Happy Tuesday, Hospitalogists. Change of plans today - After a long weekend and with Dallas in a state of emergency (and consequently being without power, childcare, and sanity), I'm re-surfacing a piece that has renewed relevance in light of recent reshuffling: Amazon's healthcare strategy. I've updated my piece from late 2023 to include some 2024 musings and happenings, but otherwise, I'll leave you with the following question: Given recent headwinds in retail health, will Amazon stay the course? What else is interesting about Amazon related to healthcare, gen AI, or health tech that I've missed? Finally, thanks so much to Navina and Verifiable for sponsoring today's send! They have some fascinating case studies to dive into below on the great work each firm is doing. |
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Amazon's Healthcare Strategy - Updates since 2024 |
Note: since this version was published, Amazon has made a number of moves: - In August 2023, One Medical CEO Amir Dan Rubin announced his plans to leave the company later in 2023. The role was passed to Trent Green, who was serving as One Medical's COO.
- On Nov. 8, 2023, Amazon launched One Medical for Prime, allowing Amazon Prime members to get healthcare for an extra $9 a month.
- In January, Amazon Pharmacy said it would integrate with One Medical in a pilot program to give patients and providers more access to medication consultations. One Medical providers can request drug consults from Amazon Pharmacy for high-risk, complex and senior patients.
- On Feb 6, Amazon confirmed plans to eliminate a few hundred roles at One Medical and in its online pharmacy unit Amazon Pharmacy.
- On Feb. 8, Amazon announced plans to close some corporate One Medical offices and move its chief financial officer, Bjorn Thaler, into a new role. Mr. Thaler will now serve in a strategic growth initiative role within Amazon Health Services.
- Omada Health announced a partnership with Amazon's Amazon Health Services division, which launched a new initiative called Health Condition Programs. Look for Amazon to make additional plays in the space - it's a new play into employee engagement as as Amazon tries to get its consumer base to change behavior and get on the Amazon site for provision of healthcare delivery. Meanwhile, I imagine Omada benefits from better brand visibility, more enrollment, and lower acquisition costs as Amazon identifies potential Omada candidates via purchasing behaviors. (Link)
Finally, retail health has hit a major backslide given recent news with Walgreens-VillageMD, Walmart Health, and CVS-Oak Street Health (though they're moreso MA/advanced primary care at this point). I'd guess Amazon is feeling the brunt of operating a primary care platform as well. But my longer term view is that Amazon is built a bit different given One Medical's broader consumer focus, easier downstream tie-in to online pharmacy & wellness services, and the ability as a platform to subsidize the healthcare play within a larger diversified Prime subscription model. The question burning a hole in my pocket (and probably Amazon's too) is…what the heck is the end game for Iora Health? |
Amazon's Healthcare Strategy is Taking Shape |
Amazon's activity and movement toward critical mass in healthcare is picking up steam. The retail ecommerce giant has made a number of plays across AWS and cloud, but also interestingly, in care delivery (both virtual and in-person) and pharmacy. If they're not already, Amazon is headed toward creating a consumer-focused healthcare platform, making long-term investments and product launches into the space (Clinic, PillPack → Pharmacy, One Medical). On the other side of the coin, AWS for Health, Amazon's enterprise cloud play, has been increasingly focused on providing the picks, shovels, and lego bricks for healthcare software developers to build new tools as of late which I wrote about (HealthScribe, HealthImaging) with the ultimate goal of creating a more compelling offering for its enterprise cloud healthcare customers. Take a look at Amazon's current healthcare footprint as of August 2023 (in 2024 go ahead and add in Amazon Health Services and Omada in that bottom section) and you can see the strategy slowly taking form: |
The healthcare strategy is taking shape in a number of interesting platform plays: Amazon Clinic: Amazon Clinic acts as a supply and demand platform for low-acuity virtual care and rather than directly providing care themselves, Clinic aggregates existing supply of virtual care providers (Wheel, SteadyMD, Curai, HelloAlpha) Pharmacy ↔ Care Delivery Flywheel: Similarly to CVS-Caremark-Aetna-Oak Street or Walgreens-pharmacy-co-located VillageMD, patients are more likely to fill their prescriptions on-site, or in this case, on-platform with Amazon. The effect is probably compounded online given that Amazon's RxPass is $5 and circumvents insurance (side by side with Clinic). Of course the largest outstanding question here is...is the Prime healthcare delivery / services add-on from One Medical or other offerings actually driving downstream sales and resulting in cheaper customer acquisition enterprise-wide? Can consumers think of Amazon as a healthcare company? It's a tough ask, in my mind. Amazon seems to know what it can competently stick its business into, and while One Medical was a bit of a stretch, they can make it work long-term given Amazon's steady platform approach to healthcare. More on that now. |
