virtually, set up video visits and, in some locations, request a health-care provider visit their house to provide services including vaccinations and screenings for common health issues such as urinary tract infections. The convenience of the service was popular with employees."
Interestingly, Business Insider had a story yesterday about troubles Amazon has been experiencing in its pharmacy business.
Here's an excerpt:
"Amazon's pharmacy business has barely registered with the retailer's most loyal shoppers, a recent survey from Morgan Stanley found.
"In the survey, which asked Amazon Prime users to pick a reason for having a membership, only 2% of the respondents chose Prime's prescriptions benefit.
"Pharmacy received the least number of votes, with most members picking other perks, like free two-day shipping and its video-streaming service, as the main driver for a subscription. It also lags behind other less successful services, like Prime Gaming and Amazon Fresh, which both received single-digit support.
"The data suggests Amazon's pharmacy business has largely failed to gain traction among Prime subscribers, who spend more and buy more frequently on the e-commerce site than nonmembers … An Amazon spokesperson said it's unfair to compare Prime's prescription benefit with free delivery and video streaming because the pharmacy service had been available for a shorter period."
Business Insider notes that "Amazon launched its pharmacy service in 2020, a little over two years after acquiring the online-prescription startup PillPack for about $750 million. The business has gone through several changes over the years and most recently was made one of the four pillars of Amazon's health initiatives, as Insider previously reported."
- KC's View:
Those pillars seem to be falling. Not falling, in fact, but being knocked over with a wrecking ball.
Pretty much everyone I spoke to yesterday after this was announced responded with some version of "WTF?"
I suppose it is possible that Amazon looked at One Medical and decided that Amazon Care was redundant … but ending the program now, before the acquisition has been approved, seems a little unwise. (I wouldn't bet serious money that the FTC is going to greenlight the deal, by the way.)
In some ways, this is typical of Amazon - it tries a thing (like smartphones) and if it doesn't work, Amazon pulls the plug. But there is something ab out this that seems precipitous. I look forward to when the story behind the story comes out.