Will Amazon provide health care at the click of a button?

When Amazon announces that it is offering a new service or product line, people pay attention. After all, the online shopping behemoth has changed the way we buy books and movies, subscribe for services, even the way we order groceries.

Now Amazon is making news in how it approaches health care. In late July, the company announced that it was acquiring national primary care provider One Medical for $3.9 billion. Then just a few days ago, Amazon pulled the plug on its in-house telehealth service Amazon Care.

Brad Staats

Experts began to speculate on how the moves would change the way Americans think about health care. Has the company decided it is more efficient to piece together an integrated health care system by buying existing companies instead of building one in-house?

“Will it build a health care system that is as easy to access as Amazon’s website — one that offers products and services at the click of the button?” asked the article “How will Amazon approach U.S. primary care?” in the Harvard Business Review.

One of the article’s authors is Bradley R. Staats, faculty director of the Center for the Business of Health at Kenan-Flagler Business School. Staats is also senior associate dean of strategy and academics and Ellison Distinguished Professor of Operations at Kenan-Flagler.

Staats sat down with The Well to discuss the advantages, disadvantages and potential impact of Amazon’s entry into the health care industry.

What advantages do you see in Amazon getting more directly involved in the health care industry?

Amazon’s approach to new businesses is this idea of, “Hey, we’re going to focus on simplicity, we’re going to work on experimentation, and then we’re going to recombine the different pieces as we try to find our way through.” The same thing happened when they purchased Whole Foods, and at first people said, “What an awful way to order groceries.” Their system still has flaws, but each day is better than the one before. And I think that’s a good example of what it may look like for health care.

Amazon recognized potential benefits from this as a major employer who offered telehealth care to its employees through Amazon Care. With One Medical, we get the next iteration of them saying, “Hey, can we solve some problems for others that we’re doing for ourselves?”

What are the disadvantages?

Many people are concerned about the potential monopoly characteristics of Amazon’s growth in health care. How much power are we giving any one organization? If you take such a large organization and you give them even more, does that eventually give them a chance to manipulate the system? We’ve seen consolidation on both the provider and the payer side, trying to get the scale to negotiate better. Amazon’s not close to being there yet, in health care, but someday, could they be so big as to create real struggles for existing players? So there are reasons to wonder about anti-competitive behavior.

Folks are worried about privacy, and I think appropriately so, as you are putting lots of data into anybody’s hands. Data is a tool. It’s by itself neither good nor bad, but it can be used for good things like coordinating care, sending the fresh vegetables somebody might need to change their diet. It also could be used for ill — sending people unhealthy, but profitable, foods or finding ways to sell them other products they don’t really need. And so for folks who are raising the alarm, I think that regulators and consumers should be carefully watching this.

It is also entirely possible that Amazon buys One Medical and, over time, sells off pieces because they realize it wasn’t the right choice for them. If you’re an existing customer of a business that gets acquired, you wonder if your service will degrade. And so clearly in health care, there’s an even bigger concern. If I’m a patient, will my experience get worse?

What impact is this merger likely to have on the health care industry as a whole?

I think it will impact it slowly. I used the Whole Foods example earlier. Another example is Amazon’s acquisition of (online pharmacy) PillPack in 2019. At first there was an outcry that pharmacies are going to be disrupted and the end is near. And we saw it wasn’t. Could Amazon eventually be in a place to disrupt health care more broadly? Absolutely. And so I think there is great potential here, but it’s going to take a while to play out.

As a whole, health care is an industry in need of broader change and a deep focus on value. Not just delivering services but really improving people’s lives. Mandy Cohen (physician and former secretary of the North Carolina Department of Health and Human Services) talked a lot about how we want to buy health, not health care. And I think that’s such a wonderful way to put it. We’re trying to deliver health, not health care.

I think you may see more partnerships with health systems, depending on where they want to take it. One Medical has partnered with several different kinds of health systems, like Emory University in Atlanta. And so I think we still may see some of that. Does Amazon try to get into the payer-and-provider space and be an integrated system? Is there potential there? Yes, but that’s not six months from now. Could we see it over time? Absolutely.

Amazon’s acquisition of One Medical presents them with a platform for experimentation to offer simpler health care. Will they succeed? Only time will tell.