The Health System Will Not Be Transformed by Amazon – But It Will Improve

Just days ago, Amazon announced it would purchase One Medical in an all-cash $3.9 billion deal.

[This article appeared originally in Health Tech World and is reprinted with permission.]

People pay attention when Amazon – a power brand – makes a move, and since the release crossed the wires, business journalists and analysts have been reporting and posting on their social platforms that this acquisition will transform the US healthcare scene and disrupt the status quo.

Everyone seems to be making money in the health sector, why not Amazon?

The purchase certainly enables Amazon to leverage its logistics expertise and cloud-based information-storage savvy to reduce friction points in accessing care and, simultaneously, add to its burgeoning health-revenue-based business.

But will the purchase of One Medical transform the vast and fragmented US health system? Let’s not jump to that conclusion just yet.

The US Health System Swamp

This is not Amazon’s first time dipping its big toe into the murky waters of the US health system, yet many observers rate this move as more significant than the company’s previous ventures.

Considering Amazon’s past track record in working to transform healthcare, it’s best to view the company’s aspirations to improve the care experience with a healthy dose of skepticism.

This is because the US health system is too big and pasted together for any single effort to have an effect.

Created slapdash in the decades since World War II, today, the US system is so fragmented that business leaders outside health care cannot fathom how companies in the health ecosystem operate or make money.

It’s hard for them to imagine how pharmacy benefit management companies make money, or how payers both encourage preventive care and, at the same time, reject physician requests for diagnostic procedures.

Amazon knows there is plenty of money to go around, and they want in, but it’s not easy to figure out how.

But, Amazon understands consumer experience better than any other company, and this time they are sticking to their knitting by tracking the access to care supply chain.

Stumbles Are a Learning Opportunity

It’s a wise move considering past efforts. Remember the Amazon partnership with JP Morgan and Berkshire Hathaway?

These three amigos were bullish on how their economic power and influence would transform healthcare, but in the end, their joint project Haven faced more significant problems than money, data or supply chain expertise could solve.

Haven’s death underlined just how increasingly fragmented the US health system is. Perhaps the three leaders at the top could never completely define the challenge Haven was created to address?

Ultimately, their desire to reduce healthcare costs and improve the consumer experience – which were goals Haven had in common with Amazon’s aspirations for One Medical – was emblematic of focusing on symptoms, not the underlying disease.

And while the Haven shutdown may have been accelerated by a lack of collaborative mindset, unwieldy structure or even a lack of unifying strategic priorities, it’s likely that the stake in the heart for Haven was the same specter confronting the authors of Medicare in 1964: fear of change and protectionism.

It is almost certain that Amazon will accelerate One Medical’s pursuit of profitability and debt reduction, but HIPAA requirements will block Amazon from accessing One Medical patient data.

So, rather than being a transformative moment, this may well be a $4 billion investment for Amazon’s leaders to learn more about just how the US healthcare system is broken.

It also hopefully will allow Amazon to apply these lessons and use its expertise to make a little piece of the puzzle operate better.

Where Amazon Has an Edge

There are four decision-making health sectors: payers, policymakers, product innovators, and providers.

But the fifth sector, made up of patients – which everyone is putatively focused on helping, does not even have a seat at the decision-making table.

Amazon has an edge in that they understand the customer experience better than any other player – and they know how to establish and keep consumers’ trust.

While patients undoubtedly have the most skin in the access-to-care game, their interests and voice often go unheard outside corporate conference rooms.

But Amazon has consistently fostered consumer confidence by reducing friction points, a patient-centric service orientation very much missing from the health system.

Building on the notion that consumer experience must be prioritised is a great differentiator, but it will not help when cutting deals with payers or providers.

Amazon is now pitted against mega-players such as UnitedHealth Group’s Optum, CVS Health’s Aetna and hospital systems that are transforming into massive physician networks.

Amazon’s acquisition now invites other players to snatch-up companies like One Medical striving to turn a profit.

Amazon’s next steps are what observers should be watching closely.

How does this acquisition connect to its other purchases and partnerships, such as Amazon Care, the employee-specific telemedicine and in-person primary care service company launched three years ago?

