What living man or woman has done more to make your life better than any other person? This is probably not something you have thought about. Most people would likely say their parents, although my parents are no longer living. I’ve thought about this question and I have a definitive answer: Jeff Bezos. Yes, Jeff Bezos. An Amazon truck stops at my house on a daily basis dropping off purchases, sometimes multiple items per day. In the early 1990s who would have thought that in the future you could go to a website and choose among 353 million products, most of which are priced lower than you can find locally. Furthermore, the prices elsewhere are lower than they otherwise would be because of the competition created by Amazon. In addition, these products are delivered to your doorstep, sometimes only a day or two after you ordered them.
This brings me to the point of this post. Amazon is entering the health care space. On Wednesday, February 22, Amazon closed on a nearly $4 billion deal to buy One Medical, a chain of primary care providers. Amazon’s success is by no means assured. Health care has historically been very difficult to disrupt due to regulations, licensure and the way health care is purchased. Indeed, health care has only been disrupted a few times in the past 120 years. The first time was the Flexner Report. I wrote about it here. The influential report resulted in closure of 60% of medical schools, turning medicine into an elite profession with significant barriers to entry and high prices. Although Flexner’s conclusions were logical at the time the results weren’t necessarily good for consumers.
The next disruption was when Congress made employee health benefits nontaxable. That is why most working people get their coverage through their jobs. That’s not a good thing because it makes it difficult for consumers to compare prices because they are no longer the customer, their health plan is. Employee health benefits also allowed providers to forgo competing on the basis of price, because the payers of care were no longer the consumers of care.
Finally, the next disruption was 1965 when Medicare and Medicaid were created. Even though the goals were worthy, all of these disruptions had an adverse effect on the medical marketplace. The sad state of health care affairs we experience today are the direct result of poorly designed laws, regulations and public policies.
Consumers complain about our health care system but entrenched stakeholders won’t give up their coveted positions without a fight. Despite Amazon’s market power is it is unclear how its fleet of trucks and warehouses will make a dent in the medical marketplace. Consider Amazon’s track record in health care. In 2018 Amazon teamed up with J.P. Morgan and Berkshire Hathaway to leverage health care buying power. The venture called Haven failed because the financial behemoths were not collectively big enough to force lower prices. Health care is local and hospitals miles apart don’t really compete with each other. In 2019 Amazon rolled out Amazon Care, a virtual health clinic that was later shut down because the service was not robust enough for large enterprise customers. Three years later Amazon tried another telehealth venture.
In November 2022, Amazon launched virtual health offering Amazon Clinic in 32 states, allowing users to access third-party telehealth providers for non-urgent health conditions ranging from sinusitis to urinary tract infections. Patients can send prescriptions to any pharmacy including Amazon’s in-house pharmacy service.
Amazon isn’t the only firm interested in primary care clinics. CVS and other drugstores have shown interest. This is a positive outcome since primary care is the first step in the health care continuum (2nd really, after self-care but I digress).
It could also lead to an extension of brick-and-mortar storefronts, experts say.
“Following the leads of other retail, I imagine we’ll see some collaboration of this [One Medical] storefront with other storefronts they own [such as Whole Foods],” said Nathan Ray, a partner in consultancy West Monroe’s healthcare and life sciences practice.
Competition is expected to heat up as more big retailers look to expand in healthcare services through primary care offerings. Earlier this month, CVS Health announced it will acquire primary care provider Oak Street Health in a $10.6 billion deal. And Walgreens subsidiary VillageMD agreed in November to buy Summit Health-CityMD for $8.9 billion.
Who wouldn’t want to see a physician while at Whole Foods! There’s a new Whole Foods going up four miles from my house. My local Walmart has a storefront for Quest Diagnostics, while a Walmart a few miles away has a limited service veterinary clinic. I have used both.
Amazon is also trying to enter the business of selling hospital cloud data services, something it probably excels at.
I worry that Amazon does not really understand what it’s up against. So far its health care business ventures have been underwhelming. Here is what Amazon has to say about its acquisition of One Medical:
For a limited time, One Medical membership is available to new U.S. customers for $144 (28% discount) for the first year—the equivalent of only $12 per month.
I hope that means an Amazon medical truck will arrive within a day or two of making an appointment. Perhaps a doctor will drive an Amazon Rivian EV mobile clinic truck and park in my driveway.
“If you fast forward 10 years from now, people are not going to believe how primary care was administered. For decades, you called your doctor, made an appointment three or four weeks out, drove 15-20 minutes to the doctor, parked your car, signed in and waited several minutes in reception, eventually were placed in an exam room, where you waited another 10-15 minutes before the doctor came in, saw you for five to ten minutes and prescribed medicine, and then you drove 20 minutes to the pharmacy to pick it up—and that’s if you didn’t have to then go see a specialist for additional evaluation, where the process repeated and could take even longer for an appointment,” said Amazon CEO Andy Jassy. “Customers want and deserve better, and that’s what One Medical has been working and innovating on for more than a decade. Together, we believe we can make the health care experience easier, faster, more personal, and more convenient for everyone.”
Whoever wrote that blurb accurately described the process of a primary care visit. Why is primary care (and other health care) so inconvenient? Third party payment has an adverse effect on how medical care is received. Your doctors must first go to medical school and then a residency. Finally, he or she has to set up a practice or work for one. They must sign up with networks, often not knowing the prices they’ve agreed to. Here is whatAmazon is offering to solve the above problem:
- A health care home base with primary care providers that help manage a person’s full health picture; from preventive and acute care needs, to chronic disease and mental health concerns
- Pediatricians and family care providers available in a growing number of locations, serving children and families
- Providers trained to address both physical and mental health needs, which may include lifestyle recommendations, medications, or referrals to appropriate specialists
- Clinical and digital integrations with leading hospital networks across the U.S. for more seamless access and coordinated care across primary and specialty care services
- Easy access to vaccine and medical records, prescription renewals, specialty referrals, and lab results in the One Medical app
- Outstanding care for seniors in a growing number of locations, with teams specialized in serving people on Medicare
I wonder if Amazon will change the name of One Medical to Prime Medical? Let’s just hope Amazon disrupts health care the way it was able to disrupt the retail industry. More about what Amazon hopes to achieve.
One Medical joins Amazon to make it easier for people to get and stay healthier
“Even though the goals were worthy, all of these disruptions had an adverse effect on the medical marketplace.”
Worthy goals are not enough?
Yeh, I agree. It takes effort to turn a worthy goal into an innovation that does more than merely “work”. It must actually help.
Reminds me, Edison once observed: Invention is 1% inspiration and 99% perspiration.
It makes me wonder what medicine would be like if Flexner hadn’t been successful in closing medical schools. Would many have closed anyway? Or would they have improved? I suspect a combination of both.
The only thing holding back this kind of innovation is government. Think about how regulation limited telemedicine for so long.
Think about the next type of major innovation. It’s probably artificial intelligence that can aid in diagnosis and care management. If Amazon, Googe and other tech companies create algorithms that can effectively provide primary care, would it be allowed to work independently or would regulators force it into the current model. We all know it’s the latter.