Amazon's Platform Advantage in Healthcare |
What affords Amazon the ability to create these platforms in healthcare over time? First of all, they're already giant, so stomaching losses on platform developing are a blip on the radar. Secondly, and more importantly, Amazon Prime is an incredibly sticky user base and allows Amazon to acquire customers for a long-term healthcare platform vision on the cheap. At the end of the day, it all boils down to CAC, and Prime is the CACiest of them all with 150 million active prime users in the US. |
Source: Healthcare Platform Blog - Amazon is Uniquely Positioned to Deploy Platform Envelopment Strategies in Healthcare: 7 Leverage Points (Part I) (Part 2) The Healthcare Platform Blog had a great 2-part series on Amazon where they outlined the following competitive advantages and Amazon's distinct ability to build platform businesses in healthcare: - A Huge User Base
- A Loyal User Base
- Provision of Hybrid Clinical Care
- Deep Pockets
- A National and International Footprint
- One-Stop-Shopping for Employers
- Digital Front Door for Healthcare
To this end, Amazon can offer consumer-centric healthcare services to Prime members at scale and continues to push the healthcare needle forward from a consumerism standpoint, offering, for instance, a 28% discount on yearly One Medical memberships $144 / year during Amazon Prime Day, wait times along with telehealth messaging services thru Clinic, and of course the aforementioned RxPass for $5 / month no matter how many eligible generics you need filled. My biggest question, and one that remains unanswered, is why Amazon bought One Medical - a brick and mortar player - at all when it can act as this great aggregator of virtual care delivery. I was skeptical of the acquisition (and purchase price) back in July 2022, and I'm still wondering what Amazon is planning to do with clinic expansion + Iora today. Is the pharmacy and Prime → One Medical flywheel enough? My working thesis is "not right now"…and that more is coming over the next several years. (2024 note: looks like more will indeed continue to come, given Amazon's announcement with Omada on benefits engagement) |
Amazon's Platform Advantage in Healthcare |
Amazon is building its version of consumer-centric healthcare. Will consumers continue to come? How will we look back upon the platforms and shovels being built today in 10 years? Things are picking up speed, and yet…healthcare is notoriously slow.
Platform thinking and ROI is long-term, and healthcare is default long-term. Eventually these platforms and flywheels will emerge. We have a long time to go. But if anyone can succeed as a non-traditional healthcare player, it's Amazon. |
Resources & Further Reading Material: |
- Amazon is Uniquely Positioned to Deploy Platform Envelopment Strategies in Healthcare: 7 Leverage Points (Part I) (Part 2)
- The New Rules of Healthcare Platforms (Link)
- Summit Health Advisor's State of Healthcare Platforms report (Link)
- Amazon and One Medical: Are we There, Yet? (Link)
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There I am sitting on the tarmac waiting to take off to go to New York for a healthcare conference when my wife texts me - "Uhh...have you taken off yet? I hear the tornado sirens going off." This was a problematic development given we live about 7 minutes north of Love Field airport in Dallas. So as expected, about 5 minutes later we get the dreaded announcement from the cockpit that we weren't going anywhere anytime soon. The problem with THAT, however, was we had to sit out the tornado warning - and 80+ mph winds - on the airplane with nowhere to go. Hey, at least I had the window seat so I could've at least seen the impending doom coming. Finally, you might have noticed my send times have been a bit sporadic lately, and that's because things have been crazy for me lately - both from a growth (good!) perspective but also a life standpoint with a bad-sleeping 8-month old. As always, I appreciate you guys' support and reading Hospitalogy. Thanks for bearing with me as I work toward resuming a more consistent cadence! |
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Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
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