Amazon-Healthcare-Destined-Disruption-Failure?

When Amazon announced its intention to shut down its existing healthcare arm – Amazon Care – many commenters hailed it as a sign that the ecommerce giant was abandoning its plans to disrupt the medical space and was returning to a focus on its core function in retail and entertainment.

"Amazon tried to do what they do in every other line of business,” said an Amazon Care representative speaking to the Washington Post. "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.”

However, nothing could be further than the truth. Amazon is far from done with the healthcare space and the news that Amazon Care is shutting down should not be considered as an admittance of defeat, but rather as a strategic move which will define the next steps of Jeff Bezos’ online behemoth into this industry.

A Change of Direction

A cursory look at the moves Amazon has been making recently will reveal a planned acquisition of membership-based primary healthcare clinic brand, One Medical and an interest in entering the currently raging bidding war for healthcare technology, analytics and networking platform, Signify Health.

Both of these moves give us a clue as to Amazon’s next moves in the world of healthcare – a shift away from employee healthcare and towards direct to customer opportunities.

"This is unequivocally not the end of the retail titan’s healthcare ventures,” writes Forrester. "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.”

With the twin prongs of One Medical and Signify Health available to it, Amazon can make it far easier for customers to access healthcare opportunities close to their homes and take a more proactive role in their own treatment – all for a lower cost than many other healthcare providers can compete with. Amazon will likely also use its significant digital expertise to streamline the patient journey into a customer-centric model which replicates the same extremely high level of convenience we see in its ecommerce operation.

"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,” continues Forrester. "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.”

Disruption?

While one of the world’s largest companies throwing its significant digital and logistical weight into the primary care market may give many brands in the medical and pharmaceutical spaces cause to break into a cold sweat, it’s important to consider what the ecommerce titan is talking about offering and what it isn’t.

While Amazon is spending a great deal of time talking about streamlining the patient journey and making primary healthcare more personal, accessible, and convenient, it is not, so far, discussing other factors which impact the industry. Hot button issues such as the cost of prescription drugs, high insurance co-pays, improvements to cancer care, or the quest for cures for some of the world’s biggest medical challenges, such as Alzheimer’s have not been mentioned which suggests Amazon is only really interested in healthcare at the clinical level.

However, this should not be taken to mean Amazon will not venture into these areas as time goes on. One thing history has made abundantly clear is that this brand has never been one to rest on its laurels and, once it has started down a path, it’s rare for it not to see how far it can travel along it. For now, the pharmaceutical and medical technology arms of the healthcare business may be safe from the encroachment of Amazon, but it would seem foolish to assume this will always be the case.

"Take a look at what Amazon’s announcement today says: "We think health care is high on the list of experiences that need reinvention,”” reports Bloomberg. "That sounds a lot like the bookstores, convenience stores and other retail industries where Amazon competes. Certainly, there’s an "it-could-be-better” consumer experience to basic doctor office visits that One Medical and other membership and clinic companies have been working to fix. Amazon brings a huge amount of financial muscle and customer know-how to that fight.”

Final Thoughts

Amazon’s abandonment of Amazon Care gave many in the space cause to hope the ecommerce juggernaut was done with its foray into the healthcare space but, as we’ve demonstrated, this is not even nearly the case. Brands in the medical technology space would do well to closely monitor the situation and try to stay ahead of Amazon’s next moves.

Amazon’s encroachment into healthcare is certain to be a hot topic at LogiMed 2023, being held in March at The Westin Rancho Mirage Golf Resort & Spa, Palm Springs, CA.

Download the agenda today for more information and insights.