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Breaking Down Amazon’s (Massive) Health Care Opportunity
“The main thing is you just never underestimate Amazon.”
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Last week, Amazon announced it would expand Amazon Care — its employee-only health care service — to the public. The service lets you chat with nurses, move to video, arrange home visits, and get medication prescribed. Amazon delivers the medicine.
The company began piloting Care internally in September 2019, and it’s now opening it up to employers in Washington state, who can offer it to their workers as a benefit. Some already seem eager to jump in. “We’re in discussions with a number of companies,” an Amazon spokesperson told me.
Though Amazon is starting small, and trying to enter a field that’s notoriously averse to change, industry experts say it has a real shot at breaking through. Its obsession with efficiency and customer service is an advantage in a system known for neither. And a new push for regulatory opening, particularly in telehealth, gives it a chance to press incumbents faster than many imagined. Health care is a $4 trillion per year business making up nearly 20% of the U.S. GDP. So the opportunity is massive.
“The main thing is you just never underestimate Amazon,” one doctor who works in digital health told me. “They have more patience than most other businesses do — which is what it takes in health care.”
From the outset, Amazon is selling Care against the pain of using today’s health system. The current system makes it difficult to get a doctors’ appointment, is inconvenient to travel to, floods you with paperwork, has you wait for long stretches, and isn’t great at follow-up. Amazon, in its post announcing the expansion, positioned Care as the solution. “Using Amazon Care,” one spouse of an Amazon employee said, “we were able to connect with a clinician in under a minute who provided medical advice that helped us get through the night. She also prescribed a medication that was delivered to our doorstep by 9 a.m. the next day.”
The statement comes from someone dependent on an Amazon paycheck, but it would be unwise to discount the strategy: Amazon is declaring that it plans to win in health care by focusing on basic care and the patient experience, major opportunities which the system has long overlooked. “We are over-indexed in health care to the highest complexity and heroic stuff,” the doctor said. “We have ignored the really simple every day. That’s left it wide open for companies to start at the easy stuff and work their way up.”
“We are over-indexed in health care to the highest complexity and heroic stuff.”
Once it cracks the “easy stuff,” Amazon is well-positioned to work its way up the chain. It’s already working with hospitals via Amazon Web Services, it’s attempting to more accurately predict disease with AWS data, it’s trying to cure the common cold, it’s selling medical devices through Amazon.com, and it’s delivering medications with Amazon Pharmacy. Now that it’s starting to form a direct care relationship with patients, this all could come together.
“If you think about all these and how they could fit together, it's essentially like a fully integrated virtual platform,” Christina Farr, a health-tech investor at OMERS Ventures, and former CNBC health-tech reporter, told me. “You've got health, you've got pharmacy delivery, you potentially also have diagnostics, and with Covid they were starting to do lab testing in some of the warehouses. It's a full ecosystem.”
Amazon's various health care initiatives operate largely in silos today, but the long-term play would be to bring them together. The company could attempt to centralize data — just like it did it in its retail organization — and use it to provide better, more cost-effective service, at lower prices. This would raise all sorts of (legitimate) alarms with privacy advocates. But if Amazon makes a meaningful difference in the quality of care, it would be hard to roll that back. Just look at what U.S. regulators and lawmakers are willing to tolerate in service of two-day shipping.
As Amazon makes its way into patient care, a new tide of health care regulation seems to be helping its cause. During the pandemic, several states waived requirements preventing out-of-state telehealth doctors from practicing in their jurisdictions, creating flexibility for a new entrant like Amazon. As of April, under the new 21st Century Cures Act, patients will also be able to request their electronic medical records, making it easier to start over with a new service. And hospitals must now post their prices online, giving Amazon a boon of new competitor data to work with.
Many in the health field aren’t paying much attention to Amazon’s push into their territory. In fairness, they’ve had a long year. But according to the doctor I spoke with, it’s time for them to open their eyes, and perhaps the rest of us should too. “You've probably read The Innovator's Dilemma,” the doctor said. “The incumbent never sees it coming.”
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