Breaking: Amazon Care shutting down after three years–what’s next? (updated)

August 25, 2022 | by

Amazon Care to cease operations after 31 December. Amazon Health Services is throwing in the towel on its primary care service for enterprise customers, after failing to make much headway with its mix of virtual care, in-home, and telehealth services. An internal email from Neil Lindsay, Amazon Health Services senior vice president, sent today (24 Aug) to employees but leaked to the press, stated that “This decision wasn’t made lightly and only became clear after many months of careful consideration. Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term.”

Employees who have been part of Amazon Care may have the opportunity to transfer to other parts of Health Services, according to the memo, or will be ‘supported’ in finding other roles within or outside the company. The total number of employees was not disclosed, but this Editor expects layoffs to be announced by the fall as Amazon Care winds down.

Amazon has been moving in a different direction with enterprises for some months. Reportedly the decision was made to ditch Amazon Care prior to agreeing to acquire One Medical, which was announced late in July. However, recently revealed negotiations actually started last February, with One Medical pitting Amazon against CVS until CVS dropped its bid effort [TTA 19 August]. 

As this Editor noted last month with the One Medical acquisition, “…for this Editor it is clear that Amazon with One Medical is buying itself into in-person and virtual primary care for the employer market, where it had limited success with its present largely virtual offering, and entreé with commercial plans and MA.” With One Medical, they will be acquiring an operation with 790,000 patients (including 40,000 at-risk, presumably Iora’s), 8,000 company clients, 125 physical offices in 21 US metros (including projected), and an established telehealth/telemedicine protocol. In other words, a ready-made provider and enterprise base to build on and sell into, for instance Amazon products like Pharmacy and PillPack.

Not addressed is what will be done, if anything, to transition current employer agreements for Amazon Care to One Medical.

It’s now a matter of whether HHS, DOJ, and FTC will agree to the buy or ask for additional divestitures. One conflict–Amazon Care–has just been removed. And this may clear the deck for other acquisitions, such as Signify Health [TTA 24 Aug], if Amazon wins the auction against CVS, UnitedHealth Group, and Option Care Health, though for a newcomer to healthcare Signify may very well be A Bridge Too Far.

What’s in play?

  • One Medical’s Iora Health and its high needs/high costs Medicare patient base. This has very much been held in the background, leading this Editor to think it will be sold to another health plan.
  • The status of the previous agreement with Crossover Health for 115,000 Amazon employees and dependents, delivered through their employer-based onsite clinics in 11 states in addition to concierge care [TTA 17 May]
  • Another previous agreement with Ginger for telemental health, only announced last week.

Amazon was touting Amazon Care as recently as earlier this year to shareholders. They had acquired employers outside Amazon such as Hilton, but not quickly enough. Expansion talk and the usual touting within the industry weren’t happening. There was an ‘air of mystery’ about what Amazon Care was doing, going back to the beginning.

Perhaps a major ‘tell’ was that Kristen Helton, general manager in charge of Amazon Care, was reported two weeks ago by Bloomberg News to be taking an “extended break to spend the summer with her family.” She had been in the GM position for three years after joining Amazon in 2015.

Count Amazon Care as one expensive learning course in the insanely costly University of Healthcare Delivery. This won’t be the first lesson, but Amazon can afford the tuition.

Geek Wire, FierceHealthcare, 

Amazon moves to acquire One Medical provider network for $3.9B (updated)

July 27, 2022 | by | 1 Comment

Amazon joining the in-person provider network space for real. Amazon Health Services last week moved beyond experimenting with in-person care via provider agreements (Crossover Health, TTA 17 May) to being in the provider business with an agreement to acquire One Medical. Earlier this month, news leaked that One Medical as 1Life Healthcare was up for sale to the right buyer, having spurned CVS, and after watching their stock on Nasdaq plummet 75%.

  • The cash deal for $3.9 billion including assumption of debt is certainly a good one, representing $18 per share, a premium to their $14 share IPO in January 2020. (The stock closed last Wednesday before the announcement at just above $10 per share then plumped to ~$17 where it remains.)
  • The announcement is oddly not on One Medical’s website but is on Amazon’s here.
  • The buy is subject to shareholder and the usual regulatory approvals. The IPO was managed by JP Morgan Securities and Morgan Stanley. It is primarily backed by Alphabet (Google).
  • One Medical’s CEO Amir Dan Rubin will stay on, but there is no other executive transition mention.
  • Also not mentioned: the Iora Health operation that serves primarily Medicare patients in full-risk value-based care models such as Medicare Advantage (MA) and Medicare shared savings, quite opposite to One Medical’s membership-based concierge model. However, Iora’s website is largely cut over to One Medical’s identity and their coverage is limited to seven states.

There is a huge amount of opinion on the buy, but for this Editor it is clear that Amazon with One Medical is buying itself into in-person and virtual primary care for the employer market, where it had limited success with its present largely virtual offering, and entree with commercial plans and MA. One Medical has over 700,000 patients, 8,000 company clients and has 125 physical offices in 12 major US markets including NYC, Los Angeles, Boston, and Atlanta. It has never turned a profit. Looking at their website, they welcome primarily commercial plans and MA (but not Medicare supplement plans).

Amazon, with both a virtual plus provider network, now has a huge advantage over Teladoc and Amwell, both of which have previously brushed off Amazon as a threat to their business. There is the potential to run two models: the current Amazon Care pay-as-you-go model and the One Medical corporate/concierge model. This puts Amazon squarely in UHC’s Optum Health territory, which owns or has agreements with over 5% of US primary care practices, is fully in value-based care models such as Medicare shared savings through its ACOs, and is aggressively virtual plus integrating services such as data analytics, pharmacy, and financial. Becker’s

What doesn’t quite fit is Iora Health and the higher cost/higher care needs Medicare market that is less profitable and requires advanced risk management, a skill set that Amazon doesn’t have. This Editor will make a small prediction that Iora will be sold or spun off after the sale.

