Can Amazon Change Healthcare? Experts Oppose Tech Giant’s $3.9 Billion Deal to Buy One Medical – GeekWire

(OneMedical Image)

Amazon’s planned $3.9 billion acquisition of One Medical will bring Amazon even further into healthcare. But whether the Seattle tech giant will change the medical system in the same way the company changed the way people buy products online is an open question.

“It’s a slap in the nose to the entire industry,” said startup veteran Mike McSherry, CEO of Seattle digital health company Xealth.

Xealth CEO Mike McSherry. (Photo Xealth)

Amazon has been targeting healthcare for years. In 2018, the company bought PillPack, which became Amazon Pharmacy. And it recently expanded Amazon Care, its primary care service originally designed for employees. Amazon’s purchase of One Medical brings the company squarely into the field.

But not all of Amazon’s healthcare efforts have been successful. Last year, the company closed its Haven healthcare joint venture with Berkshire Hathaway and JPMorgan Chase.

“You’re looking at previous efforts to find a technology solution, a business model that will solve everything — this acquisition won’t be the first attempt and probably won’t be the last,” said Dr. Joshua Liao, associate chair of health systems at the University of Chicago’s Department of Medicine. Washington. “If there’s one pull of a lever that fixes health care, I don’t know it.”

One Medical offers a membership-based model and an emphasis on technology and primary care. Users can choose a first virtual visit and book an in-person appointment online for the same day. The service is a privilege for employees at more than 8,000 companies, and individuals can also purchase an annual subscription for $199.

One Medical also provides something that takes years to build: physical infrastructure. It has more than 180 medical offices in more than 15 metro areas. And last year it diversified with the acquisition of Iora Health, which focuses on providing care for the elderly.

Amazon can use many levers to make healthcare more efficient, cut out middlemen and integrate One Medical with its existing offerings, McSherry said.

Some critics say the deal is unlikely to change much in health care. But considering it’s Amazon, there’s certainly potential.

“I just don’t know if giving them a discount is a good idea,” said Christina Farr, a health technology investor at OMERS Ventures.

How does the acquisition fit into Amazon’s business model?

OMERS Ventures investor Christina Farr. (Photo by CNBC)

The acquisition reflects Amazon’s focus on consumers, Farr said. “You can buy almost anything you want on Amazon,” she said. “The only kind of missing part of it was health care.

Farr added: “It’s about this idea of ​​being a digital gateway to healthcare – the one-stop dream or one-door concept that we’ve been talking about for decades.”

Neil Lindsey, senior vice president of Amazon Health Services, hinted at that in a statement Thursday announcing the deal. “We think healthcare is high on the list of experiences that need reinvention,” he said, citing opportunities to improve appointment bookings, wait times, time spent traveling to the pharmacy and more.

“I think it’s a fantastic move for them,” McSherry noted.

How can Amazon combine its healthcare offerings?

Whether Amazon integrates One Medical into its online pharmacy and other health programs is an open question, Farr said. Amazon also recently developed a COVID-19 test kit, introduced a new Halo View fitness band, and has a secret research collaboration with the Fred Hutchinson Cancer Center.

McSherry said he could envision Amazon bundling a One Medical membership into a Prime subscription. Lindsey previously helped run Amazon’s Prime division.

Next steps may be to include generic drugs or lab results. McSherry said getting into the insurance business will be a long-term play.

“It’s easier for them to keep accumulating income until at some point they say, ‘Hey, you’re already paying me $1,000 a year.’ Why don’t you just pay me $5,000 a year and I’ll be your insurance company,’” McSherry said.

Can Amazon Make Healthcare More Efficient?

Health care is “fragmented” with middlemen, from pharmacy managers to insurance companies, McSherry said.

And Amazon is really good at cutting out the middleman, he said. “Look at Amazon’s 25-year arc. Now they’re flying their own planes and their own ships, they’re becoming more and more fully vertical.”

“I don’t know how long it will take for Amazon to meaningfully occupy some of these incumbents in healthcare.” But we all know the inefficiency. And Amazon has proven to be the most effective company over the last 25 years at eliminating market inefficiencies,” he said.

Will people trust the company with their health data?

A growing number of health care companies also have arms that sell insurance or drugs and may have an interest in broad access to patient data, Liao noted. “If you think about that dynamic, they all have concerns at some level, so it’s not unique to Amazon,” he said.

Health information is protected by federal law. But patients increasingly have access to their own data and the ability to share it if they want, McSherry said.

Could Amazon ask people to provide their health data to the broader company in exchange for discounts or other perks, say at Amazon-owned Whole Foods?

“Would I like Amazon to know that I have a cancer diagnosis? Probably not. Probably never,” McSherry said. “But would I want to share some information with them if I’m mildly obese and interested in eating healthier? Sure. If I get a consumer benefit from this knowledge sharing.”

“Amazon is one of the most trusted brands in America, and after a 25-year legacy of building that trust, I don’t think they’re going to waste it,” McSherry added. “They’re playing a long game here.”

What does Amazon’s entry into healthcare delivery mean for equity and access?

UW MD Joshua Liao. (UW Medicine Photo)

There is a lot of activity in the primary care sector. CVS Health, which bought insurer Aetna in 2018, offers care in more than 1,000 stores; Seattle-based Vera Whole Health offers “value-based” memberships through employers; and numerous companies offer virtual options.

“You just have everybody trying to get into primary care, which is a race to capture a broad segment of patients, control costs for them, and then steer them toward lower costs and better quality care.” , McSherry said.

For one thing, it could lead to expanded patient access, Farr said: “The industry is talking about the consumerization of health care, this idea that patients should be able to navigate to health care that may be most affordable to them.”

On the other hand, focusing on narrower segments of patients, such as employees of companies that offer such services, can also reduce patient access. Such concerns are not unique to One Medical, Liao said.

“How can we, within ethical safeguards and within the spirit of health care, make health care simpler, more affordable, more accessible and more convenient? I think they are very important,” Liao said. “As we do that, the counterbalance has to be that we’re careful about things like equity and access.”

“It’s something to watch, but it’s something to watch across the board as what we think as healthcare providers is changing more and more,” Liao added.

How will the acquisition of other healthcare companies be affected?

Companies that offer primary care options to employers, including newer companies like Accolade and 98point6, will increasingly compete with Amazon, McSherry said.

When employers consider their primary care offerings each year, “I can’t imagine not including Amazon/One Medical in that consideration,” McSherry said.

The growth of services like One Medical could also put pressure on traditional hospital systems by taking away ancillary revenue like blood draws, McSherry said. “A lot of hospital systems are increasingly becoming something of a safety net,” he said. “The US health care system is kind of fragile.”

Could Amazon ultimately change the healthcare system for the better?

“I think it’s hard to answer whether they’re providing the best care in all areas,” Liao said. He said there is still not enough information about patient outcomes and no single solution to providing the best healthcare.

“It’s going to take decades if this is going to make any sense to change the way health care is delivered,” McSherry said. Amazon, meanwhile, can package a range of health products into a subscription service and “provide a better benefit to consumers at a lower cost.”

Different communities and populations benefit from a variety of approaches to health care delivery, Liao said.

“Having another option in a marketplace where people can choose and say ‘hey, this is the collection of services that meet my needs’ can only be helpful,” he said.

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