Is Amazon on the verge of reinventing American healthcare?

Photos: One Medical
Jul 22, 2022 yesterday said that it has reached a deal to acquire One Medical, a “technology-powered national primary care organization” that combines in-person, digital and telehealth services to care for patients.

The $3.9 billion all-cash deal, if approved by One Medical’s shareholders and federal regulators, makes clear that Amazon is serious about being a major disruptive force in the consumer healthcare market. One Medical CEO Amir Dan Rubin will remain in that position should Amazon take control.

“We think health care is high on the list of experiences that need reinvention,” said Neil Lindsay, SVP of Amazon Health Services. “Booking an appointment, waiting weeks or even months to be seen, taking time off work, driving to a clinic, finding a parking spot, waiting in the waiting room then the exam room for what is too often a rushed few minutes with a doctor, then making another trip to a pharmacy — we see lots of opportunity to both improve the quality of the experience and give people back valuable time in their days.”

Amazon has been inexorably pushing into healthcare going back to 2018 with its acquisition of Pillpack, an online pharmacy that delivers pre-sorted doses of prescribed medicines in envelopes to customers.

Two years later brought the launch of Amazon Pharmacy, which offers free unlimited two-day deliveries of prescriptions to Prime members and discounts on medications not covered by member’s insurance.

The planned acquisition of One Medical will not be the first time that Amazon has engaged in primary care that makes use of both telehealth and in-person services. Its Amazon Care service, which was first tested on employees in 2019, has expanded nationwide this year with plans to have physical clinics operating in over 20 cities.

Amazon is not the only retailer pursuing the primary care market.

Walgreens, under CEO Roz Brewer, has focused on the primary care opportunity and is aggressively opening Village Medical clinics, staffed by doctors, inside its stores. It expects to have 1,000 clinics in operation across the U.S. by 2027.

CVS, which has offered basic care with nurse practitioners in more than 1,100 in-store clinics, is also looking to create doctor-staffed practices at its stores.

Walmart last year acquired MeMD, a company offering nationwide virtual medical and mental healthcare services. The move was seen as complementary to in-person Walmart Health centers operated by the company.

DISCUSSION QUESTIONS: What do you think of the retailer-led pushes into primary healthcare? What will be the impact of Amazon’s acquisition of One Medical?

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"Acquiring One Medical helps Amazon shake up a sector that desperately needs modernization."
"This is more a “keep up with Walmart” move for Amazon."
"There is a fundamental reason why large retailers have pushed into healthcare and that’s to disrupt an industry fraught with challenges..."

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24 Comments on "Is Amazon on the verge of reinventing American healthcare?"

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Mark Ryski

Healthcare is a huge market with growing demand, so it’s understandable why companies are investing. This is a meaningful move for Amazon into a very big, complex marketspace. And while not everything Amazon touches turns into gold, more times than not they impact the market regardless of their own success. A company the size of Amazon, and with the growth requirements of Amazon, has to pursue really big plays — and healthcare is one of those areas.

Neil Saunders

Reinventing American healthcare will require an enormous amount of effort, dedication and financial firepower – not least to overcome all of the vested interests. Amazon has certainly made a start, but I wouldn’t say it is on the verge of a breakthrough – it is a long way from it. Even in pharmacy where it acquired PillPack some time ago, its disruption has been extremely minor. All that said, Amazon has the capability to shake things up and I wish it well, not least because the current system is pretty crummy and doesn’t work very well. Of course, whether consumers want Amazon attending to their medical needs is an important consideration, and I think Amazon will need to work hard to persuade some people.

Richard Hernandez
Richard Hernandez
Merchant Director
6 months 11 days ago

Hy-Vee and H-E-B have been some of the early adopters in retail-led healthcare for a number of years. I think this type of healthcare will become the norm in the future. It’s too easy and I am already there doing my shopping. The Amazon acquisition of One Medical solidifies the direction of this revolution and that direction is forward.

Dave Bruno

Retailers – including Amazon’s latest acquisition – are definitely assembling the building blocks required to deliver more accessible and integrated primary healthcare journeys. These are two important pieces of the puzzle. But the third piece – affordability – is still a big unknown. Despite these moves by retail, until we find a way to fix the dysfunctional health insurance system, I fear real transformation will remain elusive.

