Amazon is a powerhouse of innovation and efficiency, with a proven track record in virtually every sector of the economy. In recent years, however, the company has begun to turn its attention to healthcare. But Amazon's healthcare pursuits have had a shaky start, leading to polarization across the healthcare industry regarding whether or not Amazon can deliver on lofty expectations.
In the CareTalk episode, "What is Amazon Doing in Healthcare?", hosts John Driscoll and David Williams dissect Amazon's healthcare strategy: What worked? What didn’t? And what’s next?
How big is Amazon’s opportunity in healthcare?
"Amazon is like the beast that ate retail, right? I mean, they're everywhere, they've revolutionized home delivery. They're chipping away at grocery, some of the biggest categories of America, but it's a monster-growth engine that needs monsters to grow. And healthcare at 20% of GDP is clearly a big target.
The other thing that's amazing about Amazon is anytime they go into a market, everybody's stock kind of flops. They're sort of the heavyweight wrestler in retail. They've won, in terms of cloud-based web services. But to be fair, they have yet to succeed pretty much anywhere in healthcare.
They purchased PillPack back in 2018, that's one of the times when all the stocks of the Pharmacy Benefit Managers fell because they thought there was going to be something; that hasn't been much. They clearly have the business of selling supplies to doctors' offices. They had Amazon Care, which is providing telehealth and primary care but that is going to be shut down. And then there's been Haven, who they did with JP Morgan and with Berkshire Hathaway." - John (CareTalk)
Is Amazon’s acquisition of One Medical a big deal?
"Amazon made a $4 billion purchase of One Medical; a membership-based, technology integrated, consumer-focused primary care platform. One Medical has almost a million members to start with and 8,000 companies. With this acquisition they will be shutting down Amazon Cares because it's mostly redundant and it's too narrow. It doesn't mean it was a failure it means they've learned, and they iterated, they moved ahead. The acquisition of One Medical shows that they've learned that they are going to have to buy something and run that, as opposed to just starting it up. The bottom line is they've really had a hard time breaking into healthcare, but what is fascinating is they're relentless.
PillPack has taken years to really integrate into, they've got hundreds of engineers working on it, to integrate it into the base site. They've quietly become a real force in retail distribution to doctors' offices. And sort of transportable mail, things you can mail, in terms of durable medical equipment. I think they are, you know, where they've had a lot of success,
Amazon web services, the dominant cloud software platform in the world is where they build, where they grow into healthcare from where they've already got an edge, whether it's their 1,800 distribution facilities. The fact that nearly everybody who's a relative middle-to-high income purchaser is in Amazon Prime, where they, distribution of stuff to doctors' offices and peoples' homes. I think where they've got a strong base they grow well.
I think the message from what we've seen thus far, no Haven, Amazon Cares, a whole series of starts and stops is that (A) they're relentless, and (B) they're less successful where they don't start with a very strong base. That may have as much to do with the culture of a large company as it has to do with the actual strategy. I think it's worth thinking about what that track record shows, both about corporate personality, they're not going away, and their willingness to take risks, which they seem to be willing to do. But where their edge is not surprisingly where they're already strong." -John (CareTalk)
What can the healthcare industry learn from Amazon?
If you look at healthcare as a retail product, what retail product waits for you to try to connect with the product and service? Then you make them wait, you bury them with paperwork, and you make it hard to navigate. The money in healthcare is around folks who are older, or who have chronic conditions. And healthcare is the only retail-like service in America where the more you need, the harder it is to get what you need.
I think that's where Amazon really has an edge, in terms of just its approach to surprising and delighting the patient, or the customer and their family. But there's a but; I do think that they do not have an infinite, up and to the right, growth opportunity here. But there is a lot that conventional healthcare could learn from Amazon, just in terms of thinking about the patient as the primary customer, as opposed to what typically happens in healthcare." - John (CareTalk)
CareTalk is the only healthcare podcast that tells it like it is. Join hosts John Driscoll (President U.S. Healthcare and EVP, Walgreens Boots Alliance) and David Williams (President, Health Business Group) as they provide an incisive, no B.S. view of the US healthcare industry.