Amazon vs. Traditional Healthcare: Who Will Win?


If Amazon wants to continue growing at 25 to 30% per year, as it has in recent years, it has to generate high revenues, says Robin Gaster, visiting scholar for public policy at George Washington University and author of Behemoth. , Amazon Rising: Power and Seduction in the Age of the Amazon. “

“Some can see Amazon looking for a business that is going to get really big for them very quickly. I’m sure that’s why they’re in grocery stores, “says Gaster, adding that groceries is a low margin, high capital business and there is no evidence that Amazon will outperform others in this area . “That brings us to healthcare, which is of course much bigger than food. One can imagine that they are looking at healthcare and seeing a much greater chance of being disruptive. Amazon thinks very differently. Health care is their greatest opportunity. “

Amazon Care piloted a virtual health program for some of the company’s employees in the Seattle area in September 2019. Along with owning PillPack, using Alexa in healthcare, and working with Haven, Amazon appeared to be connecting the health points last summer, says Bryan Niehaus, vice president of Chicago-based health consulting firm Advis.

“We thought Haven could be a big part of this puzzle. But since Haven doesn’t make headway and then finally collapses, we see the new directions that Amazon is taking, ”says Niehaus. “Amazon is pushing for direct supply more aggressively, combining some of these different elements.”

The drive for increased adoption of telemedicine due to the COVID-19 pandemic may have sped that move, and Amazon Care is a natural extension of the current internal pilot. The company plans to offer it to its 1.2 million employees nationwide and also to other companies.

Another model of health care

While there have been some announcements about Amazon Care, the details are sparse. The app-based care platform is intended to ensure basic care through telemedicine and pharmacy with a few home visits. Although Amazon’s legions of warehouse workers may have access to on-site clinics, “Amazon is preparing for this voice-controlled health future by creating a non-brick and mortar primary care system,” says Gaster, who also called a consulting firm. has incumetrics that measure and evaluate innovations. “Our phone is our gateway to the healthcare of the future, and it doesn’t mean going to the doctor.”

Established healthcare facilities may be concerned that Amazon is targeting them; However, Gaster believes that Amazon is not approaching them directly, but from below: “There is a huge secondary area of ​​health care where we don’t actually go to the family doctor.” The sub-primary area is wellness and the management of chronic diseases as well as minor or temporary medical ones Initial diagnostics, he says, and these can increasingly be done at home. For example, some cell phones can perform electrocardiogram tests and diabetes monitoring. In late 2020, Amazon launched its health monitoring Halo tape, which can monitor physical activity, sleep, temperature, and even body fat composition.

“We’re going to see this pretty drastic change where people are not tied to the health care their job provides, and it’s a radical opportunity for a disruptive newbie,” says Gaster. AWS is already used in healthcare; The home delivery of prescriptions from PillPack is based on the established Amazon logistics network; and Alexa can order supplies, fill up prescriptions, and answer insurance-related questions. “I think Amazon will eat health care from below, not above,” he says.

Niehaus envisions Amazon targeting companies that contract directly with healthcare systems to ensure comprehensive coverage. It can focus on core services to improve access to appointments. He doesn’t assume that all health organizations will feel an immediate Amazon presence, especially if their core services are inpatient and outpatient services as well as specialty treatments.

Amazon is entering the home health scene at a time when President Joe Biden’s American Jobs Plan provides $ 400 billion in home or community care over eight years. Like other companies, Amazon will also need additional workers to establish a national presence, says Niehaus. While there is an opportunity, there is also competition. Existing telemedicine companies built a telemedicine presence during the pandemic.

There are old home health companies too. Amazon could build on its own or buy out existing businesses, but scaling up quickly can be tricky. Niehaus observed that the country had a shortage of service providers, including doctors, nurses and caregivers. Amazon would face fierce competition for skilled suppliers who operate in a very different segment of the job market than the people it hires to pack and ship boxes.