Paula Rosenblum

Those retailers have stores. Space.

Somehow, this really creeps me out.

Gary Sankary

The current system for delivering healthcare in the United States is broken. From a consumer point of view, retailer-led primary health care is a “Band-Aid” on a bigger problem, access to efficient healthcare. I prefer to go to a clinic and see the same doctor for my healthcare needs. Unfortunately, that’s become difficult as big healthcare systems have dominated the market and, in the interest of efficiency, are creating a system of gatekeepers that keep patients from having access to their providers for simple things like having questions answered or urgent care appointments.

For many conditions, telehealth appointments can manage. Still, it’s not a replacement for being seen by a doctor familiar with your history who can take a more holistic approach to diagnosis and treatment. These services are doing well because, in my opinion, patients are frustrated, so they represent a quick way to get treatment. I believe it’s probably the future in the U.S., but I’m not a fan.

David Spear

There is a fundamental reason why large retailers have pushed into healthcare and that’s to disrupt an industry fraught with challenges such as overpricing, exorbitant wait times, misunderstood insurance coverage, complicated billing, etc. I don’t think any single retailer is on the verge of reinventing American healthcare, instead I believe it will take several large retailers to aggressively push the boundaries of traditional health practices in a variety of ways to carve new pathways of delivering affordable healthcare to the average consumer. Amazon’s acquisition of One Medical is another step in this direction.

Patricia Vekich Waldron

The lack of efficient, effective, convenient and affordable healthcare for much of the population has created an opportunity for retailers who offer adjacent or complimentary products and services to enter this industry. While traditional providers have clearly not met market need and demand, there will be barriers like trust, skills, processes and widespread access that Amazon and others have to overcome.

Melissa Minkow

I’m excited by the idea of any sort of healthcare reinvention. Our system is incredibly broken, and the “customer (patient) experience” is usually terrible. Hopefully more people will get the care they need at the caliber it’s needed since the retailization should mean efficiencies.

Lisa Goller

As a complex, siloed sector, healthcare invites disruption. Retail leaders now extend their influence to solve issues like access to care, burnout and long wait times.

Acquiring One Medical helps Amazon shake up a sector that desperately needs modernization. Amazon’s process re-engineering will improve patient safety, efficiency and service excellence.

David Naumann

Amazon continues to diversify its business and disrupt industries. Healthcare may be a bit more challenging to penetrate, as it is a complex landscape. Many people are tied into a medical network and are loyal to their doctors. It will be difficult to attract this “customer” segment.

Brandon Rael

The reinvention of the primary healthcare system is a highly challenging proposition, as the operating model is clearly fragmented with broken processes and other assorted challenges. The healthcare industry is clearly ripe for disruption due to its extreme complexities, overwhelming costs, and inefficiencies. There are customer experience issues with frustrating processes, inefficiencies, and waiting times for claims to be completed.

Amazon’s portfolio diversification strategies extend well beyond its retail and e-commerce operations. As telemedicine and more remote ways to service patients have emerged, Amazon’s centralized platform, relentless investments in innovation, and one view of the customer may just be one of the solutions the healthcare industry is searching for. However it will be a far reach to expect the acquisition of One Medical to revolutionize the healthcare industry overnight.

Ron Margulis

This is more a “keep up with Walmart” move for Amazon. Walmart Health is growing very fast and is receiving significant backing from the C-suite in Bentonville. Consumers of food and GM are also consumers of healthcare services. Both Walmart and Amazon know that and want to capture as much of the combined share of wallet as they can.

Dick Seesel

It’s one thing for companies like Amazon (or CVS) to identify integrated solutions to pharmacy, telehealth, benefits and so forth. It’s another thing to “reinvent” a structure already dominated by a shrinking number of healthcare systems and private insurers in their own race to enhance technology and cost efficiencies.

As a Medicare Advantage customer who has used the healthcare system quite heavily this year (don’t ask!), I think the only feasible solution for the under-65 set is to offer “Medicare for all” as an alternative to traditional private insurance. I’m not sure I would trust Amazon to be the solution to that challenge.

