Last week, Forrester’s healthcare team published a blog on what Amazon’s plan to acquire One Medical means for the healthcare industry, but we didn’t predict we would be back in just a few days to cover Amazon’s next healthcare move. Sure enough, when headlines of Amazon’s plans to shut down Amazon Care plastered front-page news, controversy amongst experts ensued. To novice eyes, news of Amazon shuttering its virtual care service, Amazon Care, reads as a failure. But if we take a closer look at what Amazon is acquiring and building, we see a new dawn of healthcare disruption on the horizon.
The Shutdown Of Amazon Care Is A Strategic Move, Not A Failure
Some healthcare experts conclude that Amazon Care’s shutdown represents a failure of the company to understand the complexity of healthcare. As a former Amazon Care executive said, Amazon tried “to do what they do in every other line of business: They’re going to try to make it better than everyone else, make it less expensive, and get crazy adoption because of convenience. But healthcare is different. It’s hard.” Forrester healthcare analysts draw a different conclusion. We believe the closure of Amazon Care comes at an opportune time alongside Amazon’s planned acquisition of One Medical and entry into the bidding war for Signify Health. This is unequivocally not the end of the retail titan’s healthcare ventures. Instead, the shutdown of Amazon Care is a strategic plan to move the focus of its healthcare offerings from the employee to the consumer. Amazon’s decision to eighty-six Amazon Care reinforces its appetite to recreate the patient experience by:
- Shifting focus from employees to customers. Amazon is moving away from employee healthcare (with Amazon Care) and setting its sights on direct-to-consumer (DTC) opportunities. DTC primary care offers patients convenient care that is timely, personalized, and more affordable. This model can empower consumers with more easily accessible health services and patient education resources that will enable them to take a more proactive role in their healthcare. It also provides care at a potentially lower cost. For example, since online DTC players entered the hair loss space, the price of Finasteride for consumers dropped from $70 per month to $30 per month, likely driven by cost transparency. An effective DTC healthcare strategy will help populations, like the chronically ill and Medicare/Medicaid recipients, remove barriers to healthcare access and ultimately bring the healthcare industry closer to achieving the quintuple aim.
- Moving the needle on value-based care. The typical patient journey is onerous. All too often, it transpires like this: The patient books an appointment, waits months to be seen, drives to the appointment, finds a place to park, waits for the appointment, spends a short time with a clinician, pays a copay, receives a bill, and waits on the phone to address billing and insurance concerns. Amazon’s customer-centric model has the potential to reinvent the patient experience by putting the patient at the center of the journey to drive value-based and quality care at every touchpoint, resulting in more proactive versus reactive care. How will Amazon do this? Data interoperability and health information exchange is key. Amazon is already embedded in its consumers’ daily purchasing and lifestyle habits. By leveraging consumer profiles and accessing patient data from an interoperable electronic health record, Amazon can build an understanding of the patient’s journey and deliver the right information to its patients in their moment of need, at a time and place they prefer. Proactive care, instead of reactive care, is the key to reducing potentially avoidable hospital visits and driving down healthcare’s $4.1 trillion annual healthcare spend.
- Targeting the entire care continuum. Amazon Care was focused on virtual visits and home-based care. In 2020, everyone turned to telehealth because it was a population health and business imperative. Now, we are seeing telehealth companies like Teledoc struggling and fragmented care from various providers causing poor patient experiences and outcomes. On average, American patients see 18.7 different doctors during their lives (28.4 for patients 65 and older), leading to fragmented care and disparate electronic health records. Closing the doors on Amazon Care and homing in on One Medical is a clear signal that Amazon wants to differentiate its healthcare business by penetrating the entire care continuum. A planned acquisition of One Medical and bid for Signify Health are calculated maneuvers to acquire the expertise and resources to bring these goals to fruition. By targeting the full care continuum, Amazon can be a patient’s one-stop shop for all health products and primary care services, health food, and prescriptions.
While the headlines continue to ebb and flow, our position remains the same: We are not yet convinced that the strategies and tactics of the retail titans, like Amazon, will substantially improve the quality of patient care and achieve the quintuple aim. But one thing is definite, Amazon’s healthcare plays demonstrate that it’s serious about the healthcare business and transforming the patient experience. Nevertheless, the race to win in healthcare is an ultra-marathon and does not come without its hurdles. Healthcare is one of the most complex and highly regulated industries. Furthermore, the prevalence of the chronically ill, the population of the elderly, and the annual healthcare spend continue on a high trajectory of growth. Improving healthcare outcomes hinges on the success of innovative disruption. Revolutionizing price transparency, trust, and the patient experience is paramount. The victor will be the company who can master this trifecta to transform healthcare.
At Forrester, we expect the volume of noise in the field of retail health disruption to continue to blare over the next few weeks and months. We will be listening closely and responding swiftly. If you are looking to learn more about what retail health disruption means for payers and providers, schedule a call with us. We would love to speak with you!
Analyst Kyle Rybarczyk contributed to this blog.