This Editor continues to believe that the real game for Amazon is monetizing patient data. That has gained traction since we opined that was the real Amazon Game in June and October last year, To restate it: Amazon Care’s structure, offerings, cheap pricing, feeds our opinion that Amazon’s real aim is to accumulate and own national healthcare data on the service’s users. Then they will monetize it by selling it to pharmaceutical companies, payers, developers, and other commercial third parties in and ex-US. Patients may want to think twice. This opinion is now shared by those with bigger voices, such as the American Economic Liberties Project. In their statement, they urged that the government block the buy due to Amazon’s cavalier attitudes towards customer data and far too much internal access, unsecured, to customer information (Revealnews.org from Wired). Adding PHI to this is like putting gasoline on a raging fire, and One Medical customers are apparently concerned. For what it’s worth, Senator Bernie Sanders has already tweeted against it.   MarketWatch

Whether this current administration and the DOJ will actually care about PHI and patient privacy is anyone’s guess, but TTA has noted that Amazon months ago beefed up its DC lobbying presence last year. According to Opensecrets.org, they spent $19.3 million last year. In fairness, Amazon is a leading Federal service provider, via Amazon Web Services. (Did you know that AWS stores the CIA’s information?)  One Medical is also relatively small–not a Village MD/Village Medical, now majority owned by Walgreens Boots. This is why this Editor believes that HHS, DOJ, and FTC will give it a pass, unlike UHG’s acquisition of Change Healthcare, especially if Amazon agrees to divest itself of the Iora Health business.

Treat yourself to the speculation, including that it will be added as an Amazon Prime benefit to the 44% of Americans who actually spend for an Amazon Prime membership. It may very well change part of the delivery model for primary care, and force other traditional providers to provide more integrated care, which is as old as Kaiser and Geisinger. It may demolish telehealth providers like Teladoc and Amwell. But as we’ve also noted, Amazon, like founder Jeff Bezos, deflects and veils its intents very well. FierceHealthcare 7/25, FierceHealthcare 7/21, Motley Fool, Healthcare Dive

News roundup: telehealth claims drop 9% in February; Amwell’s good news, bad news Q1; tech-enabled practice Crossover Health growing; NowRx and Hyundai test semi-self-driving delivery

May 17, 2022 | by

FAIR Health’s February monthly tracker is pointing downward again. After a brief post-holiday rise to 5.4% of claims in January, it dropped to 4.9% in February, a 9% drop. Mental health claims seized the lead again by a country mile at 64.2% of claims. COVID-19 fell off the list of top 5 claim areas, though only 3.4% in January compared to 58.9% for mental health. This month lists categories of specialists delivering telehealth, and social workers topped the list at over 31%, which fits the telemental health picture. 

Amwell’s shaky opening to 2022. It should not come as any surprise to our Readers that Amwell, the Avis to Teladoc’s Hertz, didn’t have a good Q1. Most of their key indicators around total revenue, providers, and visits grew smartly. Unfortunately, their losses did too. Comparisons are to Q1 2021 unless noted:

Revenue grew to $64.2 million [$57.6 million], up 11.5%
Gross margin: 42.8% [38.0%], up 12.6%
Total active providers grew 12% from Q4 to approximately 102,000 [91,000] Total visits also grew 20% from Q4 to 1.8 million [1.5 million]

But there’s no turning the corner on losses this quarter, despite Converge, their unified platform, shifting over telehealth visits as planned, and adding SilverCloud, Conversa, and specialty telehealth with musculoskeletal (MSK) and dermatology programs to the totals.

Net loss was ($70.3) million, compared to ($39.8) million, an increase of 77%
Adjusted EBITDA was ($47.1) million, compared to ($26.4) million, an increase of 78%

Amwell’s projected 2022 is the same–growth mixed with financial losses: revenue between $275 and $285 million, adjusted EBITDA between ($200) million and ($190) million.

Inquiring investors may very well ask when Teladoc and Amwell, now smaller by a factor of just over 9, will ever be profitable. Mr. Market had its say over the past year, from a high of $14.26 in early June 2021, to today’s close of $3.09, an enterprise valuation loss of $11.17 or 78%, just a little better than Teladoc’s 81% in the same period. It will likely be no time soon. But the shares may be an excellent opportunity at a low cost. Yahoo Finance, FierceHealthcare, Becker’s 

Crossover Health, a hybrid virtual/in-person primary care practice group, announced that they would be opening new centers in Seattle, Austin, and another one in New York this year. Their virtual care operates in all states, while their in-person footprint consists of 41 health centers in 11 states which are generally about 5,000 square feet. They have 33 on-site clinics for employers, which are a combination of exclusive to one company and shared, and in total cover 400,000 eligible employees and dependents including for 115,000 Amazon employees and dependents. In addition to corporate clinics, Crossover offers individual membership plans in a concierge, under one roof type model. FierceHealthcare

In another tech area, med delivery company NowRx is partnering with Hyundai for a limited test of their self-driving cars in the LA area. Hyundai will be using slightly modified Hyundai Ioniq 5 electric vehicles with some autonomous capability, but using a driver. The purpose of the test is to simulate and gather data on autonomous vehicle delivery, such as delivery statistics, dispatch and customer interactions, and feedback. NowRx offers free same-day prescription delivery in the San Francisco Bay area, Orange County, and Los Angeles areas. FierceHealthcare