By Yulan Egan, John League, and Sarah Hostetter
Amazon is doubling down in the health care space. This time, it's their strengthened push to expand Amazon Care benefits, both virtual and in-person, to 20 cities nationwide before the end of 2022.
Back in March, we wrote about what Amazon needed to do to reach their full potential in health care. And while their success is more promising with this expansion, we still believe there are 3 factors to closely watch in determining the size of its impact.
Our updated take
We believe that Amazon has the potential to disintermediate existing patient-provider relationships. We have continued to watch Amazon's play in the virtual care space very closely, especially now as the telehealth landscape as a whole continues to evolve. We anticipate large challenges for traditional provider groups, health plans, and telehealth platforms dealing with regulatory rollbacks on pandemic flexibilities for care delivery. Amazon's brand and existing consumer relationships could prove to be advantageous over the traditional models of care. The existing platform is employer-focused, but if a direct-to-consumer virtual care platform is released it's not hard to envision how rapid it will accelerate the commoditization of virtual visits. And here's the thing—the demand is high. The pandemic-era demand for telehealth is likely here to stay, and organizations who have a deep foothold in this space have a strong chance of success.
At the same time, this recent news centers around an expanded in-person care footprint. Amazon is doubling down their bets on home-based care with the pending launch of its app in another 20 major U.S. cities, through which patients can request in-person care. By combining both virtual and in-person services, Amazon should create a more seamless, all-inclusive experience for consumers and reduce potential leakage to other providers when telehealth alone isn’t sufficient. To date, this hybrid model has only been available in Washington state, D.C., and Baltimore, so we are curious to see how it performs in other regions with the expansion. We think it is notable that Amazon is making large bets on in-person care despite all the enthusiasm in the virtual care space, signaling a further move toward end-to-end consumer experience.
What else will Amazon need to do to harness success? Many of the factors have not changed, but there are some important updates to keep in mind when assessing potential impact.
Three factors to watch that will dictate the size of Amazon Care's impact:
1. Will Amazon Care stick to employer-based sales—and will more employers adopt it?
With the new expansions, Amazon is further prioritizing employers in its sales approach. Selling the Amazon Care platform to other employers will increase impact, but it is unlikely to drive discontinuous growth nationwide and is not without challenges. For example, employers are not used to receiving and providing health care benefits from non-traditional models of care, so adoption is a key part of the conversation.
We’ll be watching two possible strategic moves to see if Amazon can successfully expand beyond the employer space. If they make inroads at health plans, they could maximize penetration. But the real disruptive potential lies in the care model going direct-to-consumer and becoming integrated within an Amazon Prime membership. Though it’s worth asking whether Amazon consumers will want to accept their health care services as well.
2. Can Amazon Care deeply integrate with existing, local care delivery networks?
Amazon's entire model of business has been centered around accessibility and convenience for consumers, so we will be closely watching how successfully they take those features into the health care space. Through supplementing virtual care with home visits, they are signaling a recognition of the need for a more integrated care experience. However, we still don't know how Amazon plans to handle integration of health records and referrals or whether it is considering partnerships with local medical groups or health systems. While we know that the patient experience is also a consumer experience, health care is much more complex and personalized than e-commerce. If Amazon can introduce more convenience, accessibility, and integrated networks into the patient journey, they are on their way to a sizable impact.
3. Will Amazon Care truly prioritize the health care platform, or will it simply redirect consumers to other channels of Amazon?
Amazon has a strong hold on plenty of arenas, from grocery stores to streaming services and more. We are still waiting to see how much of the strategy will be to direct Amazon Care customers to other Amazon services, whether those are health care-related, like PillPack, or unrelated, like Video or Prime. But whether Amazon has intentions to bolster its consumer or health care offerings through the push into care delivery, it may not even matter if they can generate sufficient downstream benefits. For example, if they experience increased customer retention or expanded market share, Amazon may not need its care delivery business to be all that profitable—if at all. This is a luxury unique to Amazon. But if Amazon wishes to make a lasting impact in health care, they will need to see patient care as the end state versus a means to drive other business.
Andrew Mohama contributed to this article.