Amazon’s business and labor practices have many critics, but it has won over American consumers with a fast, easy, and reliable purchase / delivery experience. Would that reputation – and its magnitude – help in the delivery of health care? “There’s a great opportunity to continue using omnichannel to curate individually, but I don’t think Amazon will disrupt the healthcare system as much as people might think,” said Bird Blitch, co-founder and CEO of Patientco, a company for payment technology in Atlanta. One reason for this is that many people still trust the existing health system to get much of their care.

Alexa, check on my mom

According to CEO Jeff Bezos’ 2020 letter to shareholders, Alexa is connected to more than 100 million smart home devices. Vendors can already create HIPAA-compliant tools to schedule appointments, find nearby vendors, answer health questions, and replenish prescriptions. Gaster envisions a future where people will ask Alexa what to do about a sprained knee, and Alexa will ask a few questions and offer advice on how to wrap and elevate it.

“There’s a huge sub-critical area that’s just wide open,” he says. Health systems have traditionally been set up to focus on what happens after the patient enters the office because that is where they are paid. “Before that, most of the health concerns exist,” says Gaster. “I think Amazon is incredibly well positioned and will collect enormous amounts of data via (Alexa) and its Amazon Care projects, via PillPack and via AWS.”

Digital health company Sharecare has partnered with Amazon to add 80,000 health and wellness questions and medically-approved content to its Alexa database. Given its HIPAA compliance, “Amazon has the potential to transform the way patients manage their care,” says Blitch. A 2019 survey found that 52% of people were interested in using voice assistants in healthcare. “I think we’ll see more vendors introducing voice assistant experiences,” says Blitch, who uses his company’s customers with their payment system.

Alexa Care Hub allows the device to monitor the activity of older relatives. It can be set up so the caregiver knows if the loved one has asked a question about the weather, seen a movie, or gone outside. “Because it can be connected to the ring, you get a lot of information,” says Gaster. “This is obviously done with mutual consent, and it goes well beyond traditional health care, but it is clearly about health.”

Amazon is already present in most US stores. According to 2019 data, around 62% of US households are Prime members. “They have a huge, loyal customer base,” says Blitch. “They have a lot of data to identify and act on, including the latest consumer preferences and demands.”

These factors can enable Amazon to leverage its technology and ability to remove customer barriers to give people more control over their healthcare.

Insurance and regulation

Now that Amazon Care is launched and believed to be successful, Niehaus believes the next step is to layer services. That could be expanding the physical health care footprint or developing or purchasing insurance products. Look at CVS Health, a drug store chain, an insurer, a PBM, and a provider (the MinuteClinics and the HealthHUBs). From what is publicly known, Niehaus says, Amazon Care isn’t set up to bill insurers. It is possible for employers to contract directly with them or offer a self-pay option for consumers.

But Amazon may also need to be careful. As the company’s health profile grows, there will be opposition to the “Amazonification” of health care from current stakeholders. However, it may lead to an examination and oversight of whether additional regulations are required and what they might look like. This also includes the home health sector, which the Biden administration has highlighted for additional funding through the Infrastructure Act, even if details are not yet available. “Regulations are our controls and scales that work as intended,” observes Niehaus.

Another way Amazon sneaks into healthcare could be behind the scenes. Amazon launched HealthLake, which aggregates health data and standardizes it into required interoperability formats, with a “HIPAA-enabled service that enables health care providers, health insurers and pharmaceutical companies to store, convert, query and analyze health data on a large scale”. says the website. Given the CMS mandate for interoperability and patient access, this is likely to be an area of ​​growth.

Gaster weaves an expanded metaphor to explain Amazon’s perspective and possible role in healthcare: The existing healthcare systems are formidable castles with huge moats and cannons pointing in all directions. There are plenty of attorneys on the battlements willing to take over the company, but Amazon is spreading across the countryside, taking in areas the castle cannot protect. In the end, castles will capitulate if they run out of supplies.

Finding opportunities could allow Amazon to expand into other areas of healthcare without realizing or caring about the collateral damage the company sometimes causes, Gaster says. “It’s like that in warehouses. It’s true on the Marketplace platform. That’s true at AWS, ”he says. “It’s dangerous to be obsessive. They don’t care about the effects of their actions. You only focus on the customers. “

Deborah Ann Kaplan writes on medical and practice management topics.

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