Amazon Acquires One Medical for $3.9B

If you looked at any sort of healthcare news last week it was pretty hard to miss what might end up being the biggest digital health story of the year: Amazon agreed to acquire primary care provider One Medical for $3.9B.

Should the acquisition close, it will be Amazon’s third largest of all time behind Whole Foods ($13.7B) and MGM Studios ($8.5B), and the first since the company appointed Andy Jassy as its chief executive.

One Medical is a membership-based primary care provider that offers virtual care as well as in-person visits. It operates 188 US locations across a dozen markets, boasts over 750k members, and works with more than 8k employers to offer its services as a benefit.

  • The company ended Q1 2022 with a net revenue of $254.1M and a hefty loss of $90.9M due in part to its significant customer acquisition costs. Hypothetically, these expenses could be cut down by steering Amazon’s ~160M US Prime subscribers towards One Medical’s services.
  • The acquisition also helps alleviate the scaling challenges of building a brick-and-mortar presence and staffing clinics in a tight labor market, while giving Amazon access to One Medical’s existing payor and health system relationships.

Amazon’s quickly growing list of healthcare moves ranges from launching Amazon Pharmacy on the back of its 2018 acquisition of PillPack to the nationwide rollout of its Amazon Care employer telehealth program earlier this year.

  • Some of Amazon’s initiatives have seen more success than others, and its ill-fated Haven partnership with JPMorgan and Berkshire Hathway came to a sooner-than-hoped-for ending last February.
  • That said, Amazon has never had significant in-person resources to bolster its care delivery, and its One Medical acquisition is a strong acknowledgement that Amazon views the future of healthcare as hybrid.

Industry Impact 

Although we’ll have to wait and see where Amazon’s healthcare ambitions go from here, owning the primary care “front door” to the healthcare system gives Amazon a way to disrupt the industry using the same customer-first playbook that made it an e-commerce giant in the first place.

As for what comes next, analysts were quick to speculate on everything from Amazon health plans to specialty care, but the acquisition itself might also prompt other retailers like CVS and Walgreens to ramp up their own primary care services. Amazon’s laser-focus on the customer experience reshaped how long millions of consumers were willing to wait for packages and caused its competition to either catch up or get left behind, and picking up a primary care provider seems to suggest that healthcare might be in for a similar shakeup.

Teladoc and Amazon Partner on Echo Voice Visits

Yesterday’s competitors are today’s collaborators, with Teladoc and Amazon inking a new partnership to bring voice-activated virtual visits to Alexa-equipped Echo devices.

  • “Alexa, I want to talk to a doctor” will now connect Echo users to a Teladoc call center to verify a patient’s medical history and health plan information ($0 if covered, or $75 direct-to-consumer). Within roughly 15 minutes, the patient will then get a call back from a Teladoc physician to treat mild needs such as colds, flus, or allergies.
  • The new service will initially be available in an audio-only format for supported devices such as the Echo Dot and Echo Show, but will add video functionality “soon” to make it easier to diagnose certain conditions.
  • The partnership greatly expands Teladoc’s consumer reach as part of its ongoing strategy to meet patients where they are. Amazon reports over 40M Alexa users in the US alone, and has delivered more than 200M Alexa-equipped devices globally.
  • This is the latest in a string of health-focused improvements to Amazon’s Alexa ecosystem, which have included capabilities for elder care coordination through Alexa Together, as well as medication management through the Care Hub… and those are happening outside of even bigger moves with Amazon Care.

Industry Impact

Despite the recent launch of Amazon’s own Amazon Care telehealth service, Teladoc’s virtual physician network is significantly larger, and this scale will be absolutely essential to keep up with what could be an insanely high call volume for the new service.

The Teladoc partnership marks Amazon’s first attempt at providing truly on-demand healthcare with Alexa devices, and if well executed, could go a long way towards breaking down barriers to care for many patients. Even though Amazon and Teladoc are now competing in the same arena, the collaboration shows that coordinated efforts are still on the table when there’s a clear benefit for both patients and the companies.

Amazon Expands Telehealth Services Nationwide

It’s never great to hear that a competitor with deep pockets and an army of engineers is pushing into your market, and this week Amazon gave companies in the employer telehealth space a lot to be nervous about.

After launching as an internal service in 2019, Amazon is now expanding its Amazon Care health offering to employers across the US amid “growing demand” for hybrid care.

Amazon Care’s hybrid model consists of two main elements:

  • Telehealth-based primary care delivered by a dedicated Care Medical doctor
  • Nurse practitioners dispatched to patient homes when medical needs can’t be resolved over video

Virtual services are now available nationwide to meet the needs of Amazon Care’s growing roster of employer clients, which now includes TrueBlue and Whole Foods Market (a fairly self-congratulatory announcement considering Amazon acquired the grocer in 2017).

In-person services are also expanding beyond the 8 existing locations (Seattle, Baltimore, Boston, Dallas, Austin, Los Angeles, Washington, DC, and Arlington), with Amazon planning to bring its nurse practitioner network to 20 additional cities by the end of the year, including San Francisco, Miami, Chicago, and New York City.

Industry Impact

The telehealth landscape is crowded with companies promising to improve outcomes with video visits, but Amazon Care’s in-person component could prove to be its biggest differentiator.

The hybrid model allows Amazon to keep patients within its ecosystem when in-person care is needed, building off the logistical expertise of its retail business to coordinate at-home and virtual care. Amazon is aiming to make ordering healthcare as seamless as ordering any other product off of, a patient experience that the company could be uniquely positioned to pull off.

Amazon Care is Coming to a City Near You

Amazon is expanding its in-person medical care service to 20 cities by the end of next year, causing many digital primary care providers to begin wondering how much disruption is on the way.

  • What is Amazon Care? The service offers virtual primary care through an app, connecting users to physicians with messages and video in as little as 60 seconds. For in-person care, nurses are dispatched to patients’ homes for tests and treatment, as opposed to patients travelling to an office.

Amazon Care began as an employee-only health service for the company’s own workers, but recently opened up to other US-based employers.

In-person care was originally limited to Washington state, Washington DC, and Baltimore, but is now set to reach Philadelphia, Chicago, Dallas, and Boston in 2021 – at least according to “three people familiar with the plans” speaking to Business Insider.

  • Is Amazon Care coming to your city in 2022? Yes… as long as you live in Atlanta, Denver, Detroit, Houston, Indianapolis, Kansas City, Los Angeles, Miami, Minneapolis, Nashville, Tennessee, New York, Phoenix, Pittsburgh, San Francisco, San Jose, or St. Louis.

Although the expansion announcement might seem as innocuous as a young Jeffrey Bezos telling you he’s starting to sell books on the internet, Amazon’s success in industries ranging from e-commerce to cloud computing suggests that healthcare could be next.

The $3T US healthcare market is notoriously difficult to disrupt, and Amazon Care’s unique approach of sending clinicians to patient homes is an enormous logistical problem, but that might make the company behind 2-day free shipping the best one to solve it. 

Although Amazon’s recent healthcare ventures haven’t had an industry-altering impact, the company has a long history of experimenting, learning lessons from failures, and making a better product down the road. Amazon Care might be that product.

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-- The Digital Health Wire team