Photo: Amazon Care
What’s really behind Amazon’s decision to shutter Amazon Care?
Amazon.com last week said it would stop offering its Amazon Care in-person and virtual health service at the year’s close, signaling a major reset amid its pending purchase of a line of primary care clinics.
In an internal memo last week, Amazon Health Services lead Neil Lindsay said, “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.”
He added that Amazon has a better understanding of “what’s needed long-term to deliver meaningful health care solutions for enterprise and individual customers.”
Launched in 2019 as a pilot for Seattle-based employees, the service provides virtual urgent care visits, as well as free telehealth consults and in-home visits for a fee from nurses for testing and vaccinations. Last year it expanded to non-Amazon employees nationwide, including introducing in-person services in at least seven cities and signing a few corporate clients, including Hilton, Silicon Labs and Amazon-owned Whole Foods.
The closing is surprising given plans announced in February to expand in-person Amazon Care services to 20 new cities in 2022.
The decision could be traced to the potential overlap with Amazon’s pending $3.9 billion acquisition of One Medical, a primary care organization that operates 188 clinics, has nearly 800,000 members and works with 8,000 companies.
The Washington Post last week reported on medical staffers quarreling with Amazon over prioritizing growth and efficiencies over traditional medical safeguards. A national nurse shortage was also seen straining Amazon Care’s expansion.
Trilliant Health reports that there has been a steep drop in telehealth visits since the pandemic’s start, with almost 80 percent of Americans solely pursuing in-person care in 2021.
To some, Amazon’s reassessment was a recognition of the complexities of healthcare, including competition from entrenched retailers, Walgreens and CVS, as well as another newbie, Walmart. A recent Harvard Business Review article stated, “While Amazon has tremendous financial resources, talent, IT skills, and patience — as well as a proven ability to turn economic sectors upside down — it faces enormous challenges in trying to create a new model for primary care in America’s huge, troubled, tangled health care sector.”
- Internal memo: Amazon Care to shut down, ‘not a complete enough offering’ for corporate customers – GeekWire
- Amazon is shutting down its telehealth service, Amazon Care – CNBC
- Amazon Care is shutting down at the end of 2022. Here’s why – Fierce Healthcare
- Amazon to shut down its telehealth offering – The Washington Post
- Amazon’s Foray into Primary Care Won’t Be Easy – Harvard Business Review
- Telehealth Demand Continues to Decline, Posing Challenges for Telehealth Providers and Policymakers – Trilliant Health
- Is Amazon on the verge of reinventing American healthcare? – RetailWire
- Amazon and One Medical Sign an Agreement for Amazon to Acquire One Medical – Amazon.com
Discussion Questions
DISCUSSION QUESTIONS: What do you think is behind Amazon’s decision to shutter Amazon Care? How does Amazon’s or retail’s overall opportunity to transform healthcare appear to be evolving?
Poll
Loading …BrainTrust
Lisa Goller
B2B Content Strategist
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
One of the characteristics that has been part of Amazon’s success is their willingness to terminate initiatives that aren’t producing the outcomes that they expect. This is another example. There’s little doubt that the acquisition of One Medical is connected to this decision. The progress retailers are making in expanding health services is exciting, and I believe a key part of health care delivery in the future. But it’s important to appreciate just how challenging this domain is. Health services is a massive market opportunity, but it’s also extremely complex.
Amazon wants to disrupt healthcare and, in some ways, I hope it succeeds as the industry is a mire of vested interests and unnecessary complexity. However those things also make disruption very challenging and Amazon will need a lot of time and money to even make a dent. With its recent acquisitions, the strategy of Amazon in health is now becoming a bit clearer. It wants to develop a solid foundation based on innovative practices and new ways of thinking – things like more in-home consultations and using analytics to secure better outcomes – so that it can, at some point, disrupt the market on a bigger scale. However the jury is still out on whether it can succeed. And of course, whether customers will be willing to trust Amazon with their health.
As one moves into a new business, one must find a reason for being — talent, technology, brand name, weak competition. There are great opportunities in the healthcare space, but Amazon’s skills and experience are too far from what is needed to succeed in healthcare. They were trying to squeeze a size-12 foot into a size-10 shoe.
Amazon entered this space very late in the game. Prospective patients with healthcare already have the services available to them, I suspect, and are required to use them if they want to get reimbursed for the care. I also wonder if there is some hesitancy to use Amazon-branded services for healthcare. Given the options available, I suspect people would go with a traditional heathcare brand.
There are a lot entries in the market from Walmart to CVS. I think the step back signals a need to review the business, make changes, and come back stronger.
Amazon is all about efficiency. If One Medical patient care overlaps with Amazon Care, there’s a reason to cut redundancies.
Healthcare is complex, yet Amazon has proven it can reinvent global standards, competitive practices and our habits.
This is nothing more than business as usual for Amazon. With its test/validate/disrupt culture, the closing of the Care unit is no surprise. In fact it’s right on strategy, especially as they await the confirmation of the acquisition of One Medical and its huge swath of capabilities and coverage. The state of U.S. healthcare is a messy maze, with so many complicated parts to the equation. It’s the reason none of the largest retailers in the world (Walmart, Amazon, CVS, Walgreens, etc.) have figured it out. I do hope someone does, because the healthcare market is ripe for disruption and simplification.
The American healthcare industry is a unique business environment. It is highly regulated, has deeply entrenched special interests, is resistant to change, and the payment schedule is dreadfully slow and mostly controlled by the insurance industry. On top of all of that, the privacy regulations on customer data are the polar opposite of what the big-data, analytics-on-everything, tech titans are accustomed to. Culturally speaking, this must have felt like a miserable quagmire to a nimble, entrepreneurial company accustomed to riding in and shaking up entire markets – despite representing roughly one-sixth of the U.S. economy.
Amazon Care’s offering overlaps its latest acquisition, One Medical. Health care’s virtual offerings got an unprecedented boost during the pandemic, which has since waned. For a credible enterprise-level offering, Amazon decided that virtual alone is insufficient and requires physical locations and infrastructure. They are also bidding for Signify Health, a home care company with a national network for older patients. Amazon’s decision to shutter Amazon Care is more a pivot than failure.
I have to respect a decision that seems abrupt, but at the same time prudent. If Amazon realized Amazon Care wasn’t going to work, at least this version of it, they did the smart thing: cut and move on. They also have the $3.9 billion One Medical in the background. That factors into the decision.
Opportunity? What particular opportunity are we talking about here, other than the basic idea that people are always improving things?
Maybe Amazon is scaling back, or maybe they were never really interested in healthcare in the first place, or maybe Jeff Bezos is rubbing his hands together and cackling with evil glee about some hidden agenda — who really knows? — but perhaps we should pay more attention when they actually … you know … do something.
As for someone else, in retail or elsewhere, “doing something” (that transforms the healthcare landscape), I’m not expecting anything: it’s a graveyard for unrealistic promises built on naive (mis)understanding of its complexities.
Amazon is approaching Amazon Care and its new healthcare acquisitions similarly to past ventures. By learning, testing and not being afraid to pull the rip-cord once they’ve learned a more effective way to innovate forward.
As long as our government and major healthcare players continue to operate on autopilot with no viable impactful solutions to bring down costs or improve service, Amazon is a strong candidate to disrupt and simplify.