In mid-February, Amazon Announce It plans to expand its telehealth program, Amazon Care, nationwide, which was previously only available to its own employees and select employers. In addition, the company announced plans to launch an in-person healthcare service, which is also sold to employers, who will then offer Amazon Care as an employee health benefit.
It’s become a cliché that every few years big tech companies hungry for multibillion-dollar growth opportunities turn to reforming healthcare. Most of the time, however, these attempts fail to deliver on their promises. Even Amazon itself was not immune: its last attempt was a joint venture with JPMorgan Chase and Berkshire Hathaway called Haven, failed after fanfaredisbanded after just three years.
The failure of Haven, as well as the failures of other big tech healthcare businesses like Google Health and Apple Health Habit, has some lessons that Amazon needs to learn to avoid getting burned again.
- Beyond the Sourcing Alliance. Haven didn’t work because simply aggregating millions of lives did not change healthcare’s distorted incentives and bloated care delivery models, only incremental progress. Amazon needs to start from the underlying value chain and innovate the medical service model. Amazon has already taken the first steps with its hybrid virtual and home care approach — a good sign.
- Focus and partners. Healthcare is complex and network effects are not as common as the consumer internet. It’s hard to get everything right, and no one company can “own” all healthcare.Amazon has done a good job choosing emergency and primary care as its beachhead, but 90% 10% of national health care spending is the result of chronic and behavioral health conditions that often require complex professional oversight. Digital clinics have proven to be a cost-effective and easy-to-use solution for complex chronic diseases such as diabetes, musculoskeletal and substance use disorders. To maximize efficiency, Amazon will need to shed its aggressive, winner-take-all reputation and partner with existing tech digital clinics with skilled nursing capabilities.
- Be patient-centric, not customer-centric. Amazon is known for putting the customer first, but how does this translate to healthcare, as the “customer” who pays the bill may not be the patient, but the health plan or employer? The obsession with patients goes beyond a great patient experience and high NPS. Amazon must also improve population health outcomes at a lower cost than traditional providers so employers can seize the opportunity in their new programs. Employers are increasingly looking to evidence-based care.
- Innovate in value-based care. Payers have been slow to replace pay-for-service reimbursement with a capitation model related to health outcomes, but if they don’t, there is little incentive to control costs. There are many ways to achieve consistency in healthcare value. Amazon hasn’t disclosed pricing for its virtual care platform, but the reimbursement model the company ultimately chooses will be a touchstone for how serious it is to truly innovate in healthcare.
Innovation is urgently needed in all areas of healthcare. But Bigfoot approaches that ignore existing care delivery models rather than try to improve them have no successful track record. Learning from its own past failures and those of other big tech health care initiatives could go a long way in ensuring Amazon Care’s survival.
Photos: Flickr, Cerillion Skyline