Mohamed Amer, PhD

Amazon intends to reinvent American healthcare, but it’s too early to predict the outcome. What the company has done is create a primary and urgent care ecosystem for its employees to address cost pressures without sacrificing the quality of care. The company has also begun building the foundational blocks to disrupt the mega healthcare industry. Retailers with a high number of employees in physical stores or fulfillment centers are keen on controlling the spiraling cost of healthcare. In the case of Amazon, it has 1.1 million employees in the U.S. alone!

Accessibility, affordability, and patient experience are the critical markers for the Amazon healthcare business. While desiring to control Amazon’s healthcare costs and employee experiences, the company continues to set its sights on solving a uniquely American problem: the highest healthcare spending per capita in developed countries with less desirable or commensurate outcomes.

Jeff Sward

Healthcare seems primed to benefit from some rigorous competition. (Pun accidental.) We rank #1 in the world in expenditures per person and nowhere near #1 in health outcomes per person. The whole system is antiquated and inefficient. Things may get a little messy along the way, but a couple years down the road there should be some successes to learn from.

Doug Garnett

I have come to believe most Amazon moves like this are investor theater – designed to continue creating the idea that Amazon is continually reinventing. In reality, their reinventions are few, far between, and some have been tremendously potent.

Healthcare! No. I think they know it’s a solid headline getter so they continue to dribble bits of healthcare out to investors. But I can’t see Amazon making a significant advance in something so human.

Shep Hyken

This is our future. Seldom does anything stay the way it is, so why should healthcare be different? Amazon has been entering this space for a while. Be it Amazon or some other “disrupter,” this is good for everyone, especially the consumer/patient. It raises the bar, forces innovation, and breeds a new level of competition.

Liz Crawford

It’s true that health care needs “reinvention”; it is very slow to leverage the advantages of digitization and modern communication. However I don’t think that Amazon will be the prime mover here. Instead, I think that other players in the medical industry (physicians, insurance companies, clinics) will be adopting pieces of the Amazon approach, including tele-health and prescription delivery services.

Oliver Guy

Amazon specialize in eliminating friction. They must have identified an area of friction – and hence untapped profit – in order to be focusing in this area.

Certainly consumers desire easy to access healthcare and a retail setting for this is ideal.

Raj B. Shroff

The retailer-led pushes into primary healthcare make sense. Like food, people will always need healthcare. As for the impact of Amazon’s acquisition, too early to say, but with their size, there are only a few verticals that can fuel the growth engine and there is space in the market for better service, no doubt.

All the comments in this discussion have focused on reactive health. I’d like to see Amazon go after more preventative care, health monitoring, etc. We’ve not been very good in this area but we are very close to having great tracking and predictive tools (e.g. Apple watch, AI, etc).

The real innovation will come from someone truly approaching healthcare differently (a real disruptor) which I don’t think Amazon will do. They’ll streamline the mess for now, their effort is getting closer to parity with WAG, CVS, WMT, etc.

Craig Sundstrom

How successful this is will depend on their goal(s): if, as with many of their activities, the point is simply to experiment, or generate headlines, then the goal has already been satisfied. If the goal, OTOH, is to “reinvent” healthcare, well … as other have noted: lots’a luck with that! How many years is it since WF was acquired and have they “reinvented” grocery?

Brad Halverson

If anyone can insert themselves in to innovate, invent and simplify, it’s Amazon. They appear to be nibbling around the edges by starting in primary care and meds, but it’s a good place as any to begin change.

Will be interesting to see if they go farther and poke a hole in the messy middle of inflated health insurance costs, inefficiencies in networks, billing, claims, etc — which have been painful for most Americans.

Nicola Kinsella

I’m excited that these customer centric organizations are trying to change the healthcare experience for the better, because often the patient experience gets overlooked. Or healthcare providers focus on the actual delivery experience, but not the time consuming logistical experience before you get to a location for treatment. And re the Amazon acquisition, more competition in this space can only be better for consumers overall. Looking forward to seeing how this plays out.

"Acquiring One Medical helps Amazon shake up a sector that desperately needs modernization."
"This is more a “keep up with Walmart” move for Amazon."
"There is a fundamental reason why large retailers have pushed into healthcare and that’s to disrupt an industry fraught with challenges..."

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