Back in 2018, I offered a speculation about what Amazon might do in healthcare as part of its now defunct joint venture with JPMorgan and Berkshire Hathaway. The focus was on doing what Amazon is remarkably good at: creating simple, consumer-friendly, transparent and highly liquid markets. Here was my suggested Step 1:
“[T]here are several classes of healthcare that many patients are ready to shop for (and payers have been trying to get them to shop for): minor acute care (sniffles and coughs to simple fractures), basic diagnostic services (labs and imaging) and some preventative care (e.g. flu vaccines).
Amazon could start there: Focus on some specific metro regions (ones where Amazon, BH and JPM have employees), target PPO (which allow for more self-direction vs. HMO) and ASO (to avoid state regulatory frictions) and require plan administrators to create interfaces to pump network and benefit information to an Amazon Health website; cut deals with telehealth, retail and urgent care clinics, primary care and free-standing imaging centers; require them to build interfaces with their scheduling systems. And finally, employees save their benefit information into this “Orbitz” for healthcare.
“Alexa, I have a sore throat…” Options inside the Venn diagram of benefit design, network and convenient availability populate: one clinic is nearby, affiliated with the member’s primary care but no slots until tomorrow; one urgent care center is on the way to work and has immediate availability but Tier 2 so a higher co-pay. TDOC has Dr. Jones ready for a call in fifteen minutes. There’s also the ED downtown with Harvard trained doctors but that’s a $200 co-pay and current wait time is 4 hours. Once a choice is made, patient intake forms pre-populate and co-pays are collected in advance.”
Last week, Amazon announced Amazon Clinic, a service that will connect prospective patients looking for care for ~20 common conditions to “affordable, virtual care options.” The options will be alternative competing, third party providers (HealthTap and SteadyMD seem to be the primary ones at this time) for each condition, with readily comparable availability and pricing.
How does this new initiative match up vs. my original speculation? Here’s what similar:
- Amazon is an intermediary, not a supplier
- The available care starts with a limited set of discretely defined, readily understandable “commodity” services
- Alternative suppliers are racked and stacked to make comparisons on price, convenience and experience easy
- The market is bolted into the Amazon shopping website with the same look and feel as an easy on-ramp
What is different from my speculation is (as of right now):
- There is no insurance coverage for the care being offered (though Amazon pointedly adds “yet” qualifier to this)
- The providers are purely virtual with no local in person alternatives.
But these things can change as volume scales. The important thing is that – four years, a lot of capex and consultant costs later – Amazon has figured out that it can’t and doesn’t need to reengineer healthcare delivery from the inside (as it implicitly was trying to do with Haven and, partially, with Amazon Care, both now defunct). Instead, it should focus on structuring a more liquid, effectively functioning market and let incumbents or start-ups figure out how to reengineer themselves to win. That’s how innovation can be encouraged. Start with the medical equivalent of books and move on from there.
This move also doesn’t need to be synergistic or coordinated with the One Medical acquisition. As I noted here, One Medical has more in parallel with Prime and Whole Foods aspects of Amazon’s business than the website shopping side. Overlaps can be explored over time: One Medical could, for example, an become a care supplier like any other on the Amazon Clinic website or, in some geographies, a real world logistical extension.
Four years haven’t been lost. The pandemic has given everyone comfort with virtual which makes it easier to find a starter set of care suppliers. Maturing regulation-driven price transparency could create some interesting market making options like Amazon. And the current exhaustion of traditional healthcare delivery is going to push consumers to look for options.
Now things can get interesting.