Is there a cause for concern as Amazon’s tech and logistics prowess may disrupt healthcare

Is there a cause for concern as Amazon’s tech and logistics prowess may disrupt healthcare

October 06, 2022 : As Amazon makes more significant moves into healthcare and turns its efficiency machine on medicine, some experts say the industry could change in practical ways.

“It’s the start of Amazon climbing a mountain,” said Derek Streat, a health technology veteran and CEO of Seattle healthcare software startup DexCare.

That mountain is undoubtedly steep. Amazon has already spent years investing heavily in healthcare, with mixed results. The company last year ended its Haven joint venture with Berkshire Hathaway and JP Morgan Chase, and it recently announced plans to shut down its virtual-first service Amazon Care.

But Amazon signaled its continued interest in healthcare this summer when it announced a $3.9 billion acquisition of primary care group One Medical. The deal, which would be Amazon’s third-largest acquisition, is still being reviewed by regulators.

Given the size, complexity, and potential for technology to further transform the healthcare market, the sector has emerged as one of the most likely industries where Amazon could find a fourth pillar of its business, alongside its existing three: Amazon Web Services, Amazon Prime, and Amazon Marketplace.

We spoke with healthcare industry leaders to learn more about how the tech giant might use its tech and data prowess to disrupt another market.

Amazon has a broad set of offerings that it can build on and scale

Amazon already partners with health companies through Amazon Web Services for Health, supporting everything from finance and operations to medical research and patient-clinician interactions. AWS provides tools to mine health data, collect revenue, and virtual power care.

The company will likely expand on these efforts, scale them, and link them to devices like its Halo View health band, its e-commerce marketplace, and its online pharmacy said Streat.

Amazon’s planned acquisition of One Medical — which would be its third-largest acquisition ever — is similar to how Facebook (now Meta) scooped up Instagram for $1 billion in 2012, said Streat, whose startup spun out of Providence’s digital innovation group.

“‘We can take this little thing and put it into our engine, and it will be amazing,’” said Streat of Facebook’s thinking. “And I think this is the same. If you’re Amazon, you think at that scale.”

Amazon’s logistics expertise may be helpful for healthcare

Inefficiencies plague the industry, from delays in care, multiple follow-ups for tests, fragmented data systems, and supply chain issues. Experts said Amazon could partner with numerous health systems to eliminate inefficiency and help deliver supplies and services.

“Amazon’s extraordinary supply chain management and consumer e-commerce platform could be unparalleled assets for selling and delivering goods where they are needed,” said physician Ken Mandl, director of the Computational Health Informatics Program at Boston Children’s Hospital.

The physician and vice president of digital patient experience and virtual care at Mass General Brigham, Lee Schwamm expressed Amazon could be a “single supplier” and discover a way to generate significant revenue “in a way that it knows how to do.”

Amazon, which obtained online pharmacy startup PillPack in 2018 and later established Amazon Pharmacy in 2020, could also further blur the differences between at-home care and care at a hospital or clinic. “It’s likely going to lead with diagnostics tied to asynchronous care delivery for specific specialty areas that you could transition to 100% virtualized care,” stated Streat, who co-founded C-SATS. This Seattle startup utilized technology to grade surgeons and was obtained by Johnson & Johnson in 2018.

One instance would be diabetes management through home diagnostics, expressed Streat. “They can virtualize entire service lines,” he said. In the hereafter, people may spend less time recovering in the hospital from disease and surgery and more time at home.

Reason for concern

Amazon will require to overcome data privacy situations from regulators and business partners.

On the exact day Amazon announced the One Medical deal, Sen. Amy Klobuchar (D-Minn.) penned a letter to the Federal Trade Commission.

“I also request that the FTC consider the role of data, including as a potential obstacle to entry, given that this said deal could result in the collection of highly sensitive personal health data in the grasp of an already data-intensive business,” noted Klobuchar, who chairs the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights.

Amazon also requires to be careful about collecting and using data to acquire patient and physician trust, a critical factor in healthcare, expressed Shantanu Nundy, chief medical officer of healthcare company Accolade. “Medicine advances at the speed of trust,” he stated.

The accession of One Medical presents other potential issues for Amazon as it descends deeper into healthcare.

One Medical is a primary healthcare service that recommends patients to other providers for specialty care.

But academic medical bases like Mass General Brigham earn their margins by making a sizeable primary case patient base that sustains specialty care. Amazon could utilize its data to skim off the wealthiest and most vital patients, leaving hospitals to serve as a safety net for the destitute, said Schamm. That could leave hospitals in financial jeopardy, stated Streat, who notes that rural health systems are particularly weak.

Schwamm also fears about Amazon funneling specialty care through One Medical. Amazon could dedicate “slots” with specialists, granting expedited entry to its patients and skewing admission to patients outside its system.