On July 21, 2022, probably the most high-profile acquisition within the well being care area in current reminiscence was introduced, when Amazon publicized the acquisition of One Medical, a major care group, for $3.9 billion. Amazon’s curiosity within the large US well being care trade has been no secret lately, however that is undoubtedly their greatest wager to this point. One Medical’s core enterprise is a subscription primarily based digital platform providing telehealth providers, however it has additionally made inroads in growing in-person brick and mortar clinics as nicely. One Medical additionally gives its personal proprietary EMR system as employer-oriented choices (with Google recognized to be a serious shopper).
Given Amazon’s large scale and ambition, individuals within the area will little question be watching this transaction carefully and listed below are 5 areas we shall be taking note of:
1. Main care is a beautiful goal.
As many commentators have famous, with a purpose to carry down prices and improve the standard of affected person care, innovators want a big inhabitants to gather knowledge and unfold danger. Amazon tried this as soon as already with its notorious three way partnership, Haven. Between Amazon, Berkshire Hathaway and JPMorgan Chase, Haven had 1.2 million U.S. staff in its system, however as a result of these staff had been in broadly dispersed geographies, it lacked ample market energy to carry down the prices of well being care providers for its staff. Equally, well being care suppliers had little incentive to retrain their focus from offering (costly) episodic care to specializing in general well being care outcomes primarily based upon worth.
In contrast to the Haven three way partnership, the One Medical acquisition represents an funding in value-based major care which gives some distinct advantages. Whereas many non-public fairness investments give attention to fee-for service and outpatient specialties, garnering a return on such an funding typically includes growing extra income streams by including ancillary services and products. However, major care suppliers are typically well-positioned to direct and handle the care of their sufferers as a result of length and frequency of contact with them. Coupled with superior knowledge analytics to enhance care administration and ship evidence-based care, many within the well being care trade imagine that major care has the potential to revolutionize care supply in america, shifting away from costly, procedure-based care to patient-centered care led by physicians. Lastly and maybe most critically, One Medical’s current attributable Medicare lives supply a chance for Amazon to interrupt into the value-based Medicare mannequin at a scale that might be not possible with its personal staff.
2. Well being programs – be cautious.
The One Medical acquisition has repercussions past the individuals to the transaction. Direct Main Care has seen an explosion of curiosity lately, and One Medical doesn’t place itself as a competitor to well being programs. Nonetheless, if One Medical is ready to enhance the standard and entry to care and higher handle high quality of care, it’s prone to cut back the necessity for the episodic care supplied by hospitals and different dearer actors. Â
3. Improvements in employer choices.
Whereas this acquisition might be seen in some ways as a departure from Amazon’s earlier forays into well being care, it’s essential to notice probably the most beneficial factor Amazon brings to this transaction continues to be its large worker base. If Amazon began with their worker base within the Haven three way partnership, right here they’re beginning with a confirmed major care mannequin and plugging their worker base into that. Â
Even past that, nevertheless, Amazon now has an amazing alternative to innovate with respect to the employer’s function within the supply of well being care providers with out the stress of that being the core of the enterprise. New alternatives on this area embody the addition of localized clinics being positioned subsequent to main workplaces (assume Amazon warehouses). If Amazon can create its personal market strategically, they may drastically make inroads in one of many greatest alternatives within the well being care area – the roughly one quarter of American who don’t have a major care physician.
4. Improvements in knowledge and supply.
Many doctor practices, both as stand alone entities or when operated by hospitals or well being care programs, endure from lack of sources to develop and innovate in info programs, knowledge administration, and improvement of medical protocols, significantly as a result of, as famous above, there’s often a robust give attention to offering extra profitable episodic care to the detriment of preventive medication. We’ve no doubts that Amazon will additional One Medical’s knowledge analytics capabilities in a approach that can allow it to handle well being care and value knowledge throughout the heath care continuum. Equally, we anticipate that One Medical will proceed to offer (and even broaden) its choices of telehealth and different providers which might be value efficient, handy, and allow the immediate administration of affected person well being to attenuate subsequent, expensive interventions.
5. Engaging to physicians.
The One Medical follow mannequin is prone to seem engaging to many major care physicians as a result of it locations them on the heart of well being care decision-making for his or her sufferers. It’s broadly documented that the variety of physicians in unbiased follow is lowering. On the identical time, many major care physicians are leery of turning into employed by well being programs as a result of a lot well being system income depends on hospital providers – which means that the physicians are in a secondary place with respect to their potential to command monetary and administration sources. Amazon and One Medical are positioned to reap the benefits of these dynamics. With One Medical’s current infrastructure and Amazon’s market penetration and presence throughout america, they need to be enabled to draw sufferers whereas on the identical time relieving physicians of administrative burdens that overwhelm many well being care suppliers.
Nathan Viehl is a member of Thompson Coburn’s well being care follow.
