What Amazon’s Acquisition of One Medical Means for the Healthcare Industry

What Amazon’s Acquisition of One Medical Means for the Healthcare Industry

Amazon might become your primary care doctor very soon.

On July 21, e-commerce giant Amazon announced its acquisition of the U.S.-based primary healthcare chain One Medical. The purchase will cost US$3.9 billion (US$18 a share). 

“We want to be one of the companies that helps dramatically improve the healthcare experience over the next several years,” says Neil Lindsay, Senior Vice President of Amazon Health Services, highlighting the need to reimagine how the healthcare industry works. To make sense of this recent acquisition, let’s dive into Amazon’s foray into healthcare over the past couple of years and what that means for the future of healthcare. 

Amazon’s journey into healthcare

Even before this purchase, Amazon has been gradually expanding its position in the healthcare sector. To start off, the company tried to simplify the process of buying prescription medicines for customers. In 2018, Amazon announced its plans to acquire online pharmacy PillPack for US$753 million. The company took all the learnings it received from its acquisition of Pill Pack and in 2020, it launched Amazon Pharmacy. This service allows people to get medicines delivered to their homes and also speak to pharmacists if they need advice. 

On the treatment side of healthcare, Amazon created a virtual/in-person hybrid healthcare service, Amazon Care, in 2019 for its employees in Seattle. This service has since been expanded to a nationwide scale, with big names, such as grocery chain Whole Foods as well as hotel chain Hilton, signing on as its clients. 

The company has also engaged with other healthcare providers via Amazon Web Services (AWS). AWS is a cloud storage service that hosts the data of some of the largest healthcare providers in the world, including Moderna and the National Health Service of the UK. In 2021, AWS launched a healthcare accelerator. Through this initiative, the company aims to support startups that are creating innovative healthcare solutions. 

Finally, Amazon has also tried its hand at entering the health tech space by investing in the Halo Band, a health tech gadget that keeps track of various health and wellness indicators. 

Healthcare does not only affect those who are struggling with diseases, but also every one of us, as we’ve learned from the pandemic. Seeing medical care systems around the world being overwhelmed constantly by the rising demand during Covid, many might wonder if the tech industry, like Amazon, might have a fix for the broken system. To decipher that, let’s take a closer look at both the positive and negative sides to Amazon’s foray into healthcare. 

Benefits of Amazon’s healthcare investments

Providing comprehensive care under one umbrella

If you look at each of Amazon’s investments, they fit together very well. If Amazon combines all the services, it can create a comprehensive, all-in-one healthcare solution for customers. For instance, you could perhaps eventually book appointments for Amazon Care through Alexa and use the Halo band to track the developments of chronic conditions, sending alerts to medical professionals as and when necessary. Doing all of this could make Amazon a major market disruptor in healthcare. 

Improving customer experience 

Some experts even believe that Amazon’s great history of prioritizing its customers could lead to better healthcare experiences. It could also motivate other healthcare providers to innovate and improve their services as well. 

Providing investors with a return on investment (ROI)

Another group of people looking at these investments more positively are investors. Amazon had been facing trouble with keeping its e-commerce revenues up amid inflation and the rising cost of labor and shipping. Since service businesses, like the healthcare industry, tend to have variable costs and higher margins while being less capital-intensive, Amazon’s dive into healthcare could bring forth a relatively steadier stream of revenue for the company.

Concerns surrounding Amazon’s healthcare investments

But all isn’t positive about Amazon’s entry into the healthcare space. One of the main concerns is data privacy, as Amazon has previously dealt with serious data breaches. For instance, in 2021, a former AWS employee was found guilty of stealing the data of 100 million Capital One customers. If similar situations were to happen to Amazon’s healthcare services, then people’s medical data could be at risk. Even if the data isn’t stolen, Amazon itself could use this data for its own purposes. According to an investigative report by The Wall Street Journal from 2020, Amazon uses the data of sellers that list their products on its platform to create competing products of its own. 

Currently, Americas’ sensitive medical data is protected by the U.S. Health Insurance Portability and Accountability Act (HIPAA). Hence, under ideal circumstances, your data should remain safe. However, HIPPA alone may not be enough to keep your data secured, given that data from medical tests, prescriptions and wellness applications are not protected under the act. This becomes particularly alarming when we think about the Roe vs Wade reversal, where any information confirming an abortion could land patients in hot water with the U.S. government. Just this month, a Nebraska mother and her 17-year-old daughter are reported to be facing felony charges because the mother allegedly helped the daughter carry out an abortion. 

Whether Amazon would have a positive or a negative influence on healthcare is yet to be seen. However, given the fact that the U.S. has the most expensive healthcare system in the world, the entry of a new player should help increase competition and improve the public’s access to healthcare. 

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Header image courtesy of Unsplash

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