In recent weeks, many across the industry have picked up on cues suggesting that Amazon was quietly preparing to expand its care delivery arm, Amazon Care. Launched about a year and a half ago, Amazon Care currently offers a combination of virtual care and house calls. To date, those services have only been available to Amazon employees in Washington State. But yesterday, Amazon formally revealed plans to expand those services in 2021. That plan includes three distinct elements:

1. As of yesterday, Amazon Care is available to other employers in Washington State.
2. Starting this summer, Amazon Care’s virtual services will become available to Amazon employees and other employers in all 50 states.
3. Amazon Care’s in-person services will become available in “major cities” across the country “in the coming months.” The announcement mentions Washington, D.C. and Baltimore as two initial targets.

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Our initial take

Amazon’s brand cachet has the potential to disintermediate existing patient-provider relationships. During the pandemic, most virtual visits were delivered by traditional care providers like hospitals and physician groups. Patients largely relied on virtual channels to connect with their existing care providers. But as plans and providers work to figure out what their long-term stance toward telehealth will be, there may be an opening for non-traditional players to gain a deeper foothold in the market. Amazon’s brand and existing consumer relationships could prove to be an advantage over traditional provider groups, health plans, and pure play telehealth platforms.

Amazon is betting big on home-based care. Amazon has been experimenting with a variety of tools for improving employee health and well-being . In addition to piloting Amazon Care, they have partnered with Crossover Health since July of 2020 to offer Amazon employees in three markets both virtual and in-person care, the latter of which is delivered at 17 bricks-and-mortar Crossover “Neighborhood Health Centers.” Crossover Health recently announced an expansion of this partnership to include two additional markets, with a continued focus on Amazon employees. But the much smaller scale of this expansion indicates that Amazon either has increased confidence in the growth potential of home-based services, or at least that the company perceives a need to move more quickly in the home-based care space.

This will accelerate the commoditization of virtual visits. Based on yesterday’s announcement, it appears that Amazon Care’s initial priority will be in selling virtual care services to other large employers, rather than launching a large-scale, consumer-facing virtual care platform. But it’s not hard to envision that a direct-to-consumer virtual care platform might be a next step. The ability to offer a virtual visit is not going to be a differentiator for providers or plans in a world where a certain number of Amazon Care visits are included with a Prime membership. Depending on how tightly Amazon plans to integrate this service with Alexa’s capabilities, this move could even commoditize some remote patient monitoring functions as well.

This could be Amazon’s most directly competitive move into the health care space yet. Three years ago, as Amazon was just beginning its foray into health care, we sat down to brainstorm what health care “identities” the technology giant might adopt. At that time, most of Amazon’s near-term bets appeared to be either collaborative in nature (e.g., partnering with health systems to streamline logistics) or modestly competitive plays in the pharmacy space (e.g., the PillPack acquisition). We identified care delivery—and specifically primary care delivery—as the most ambitious and directly competitive play the company was likely to make, but also noted that this strategy was unlikely to materialize in the short-term. The Covid-19 pandemic has almost certainly accelerates that timeline. Amazon Care was initially launched as a pilot before the pandemic began, but it's hard to envision a scenario in which the company could or would expand its services so rapidly without the incredible surge in demand for telehealth services brought on by the pandemic.

The potential of Amazon Care is clear—but its success is far from certain. Here are three things we think will dictate the size of its impact.

Will Amazon Care remain a business-to-business offering, or will it eventually become a direct-to-consumer model?

As of December 2020, Amazon reportedly employs about 1.3M people. They are a large employer, to be sure, but this number still represents only a very small portion of the commercially insured market, and an even smaller portion of the U.S. population. The move to sell the platform to other employers will drastically increase Amazon Care’s potential impact—but that impact is still likely to occur unevenly across the country, with Amazon Care being a much bigger competitive in some markets than in others, based on employer uptake.

A direct-to-consumer play could prove to be a true driver of discontinuous growth nationwide, especially if integrated as part of the Amazon Prime membership program (recent data suggests that nearly a third of Americans have an Amazon Prime membership today).

How deeply will Amazon Care integrate itself with existing, local care delivery networks?

For all of virtual care’s potential, it’s not realistic to expect 100% of care—even primary care—to be delivered virtually. And while it appears Amazon Care will include house calls as well in certain markets, its clinicians will still inevitably bear responsibility for referring patients to specialists and other care providers in many cases.

Amazon Care’s early marketing materials lead with a clear focus on ease, primarily centered on accessibility and convenience. There is little indication of how Amazon plans to handle integration of patient health records and referrals, which are critical elements of the patient experience as well—and an important reason why many patients have preferred to use virtual care to connect with their own care teams, rather than relying on national telehealth platforms.

How will Amazon make Amazon Care sticky—and how much of that “stickiness” is aimed at health care services specifically?

The Amazon ecosystem is designed to frictionlessly reinforce a consumer’s relationship with Amazon. All of the various elements of Prime, Alexa, Video, Whole Foods, etc. are built to keep customers in Amazon channels.

Amazon will ostensibly do the same thing with Amazon Care, but it’s not clear how much of the strategy will be to direct Amazon Care customers to non-health care channels like Video or Prime, versus health care-specific channels like PillPack. Which channels Amazon priorities will provide important cues as to how much Amazon Care is a health care strategy as opposed to a retail strategy designed to drive virtual foot traffic to the broader suite of Amazon offerings.