As if selling virtually every consumer product imaginable wasn’t enough for Amazon, the retailer and tech company now wants to get into the doctor’s office space. Early this month, the company announced that it was in the process of negotiating a deal that would see it buy a chain of health clinics operated by One Medical. The move would allow the Jeff Bezos-founded company to move decisively into the health space, something that it has been planning for some time.
The size of the venture is significant. If the deal goes through the way Amazon intends, it could become responsible for a network of over 800,000 patients, making it one of the largest providers in the U.S. The conglomerate intends to combine its medical services with its other offerings, such as streaming, providing patients with a truly unique (and heavily Amazon-focused) experience.
The deal is expected to cost Amazon around $4 billion, less than one percent of the firm’s current market value. And, according to commentators, it comes as no surprise. Amazon has made clear over recent years that it is deadly serious about getting into the health space, with numerous ventures, including projects to address human aging.
A few years ago, Amazon bought PillPack to expand its retail offering. Before the acquisition, consumers could buy virtually anything from Amazon, except prescription drugs. But the move allowed the company to plug the gap in its retail empire.
Now the firm wants to get into brick-and-mortar clinics. People should be able to go directly to Amazon to get the medical checkups and scans that they need, completing the firm’s health offering.
How Will Amazon Improve On Traditional Doctor’s Offices
Amazon wants to bring some of the principles it applies in its retail business to medical establishments. One Medical, the company says, will let it offer patients same-day appointments, something that is still rare in healthcare, even under private enterprise.
One Medical is an obvious choice for the conglomerate because its business model already appeals to Amazon’s sense of urgency. The healthcare chain offers its network of patients access to same-day checkups and treatments, mostly eliminating the need to book in advance.
On the technology front, One Medical already has a successful app. The technology allows patients to consult with doctors and book appointments which, again, is also appealing to Amazon’s core beliefs.
Before Amazon signaled its intentions to buy One Medical, it wasn’t clear which business model the company would adopt. Some observers believed that the firm would adopt a Google-like model, offering healthcare options to large employers like IBM. But it now appears as though the company will go down the direct-to-consumer path. Just as with its retail arm, Amazon wants to connect directly with its target audience.
How Amazon will change doctors’ offices depends on its vision for the future. But as with other sectors, the expectation is that the company will reimagine medical care from the group up. We may see simple improvements to office layouts and storage with things like custom cabinets and hotel-like waiting rooms. But most likely, Amazon will focus on efficiencies and, in some cases, break with traditional medical practice. We’re likely to see an increase in triage and more specialization among medical professionals. Data-facilitated speed will be the aim of the game.
Is One Medical A Profitable Venture?
One Medical is currently a private membership service. Patrons pay substantial monthly fees. Despite this, the service isn’t yet profitable, so why is Amazon interested?
It comes down to the online store’s long-term thinking. Amazon isn’t afraid to gobble up low-margin services if it believes that it can scale them over long time periods and make them profitable. One Medical isn’t making a lot of money right now with its physical clinic model. But Amazon believes that it can improve how it operates by developing hybrid services: some patients arrive at the clinic for treatment while others get the attention they need online. This way, Amazon believes that it can cut costs and offer far lower subscriptions than rivals.
Given excessive costs in the medical sector, Amazon’s arrival in the industry could be precisely what it needs. The retailer has a management structure that makes cost-cutting and efficiency the default position. Despite the cost of One Medical, Amazon believes that the purchase is worth it, due to the future of healthcare. Only a minority of patients will actually have to attend the clinic. And over time, the eCommerce retailer is going to get better at determining who those people are.
The Data Privacy Question
Data privacy is critical for all companies, but it is particularly important in the healthcare sector. HIPAA ensures that medical practices pay big fines if they don’t maintain patient confidentiality at all times.
Many people are concerned about Amazon’s entry into the market, a company well-known for its liberal use of customer data. The worry is that the giant will use data it gleans from One Medical practice to limit who it employs and which products it advertises on its sites.
The good news is that companies like Amazon can’t own doctors. That means that any professional medical staff will work with One Medical, not for it.
Furthermore, if there are privacy issues, regular medical insurance will cover them. Patients with medical claims will be able to take Amazon to a court or settle outside.
With that said, protections might not go far enough. Because One Medical is app-based, the company potentially has the ability to track every interaction that patients have with medical professionals. And because of the app-based nature of that data, privacy protections are often considerably lower.
Is A Consumer-Oriented Healthcare Model Possible?
While Amazon is trying to create a consumer-focused healthcare model, it still might not be possible. Healthcare is a complicated and highly regulated industry. Dynamic and innovative firms have been trying to disrupt the space for years and have failed. The best they can hope for is to give consumers a taste of what’s possible when it becomes consumer-focused, increasing the demand for political change.
(Devdiscourse’s journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)