Amazon Care operates at locations in Seattle, Baltimore, Boston, Dallas, Los Angeles, Washington, D.C, Austin, Texas, and Arlington, Virginia. Will Amazon Care and One Medical merge?

Will it impact their online pharmacy business? Amazon bought PillPack two years ago for $1 billion, yet despite its unparalleled delivery expertise, the company has still to gain traction in the pharmacy sector.

Plus, remember the smart collaboration that Amazon struck with telehealth giant Teladoc giving the latter broader consumer access to “I want a doctor” using Alexa as a virtual-care tech platform.

Leading economist and authority on integrated delivery systems, Dr. Alain C. Enthoven, wrote more than a decade ago that the “healthcare system is fragmented, with a misalignment of incentives, or lack of coordination, that spawns inefficient allocation of resources. Fragmentation adversely impacts quality, cost, and outcomes.”

Not much has changed since Dr. Enthoven penned those words; fragmentation complicates every aspect of care.

Amazon may be a supply-chain management behemoth, but can they transform or disrupt the system so that care becomes less expensive? Will people with pressing health concerns have greater access to care? Maybe.

Amazon has joined the club of mega players committed to making waves within the health ecosystem – Apple, Google, Microsoft, Oracle, Teladoc and others.

Combined, these players add more complexity to a non-integrated system that generates more and more layers – each with its own economic model and an invoice to be paid by some part of the ailing health system.

At the bottom of this system, supporting it, hopefully benefitting from it but just as often held captive by it, is the patient-consumer. This is where Amazon is likely to focus, but will that focus result in transformation?

Reflecting on the Amazon acquisition, innovation theorist John Nosta wrote that an “essential component to this discussion is time. The imposition of social imperatives like equity in the context of the early stages of technological development crush innovation at its very core.”

The United States health ecosystem is a modern-day version of the mythological Labyrinth.

Like the Cretan maze, it is almost impossible to navigate, but Amazon certainly has the resources, patience and self-interest to explore and try to solve the puzzle.

While success will not come easily or quickly, expect this e-commerce giant to continue to press forward with its headline-grabbing investments, learning until it gets it right. Improving our lot is not Amazon’s business objective, but we may benefit as an outcome.


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Gil Bashe, Medika Life Editor
Gil Bashe, Medika Life Editor
Health advocate connecting the dots to transform biopharma, digital health and healthcare innovation | Managing Partner, Chair Global Health FINN Partners | MM&M Top 50 Health Influencer | Top 10 Innovation Catalyst. Gil is Medika Life editor-in-chief and an author for the platform’s EcoHealth and Health Opinion and Policy sections. Gil also hosts the HealthcareNOW Radio show Healthunabashed, writes for Health Tech World, and is a member of the BeingWell team on Medium.


Editor in Chief, Medika Life

Meet the Medika Life editor-in-chief, working closely with founding editors Robert Turner and Jeff Livingston, MD.

Not your usual health-industry executive, Gil Bashe has had a unique career shaped by more than three decades in health policy, pharma, life science, digital health, eco-health, environmental innovation and venture capital and informed his determination to ‘give back.’

A champion for health innovation that sustains people’s lives and improves their care, Gil honed his perspectives on both battlefield and boardroom. He started in health as a combat medic in an elite military unit. He went on to serve as a clergyman tending to the ill; as a health products industry lobbyist in environmental affairs; as CEO of one of the world’s largest integrated health marketing companies; as a principal in a private equity-backed venture; as a Medika Life author and Health Tech World correspondent; and as Chair Global Health and Purpose at FINN Partners, a community of purpose dedicated to making a difference.

In the forefront of change, Gil is ranked as a Top 10 Digital Health Influencer; Medical Marketing & Media Top 10 Innovation Catalyst; Medika Life named him a “Top 50 Global Healthcare Influencer,” and PM360 presented him with its “Trailblazer Lifetime Achievement Award.” He is a board member for digital health companies and is an advisor to the CNS Summit, Galien Foundation, Let’s Win for Pancreatic Cancer, Marfan Foundation and other health-centered organizations.





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