The Washington Post has a piece about Amazon’s efforts “to consolidate its telehealth, pharmacy and primary-care services following its $3 billion acquisition of One Medical in 2022. Earlier this month, Amazon laid off hundreds of employees across Amazon Pharmacy and One Medical and announced a corporate restructuring. Current and former employees say the move reignited concerns that the e-commerce giant would start prioritizing profits over patients.
“One Medical CEO Trent Green said the company remains ‘independent of Amazon leadership’ and any changes are unrelated to the acquisition.”
The Post writes that “Amazon has long had health-care ambitions, but it has struggled to make them a reality. In 2020, it tried to improve health-care systems in partnership with JPMorgan Chase and Berkshire Hathaway in a since-shuttered venture called Haven. More recently, it spun up virtual and in-home health clinic Amazon Care, which it hoped to sell as a workplace benefit, but shut it down in 2022 as it struggled to attract customers.
“Amazon built its empire in part through big acquisitions. It is also known for its frugality, a core principle that dictates that employees ‘accomplish more with less.’ When buying companies, Amazon has historically looked for good deals, and allowed its acquisition targets to operate independently while it observes and gathers data. Only then does it gradually begin molding those companies, like it did with Whole Foods and the gaming platform Twitch.”
According to the Post story, “Today, Amazon’s health-care offerings include Amazon Clinic, an online-only offering for common ailments that works with third-party medical providers; Amazon Pharmacy, which it grew out of PillPack, a start-up that the company acquired for $1 billion in 2018; and One Medical, the concierge primary-care clinic with a $199 annual membership fee that appeals to young, healthy, urban patients comfortable booking appointments and talking to doctors via an app.
“Over the past few months, Amazon has worked to integrate these businesses, stocking One Medical waiting rooms with Amazon Pharmacy fliers, creating a program that allows One Medical doctors free consultations with Amazon pharmacists, and offering Amazon Prime subscribers One Medical memberships at a 50 percent discount.”
KC’s View:
I’ve consistently been skeptical about retail businesses – like CVS and Walgreens – getting into the healthcare business, largely because I’m not sure traditional retail priorities are a good fit with those of healthcare institutions. (It also doesn’t help, in my view, that CVS and Walgreens often run crappy stores, suggesting that while they may be big retailers, they’re not very good retailers.)
Amazon is both more ambitious and competent than either of those two drug store chains, but while integrating its various offerings may make a lot of sense, I’m not sure that integration of its business is the company’s strong suit. I would argue that Amazon has not taken advantage of Whole Foods’ intellectual property to the degree it should have, and Whole Foods makes minimal use of Amazon programs such as Prime and Subscribe & Save.
It is still early in health care for Amazon, but as much as this is a big opportunity, this also is a big lift, and it remains to be seen whether it will be successful.
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