Blog Post

Report: Amazon may be planning to enter health care market

August 22, 2014

    Dan Diamond, Managing Editor

    Back in December, Apple executives trooped to the FDA, privately pitching federal regulators on their goal of launching new health apps, devices, and software. Half a year later, the company publicly announced its plan to move into the health care market.

    Is Amazon starting to follow the same playbook?

    Modern Healthcare's Darius Tahir reports that top Amazon and FDA officials held their own meeting last month. And they're not talking to the press about what they discussed.

    For hospital executives, it could mean nothing—perhaps FDA was pushing Amazon to clean up its messy prescription-drug market—or it could mean everything.

    “Amazon is always so creative that they tend to enter markets in a big way, disrupting existing business models,” Bradley Merrill Thompson, a lawyer at Epstein Becker & Green, and a member of an FDA advisory panel, told Modern Healthcare.

    “It will be fascinating to see whatever they have in mind.”

    What Amazon would bring to health care—and what it lacks

    As an aggressive growth company, it makes sense that Amazon would consider health care.

    From selling books to CDs to now selling, well, pretty much anything, Amazon founder Jeff Bezos has consistently pushed Amazon into new industries. And other growth-oriented firms, like Walmart and Apple, are already launching strategies to capture health care business, as patients increasingly will play a role in shopping for their own care.

    Unlike other non-traditional competitors eying the health care market, Amazon lacks some clear advantages. It doesn't have a physical space, like Walmart, which rules out on-site clinics. It doesn't have a popular smartphone, like Apple, which would complicate plans to roll out a health monitoring app.

    What Amazon can offer is an "easy distribution channel for e-visits (or home visits) and same-day drug delivery following those visits," the Advisory Board's Alicia Daugherty says. (Daugherty leads the Advisory Board's marketing and planning research, and is investigating new competitive threats for the upcoming Market Strategy Summit.)

    "[Amazon] also is good at the regular deliveries of necessities at specified intervals," Daugherty added. "I could see them doing the same thing for regularly refilled prescriptions."

    It's essential to caveat: Amazon's meeting might have involved sales of beauty products, or health food, or something else that's not clinically relevant.

    Amazon also could be months away from unveiling any health care strategy, given that working with the FDA can involve navigating complex issues, says Kenneth Kleinberg, who leads the Advisory Board's health IT research.

    "There are FDA regulatory distinctions between manufacturing, marketing, and selling medical devices," Kleinberg notes. "There are regulatory distinctions between devices used for wellness, which often aren't regulated, and ones used for disease management."

    But the looming power of Amazon—a giant retailer that’s shown the ability to move into existing businesses and dramatically shake them up—is worth keeping an eye on.

    "Amazon is certainly big enough to take on the FDA to drive change," Kleinberg adds. "But do they want to?"

    "Do they have to?"

    The landscape is changing. What does that mean for your volumes?

    At the 2014 Market Strategy Summit, you'll get to see our latest market analytics, review our research on consumer-oriented competition, and participate in briefings on referral strategy in the clinical integration era.

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