The Washington Post writes that Amazon's decision to close down its Amazon Care telemedicine business may reflect a recognition that while the industry may be ripe for disruption, it is easier to achieve through acquisition than startup.
"To understand where Amazon is headed next in health care, the industry is looking for clues from a different direction: Amazon’s acquisitions.
"Amazon is in the process of acquiring primary care start-up One Medical for $3.9 billion, although regulators said Friday they are taking a closer look at the deal. While the e-commerce giant’s exact path into health care is unclear, Amazon has shown sustained interest in the primary care market, including providing home health care for seniors (a burgeoning opportunity as the baby-boom generation ages) and selling telehealth and mental health services to employers."
(The Wall Street Journal reported last week that the Federal Trade Commission is investigating Amazon's proposed purchase of One Medical's parent company, which "could delay its completion as federal competition investigations often take months to finish. Significant U.S. antitrust probes on average take about 11 months.")
"Amazon has long experimented with different models for expansion and growth," the Post writes. "Amazon Web Services, its dominant cloud division, stemmed from its own needs but became a huge revenue center when Amazon started selling it to other companies. For years, though, it failed to break through in groceries with Amazon Fresh, and in 2017 it acquired Whole Foods to boost that side of its business.
"Health care may lend itself to the latter model. The Post previously reported that former Amazon Care employees had concerns about the tech giant’s fast and frugal approach to health care and that medical professionals hired to provide care sometimes clashed with the company over its approach. And in a note to staff announcing the closure, the current executive in charge admitted that Amazon Care was failing to please its corporate customers."
The Post writes that there are two probably models for how Amazon will proceed in healthcare. One is to have narrow health-care goals, with a focus on "employer-based models, or virtual mental health care, or caring for the 65+ population." But the other possibility is that Amazon will seek "to ultimately dominate consumer health care across the board, much like its efforts in e-commerce, logistics and cloud services."
The New York Times has a rather skeptical analysis of Amazon's current direction:
"Any company claiming its innovation will revolutionize American health care by itself is selling a fantasy. There is no technological miracle waiting around the corner that will solve problems caused by decades of neglectful policy decisions and rampant fraud. And a fix aimed at just the upper crust of employer-sponsored health coverage has no hope of making health care more accessible to those who are truly being left behind.
"Amazon Care and One Medical saw the same market opportunity within the crisis-ridden American health care system: a paid escape hatch for the better-off. Not the really wealthy - they have always had concierge care on demand - but the middle- to upper-middle-class worker who has a job and insurance, yet who can’t believe how hard it is just to see a doctor.
"One Medical, pitching itself as 'no ordinary doctor’s office,' lets people with means leapfrog some of the hassles and waits of American health care, while promising longer appointments and friendlier doctors. Its offices are concentrated in wealthier areas and do not accept Medicaid, which reimburses providers far less than private insurance and tends to cover sicker patients who require more costly care.
"Amazon will have a big task on its hands to make One Medical work: The company, which charges $199 a year for membership, has not been profitable, losing $91 million in the first quarter of 2022."
The Times also offers this pithy note: " It might be possible to deliver a spatula to someone’s apartment in 24 hours, but applying the same approach to health care seems a taller order."
- KC's View:
When you have almost limitless resources, it is possible to experiment with various options and see what works and what doesn't. FYI … Tom Furphy and I will talk a lot about this tomorrow when The Innovation Conversation returns…