Where is Amazon Heading After Amazon Care’s Failure?

The illustration in this photo shows the Amazon Basic Care logo on a smartphone with the Amazon logo in the background.

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Take another healthcare failure from one of the ultimate market disruptors, Amazon.

First, Haven’s much-touted healthcare reform effort with JP Morgan and Berkshire Hathaway ended its short life.

Now, Amazon Care, the company’s effort to address telemedicine and primary care for the employer market on a national scale, advertised itself as getting more and more clients. Closed.
Is that all you need to prove what many have been saying over the years? Is healthcare just harder to disrupt than most industries?

Maybe not, but this could indicate a change in approach to how Amazon is trying to gain more market share in the health industry. Amazon Care’s closure could return to the simple choices businesses, especially those with large amounts of cash, must make when entering a new market. It’s build or buy.

For some healthcare industry watchers, it’s no surprise that Amazon Care will disappear as a separate entity. Something was written on the wall when Amazon decided in July that he would acquire One Medical, the primary care company he hoped Amazon Care would eventually do nationwide. was And for cash-rich companies looking for opportunities to tap into the stock market, which has recently devalued public health companies – One Medical is trading as high as $58 in 2021 and Amazon is trading at $18 a share. announced plans to buy at – Amazon may have been more opportunistic than anything else in planning the next phase of the future of health.

Seeking more share and entering markets that require a physical presence is nothing new for Amazon, nor is it opportunistic about timing. As Amazon’s acquisition of Whole Foods hits its fifth anniversary, remember that Amazon’s stock price rose as much as the purchase price of then-troubled luxury grocers on the day it announced its acquisition of Whole Foods. Worth keeping.

“It’s no surprise they shut it down,” said Sari Kaganov, general manager of consulting at RockHealth. RockHealth invests in health startups as venture capital and has a health advisory and research arm. “Their vision has always been to have an integrated primary care solution, but now they will have a solution that is better than anything they can build.

It may have come as a bit of a surprise that Amazon announced its closure before the deal with One Medical was finalized, but One Medical has far more markets, more offices, and more than Amazon has ever had. I have a company that is a client (had to brag about the contract). Whole Foods, owned by the company, as an Amazon Care client). It might also surprise you that it didn’t wait to rebrand One Medical as part of Amazon Care. His PillPack, an acquisition in the pharmacy space, is still branded but is now folded within Amazon Pharmacy.

By Amazon’s own account, Amazon Care was a failure, at least on the terms conveyed in an internal memo provided to the press about the closure. No doubt they struggled with the problems of building face-to-face care components nationwide, staffing sectors with limited history, and getting corporate clients to sign on. Not a care solution. Amazon would have had to invest significantly more to build a truly national hybrid healthcare practice with facilities, doctors and clinics.

After all, let’s say Amazon Care was a test run for your business, and after you had a good idea of ​​what Amazon wanted in the long run, you bought a better company when its value was declining.

“One Medical is great, so I don’t think they’ve failed,” Kaganov said.

Amazon has learned a lesson in recent years that has affected the fate of many health busters. It’s hard to make an independent startup work in this space, even if it’s one of the richest companies in the world. Togo.

“Amazon Care was no different than any other standalone health startup in terms of integration needs,” Kaganoff said. “They messed around with it a little bit,” she added. It’s enough to know that their ambitions are still validated in the market, but that doesn’t mean they’re there.

“Over the past few years, one of the ways we have been working towards this vision has been with Amazon Care, our emergency and primary care services offering. However, despite these efforts, we have determined that Amazon Care is not an appropriate long-term solution for our enterprise customers,” an internal memo said.

While Amazon’s healthcare efforts in recent years have been associated with direct battles to shun the latest health wrecks (such as Amazon Care vs. Teladoc), Wall Street analysts believe the market is set to continue as Amazon takes a series of steps. said it should be more concerned about making acquisitions of broader purpose.

It seems to be happening.

Amazon is still wielding cash to increase purchases in healthcare, a more central marketplace than standard national care practices.

Amazon clearly plans to become a formidable player in healthcare. That ability could be leveraged to personalize products, connect pharmacies, and ultimately threaten many other big retailers looking to upend healthcare. Acquired his MeMD, a telemedicine company in 2021. CVS, which already offers telemedicine through a deal with American Well, is another rumored bidder for Signify. Walgreens has his VillageMD with hundreds of offices in markets across the country.

This retail disruption is only growing, for the final reason. From consumers to employers, the healthcare market accounts for the majority of spending when looking at share of wallets. Amazon is already in almost every part of my wallet, except maybe banking (although I do have credit cards).

What’s the biggest part of the market they don’t participate in?

“It’s healthcare and they already have a lot of health-conscious things for consumers, so it makes sense to go big in healthcare,” Kaganoff said.

When the disbanded Haven made its big debut three years later, people said that the combined efforts of Berkshire Hathaway, JP Morgan, and Amazon could dramatically reduce the cost of the entire healthcare system, which Warren Buffett called a tapeworm. I was thinking national economy.

And it’s still part of the story. Everything Amazon does is partly to reduce costs and increase efficiencies. “Better care at lower costs,” Cano Health CEO Marlow Hernandez told CNBC last week, is a paradigm shift for all players in the space.

Amazon’s consumer internet business may be the ultimate transaction disruptor, but healthcare’s transaction system is under threat and people want to treat it like just a form of retail. plug. “Patients have been asking for an integrated platform that builds relationships and is no longer a number,” said Hernandez.

This is what we call value-based care, and “value” for patients is a novel idea, and may show just how messed up the US healthcare system is. Hernandez predicts that the primary care market will grow from $1.8 trillion to $3.7 trillion by 2030.

This speaks to the underlying purpose of big companies like Amazon and its rivals.

“I think it’s just market share,” Kaganov said.

The end of Amazon Care seemed abrupt. But as Amazon moves from primary care to more complex and potentially chronic care, combining pharmacies and over-the-counter medicines with all of its offerings, it’s moving from private health startups to Teladoc, retail competitors and retailers. Everyone is covered, right down to healthcare. Incumbents should continue to worry. Amazon Care’s failure has come at a price, and while it may have come as a surprise to even some within Amazon, what the company ultimately buys and builds remains a powerful disruptor. could be.

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