Healthcare is on the verge of being Amazon-ized. Earlier this month, the retail and cloud services giant disclosed plans to not only expand its pilot healthcare delivery program to all U.S.-based employees but to offer the program to employers as well.
Amazon Care, which launched in Washington state in 2019, provides virtual health services such as video, text and phone visits through the Amazon Care app, as well as in-person care for routine procedures such as blood draws or listening to a patient's lungs.
Now, the company plans to expand Amazon Care's telehealth services to its employees in all 50 states starting this summer, according to a press release; Amazon will also expand the program's in-person service to employees in Washington, D.C., Baltimore and other cities over the next several months.
But the company is also taking things a step further by expanding the healthcare program beyond its own walls to other employers. Amazon Care is now available for other employers in Washington state to use, pushing Amazon deeper into healthcare delivery.
The expansion of Amazon Care comes at an interesting time. The COVID-19 pandemic helped telehealth services grow in popularity and forced an often technology-averse industry to quickly build for and adopt a new form factor for healthcare delivery. Major telehealth players like Teladoc and Amwell saw use skyrocket last year -- Amwell reported a 4,000% surge in non-Amwell provider use from 2019 to 2020 -- and are capitalizing on the momentum to expand their platforms through partnerships and mergers.
But the expansion also comes at a time when companies like Amazon are facing increased regulatory scrutiny for their dominance in markets. Amazon was one of four tech companies named in a 2020 federal report on competition in the digital marketplace that essentially called for breaking up big tech companies like Amazon, Google, Apple and Facebook. Federal and state antitrust lawsuits have already been filed against Google and Facebook alleging anticompetitive behavior.
Plus, there are big changes happening inside the walls at Amazon. In its third financial quarter, which begins in July, Andy Jassy, the current CEO of AWS, will replace Jeff Bezos as Amazon CEO. Bezos will stay on as executive chairman.
Analysts like Paddy Padmanabhan, founder and CEO at health IT consulting firm Damo Consulting in Oak Brook, Ill., don't believe the change in leadership will change Amazon's healthcare strategy, but it could open a door for Amazon to make a concrete commitment in healthcare as a strategic investment.
Fits, starts and successes
The Amazon Care program follows a model Amazon has perfected -- using its employees and the company itself to pilot projects and scrutinize their possibility for success before rolling them out to consumers and other companies.
The expansion of Amazon Care comes on the heels of shuttering another healthcare experiment -- Haven, a partnership and joint venture between Amazon, JPMorgan Chase and Berkshire Hathaway that focused on how to lower the growing costs of healthcare for employers.
Haven faced challenges from the start with quick and significant turnover at the leadership level, including the loss of its chief operating officer in 2019 and CEO in 2020. The COVID-19 pandemic, which upended routine care and kept Haven employees at home, didn't help, according to CB Insights principal analyst Jeffrey Becker.
Plus, alongside its participation in Haven, Amazon started running competing healthcare pilots internally. In 2018, for example, Amazon acquired online pharmacy PillPack, which has since been rebranded as Amazon Pharmacy and is now part of Amazon Care.
Given COVID-19 and the growing interest in virtual care options, Amazon Care's expansion comes as no surprise, Becker said.
"Amazon Care is entering a crowded and well-funded market," Becker said. "The company will find itself competing with telehealth and patient engagement companies that have found an increasingly active market within the employer segment."
Haven, Amazon Pharmacy and Amazon Care focused on Amazon's own employees, but the company has signaled that it wasn't shy about expanding beyond that, Becker said.
Other parts of the Amazon healthcare strategy are also in play. In 2018, Amazon launched Comprehend Medical, a natural language processing service that uses machine learning to pull health data out of medical text; in 2019, it launched Amazon Transcribe Medical, a medical speech-to-text service. In 2020, the company released Halo, a health and wellness band that provides body composition information, voice analysis and sleep and activity tracking.
Just recently, Amazon started previewing HealthLake, which will allow healthcare providers and health insurance companies to store and analyze vast amounts of disparate healthcare data.
Jassy's healthcare opportunity
With its many healthcare projects underway, Amazon Care is an initiative Damo Consulting's Padmanabhan said pulls everything together, presenting a new opportunity for Amazon's incoming CEO.
Paddy PadmanabhanFounder and CEO, Damo Consulting
"Amazon Care carefully threads together a number of disparate healthcare initiatives into a seamless offering," he said. "The whole may turn out to be bigger than the sum of the parts."
As Jassy takes the helm, he is expected to continue Amazon's current approach to healthcare -- multiple pilot projects run in tandem, murky as to the exact direction it wants to go but no "big rocking of the boat" compared to Bezos, according to Padmanabhan.
Still, Amazon's strategy differs from companies like Microsoft or Google, which have aligned themselves as strategic partners to healthcare organizations. Amazon is providing similar cloud-based tools and services for healthcare organizations, but it's also going beyond those efforts.
Amazon's entry into the healthcare market with Amazon Care could push innovation and competition, which will result in lower healthcare costs and improved quality of care. Yet, as the company positions itself as a vehicle for healthcare delivery, competition could become a complexity that Jassy will have to navigate going forward.
"Sooner or later, they're going to come into conflict with their own customers," Padmanabhan said. "If you've got big health systems and enterprises hosting their data in your cloud and then you're out there in a business that could potentially leverage that data to improve their business, they could eventually compete with [their customers]. That might sound far-fetched today, but it's only a couple steps away."