This week, the tech giant Amazon announced that it is acquiring One Medical for US$3.9 billion. The bet is that purchasing One Medical, a primary care practice that offers direct-to-consumer services through a membership, will help Amazon expand its Amazon Care platform with additional data and both in-person and virtual services.
Amazon has made forays into the world of healthcare before—remember Haven? That didn’t work out, but Amazon Pharmacy and Amazon Care have a pulse. One Medical could be a nice add-on to Amazon’s fledgling healthcare business: Could is the operative word here.
Amazon is not the only one trying to transform healthcare in the U.S. In the last few years, we have seen an influx of venture capital into and a slew of startups focused on healthcare—whether it be for better member engagement, patient data exchange, automated enrollment, administration platforms, chronic care support, or digital B2B payments.
Digital health startups raised over US$29.1 billion in over 729 deals in 2021 alone. The next chapter in healthcare (systemic changes notwithstanding) will be bridging the divide between medical and digital. In a way, this impending shift is the sequel to the 1999 retail shift from primarily brick and mortar to e-commerce. Once that change happens, it will be here to stay.
Key Considerations for Amazon
There are several make-or-break factors in Amazon’s acquisition.
- One Medical’s ability to lure individuals and businesses to enroll—and reenroll year after year.
- Individuals’ willingness to leave their primary care providers behind. Not everyone has one, true, but some may have a relationship that is not easy to replicate digitally with an unknown provider.
- Amazon’s ability to convey a highly nuanced target market message, showcasing One Medical as more than an add-on to traditional networks and employer benefits. The 2020 U.S. census indicates that 54.4% of the population rely on employment-based insurance, and another 36.2% have Medicare or Medicaid. Then there are those who don’t have coverage. How will One Medical approach this audience that is clearly not one size?
- Amazon’s ability to scale One Medical and price its services to the varied members of new customer cohorts. Today, One Medical is present in Boston and Washington, D.C. with nurse practitioners and physicians serving as primary care resources and as care navigators. The size of the medical staff would have to balloon into the tens of thousands and be licensed to practice in multiple states to serve a broader audience. Where those professionals will appear from, when we are already experiencing provider fatigue, is a major question.
- How patient data will be used. If Amazon has designs on productizing that data, it may be ruffling feathers—this is confidential information, and most people would like it to stay that way.
Signs of a Successful Future
Today may be as good a time as any for a primary-care-meets-digital marriage. The Great Resignation is bringing individuals out from employer group health plans and into the underexplored market of individual health coverage. Freelancers, gig workers, seasonal workers, and entrepreneurs presumably need access to health services, too. These parties would benefit from, if nothing else, access to primary care coverage.
Amazon has a shot at succeeding, given its e-commerce track record over the past two decades and immense cloud capabilities, making APIs, cloud computing, data storage, and more readily available to apply to any acquired entity. After all, this endeavor will require a great deal of patient information, claims data, and payments. Besides, after Haven, a more manageable bite this time around, working alongside health plans rather than being one itself is not a terrible idea.
Have thoughts on this acquisition or a new digital solution I should have on my radar? Reach out for a briefing or a conversation at [email protected]. In the meantime, stay healthy and don’t forget to visit your primary care provider—digitally or in person.