The journey that started in 2018 when Amazon acquired PillPack, rebranded as Amazon Pharmacy, to package and deliver medicines has been full of twists and turns up till now
The golden era of tech in the primary healthcare sector is around the corner. After the Covid-19 pandemic, consumers are now seeking quicker and more convenient healthcare services, and tech firms like Amazon surely know how to leverage the situation.
Expanding, innovating, and diversifying is Amazon’s hallmark, and currently, the e-commerce giant is boldly marching into the healthcare sector.
The journey that started in 2018 when Amazon acquired PillPack, rebranded as Amazon Pharmacy, to package and deliver medicines has been full of twists and turns up till now. Later in the same year, it partnered with JP Morgan and Berkshire Hathaway to create Haven, a not-for-profit entity that worked towards improving the healthcare facilities of employees of these three organisations. It was aimed at making primary healthcare products and services more affordable and accessible. Unfortunately, it folded in 2021.
Again in 2019, they launched Amazon Care, a telehealth service, and expanded it in 2021 to nationwide employees. They also introduced Halo, a wearable healthcare device, in 2020, and in 2022 they partnered with Teladoc to create a voice-activated virtual care program. 2022 was an eventful year for Amazon in the healthcare market with acquisitions and shuttering of Amazon Care.
Amazon Care: A miserable failure or a strategic move?
Amazon Care was the cornerstone for the organisation’s venture into the primary healthcare sector. It started in September 2019 and could revolutionise the emerging telehealth domain. Patients were able to connect with physicians and experts 24/7, even on holidays, without dragging themselves out of the house.
However, it looks like the healthcare service was short-lived, as Amazon has decided to cease Amazon Care’s operations after December 31, 2022. According to Fierce Healthcare, senior VP of Amazon Health Services, Niel Lindsay, revealed that for two years, Amazon Care has undergone constant changes incorporating customer feedback to improve customer satisfaction. However, after careful consideration, the company believes it will not be a viable long-term model.
After the failure of Haven, some people believe this is Amazon’s second defeat in the healthcare sector, and maybe this industry is harder to disrupt than others. But is it really a defeat or an intelligent decision that will give Amazon a much-needed thrust? The real question is whether they should build or buy, and it looks like Amazon is on a buying spree.
However, it is not all that bad. The One Medical and Signify deal is proof that Amazon is not yet ready to retire from the industry. It is a clear indication that the company is exploring ways to seal its place in the 4 trillion USD healthcare industry in the long run.
Amazon’s new acquisition- One Medical
Amazon was quick to understand that it is wiser to acquire an existing business than build an entity from scratch, and that is exactly what they are doing. Even before they pulled the plug on Amazon Care, the company was in talks with On Medical, a company that does exactly what Amazon Care used to do. There are rumours that this deal had something to do with Amazon Care ceasing its operations.
One Medical has a more mature model and caters to a wider demography with 8000 employees, 188 clinics in 29 markets, and about 767,000 members. Additionally, Amazon can also tap into the 65 and above age category with Iora Health Line of Business, a subsidiary of One Medical. The deal was closed at 3.9 billion USD.
Amazon was also eyeing Signify Health and has joined the bidding race. Signify Health provides in-home evaluation and uses big data and analytics. If reports from Fierce Health are to be believed, then the company’s shares rose by 40% in August 2022 after United Health and Amazon both were heard bidding. It is also said that United Health and Amazon are close contenders in the bid. However, Signify Health closed the deal with CVS, one of Amazon’s primary competitors.
Is it a smooth road for Amazon in the healthcare sector?
Despite its bold and clever strategies, Amazon has to overcome concerns about data privacy and tackle the crumbling American healthcare industry. With the acquisition of platforms like One Medical, the tech giant will now have unhindered access to the most sensitive data of hundreds of people, and many experts worry about data privacy.
Privacy advocates also suspect that Amazon may be collecting user data without their consent and will use it to make false purchase predictions. Trust is an important element in the healthcare sector, and the Seattle-based giant has a long way to go before cementing its equations with concerned users and sceptic healthcare workers.
Amazon’s plight does not end here. The 3.9 billion USD acquisition may be an indication that the organisation aims to change the USA’s primary healthcare system. However, Harvard Business Review has expressed its concerns as sustaining in the primary healthcare game is not a cakewalk. Additionally, One Medical was suffering losses and Amazon had to change its model in order to survive. One Medical’s major demography consisted of young individuals spending $200 annual membership fee. The model limited accessibility to the insured and the more complex section of the market. The e-commerce company has to meander its way through these challenges.
In the end
According to BBC, in November 2020, when Amazon Pharmacy was launched in the US, investors noticed a dip in share prices of pharmacy chains like Walgreens and CVS. The service enabled the customers to get free, two-day deliveries at any time. Amazon has come a long way from selling books to disrupting the retail industry with new technology. It is only a matter of time before the company’s foray into the healthcare sector will bring huge possibilities with it. There is no reason to doubt the Amazon charm. However, it would be interesting to see how they tackle skeptical users and tough competitors like CVS and Walgreens, to reach out to the masses.