Has Amazon lost its ‘edge’ in healthcare? Or finally seeing reality?

Amazon’s long and winding road to Healthcare Reality is no surprise to those tracking Amazon’s moves over the past few years. And Bloomberg agrees. In the eyes of many of the industry, Amazon was one of the top companies revolutionizing healthcare in a consumer-focused, tech-driven model. They were making The Big Moves along with giants CVS and Walgreens with an open wallet, with Walmart lagging and tagging behind. But when you turn a Gimlet Eye to the track record, The Big Moves were marked by hubris, uncertainty, lack of focus, lack of healthcare expertise, and just plain bad judgment.

• First, there was the sinkhole known eventually as Haven, 2018-2021. This partnership with JP Morgan and Berkshire Hathaway (RIP to the legendary Charlie Munger) generated truckloads of 50,000-foot quotes by JPM’s Jamie Dimon and B-H’s Warren Buffett about the ‘hungry tapeworm’ of healthcare costs and the need to simplify it for their million-odd employees. It was clear that Amazon was relegated to the ‘junior partner’. Their reaction was to go their own way well before the shutdown and make its own acquisitions, acquiring PillPack in mid-2019 as the first move towards a PBM, Amazon Pharmacy, then pushing Amazon Care for large employers. TTA 6 Jan 2021
• Then there was the brief and mysterious life of Amazon Care, 2019-2022. Their mix of virtual care, in-home, and telehealth services signed up large employers such as Hilton and (of course) Amazon with the eventual vision of delivering in-home care of visits and medications via mobile providers. Despite plenty of pivoting behind the scrim but eventually going nationwide with some, not all, of their services, their vision wasn’t attractive to most large employers. Even before One Medical was acquired in July 2022, Amazon decided to ditch Care by end of 2022. TTA 25 Aug 2022
• And $3.9 billion later, there is One Medical, acquired earlier this year. It has never made money and won’t for at least two fiscal years. It doesn’t resemble an Amazon-style delivery model either. It’s a membership model practice group with individual paying members plus 9,000 corporate service contracts and telehealth. Of course, memberships including telehealth are being offered to the millions of Amazon Prime members at a drastically discounted rate starting earlier this month.
• Bubbling under this is Amazon Clinic, an asynchronous virtual consult service leaked in November 2022, formally announced in June 2023 but delayed until August on data privacy issues that attracted Senatorial scrutiny on whether information would be passed to other Amazon services for merchandising [TTA 27 June]. Visits cost an average of $50. Amazon is surprisingly mum on Clinic’s status.

From the collection of articles linked above, plus TTA’s ongoing chronicle of FTC’s (and DOJ’s) consistent scrutiny (some call it vendetta) re Amazon [TTA 24 Aug, 27 Oct], one cannot conclude that Amazon has lived up to its publicity, dominating coverage earlier this year, that it would be a leading Healthcare Transformer. In that last article, this Editor’s obvious doubts were summarized as “What we view as a juggernaut is facing more than their share of distractions and changing circumstance.”

It is awfully nice to know that Bloomberg has taken our small ball of misgivings and run with it. Their article describes, through interviews with current and former employees, patients, competitors, and industry analysts, a “culture of hubris”, believing that “Silicon Valley-style invention could outsmart industry incumbents” and management not listening to the industry people they did hire. The hubris goes back to the very beginning. Even transitioning a young but deep in the red company like PillPack, bought for a truly ridiculous amount of money but that fit easily into the Amazon model, took an inordinate amount of time–about two years. Amazon Pharmacy, built on the PillPack bones, doesn’t seem to be meeting expectations, running headlong into local retailers such as CVS, Walmart, and Walgreens, discounters such as GoodRx, and deliverers such as Mark Cuban Cost Plus. No surprises there when you waste two years. Wall Street doesn’t like it much either, despite the promises from CEO Andy Jassy that healthcare is their long-term growth area, carrying through the vision of former CEO and now chairman Jeff Bezos.

It also doesn’t help to be the corporate target of the FTC, not mentioned in the Bloomberg article.

This Editor will quote herself from a recent article. While it was in the context of learnings from Olive AI, it applies equally to those with lots of success in other businesses or even other parts of healthcare. Know that healthcare, no matter what the conferences say, is an entrenched, over-regulated, risk-averse, and thus extremely slow-moving business. The risk level is high, the reward may be incremental, at best. And the big guys–the payers, big health systems, and their vendors, will always have it all over you.