Boomtown Accelerators

How Might it Change Healthcare

By Toby Krout, CEO, Co-founder, Boomtown Accelerators

THESIS: Virtual care is a primary category of health tech innovation, and one ripe for groundbreaking disruption. What will be the ramifications for traditional players as Big Tech moves broadly and intensely into the industry? We examine this with the recent announcement of Amazon’s purchase of One Medical. 

Amazon’s blockbuster purchase in July 2022 of One Medical, a chain of 180 primary care clinics in 28 markets, could be a game-changer in the healthcare industry. The purchase is huge – One Medical has nearly 770,000 members in 23 states plus Washington D.C. What does this move mean for the online retail giant? 

First off, it’s not actually that big of a surprise that Amazon – as the world’s most consumer-centric company – is expanding its physical footprint in medical care (Kaufman 2022). It comes after its aggressive scale-up of what began as a modest primary care pilot for its employees in the Seattle area, Care Medical. Amazon also enlisted Crossover Health to expand virtual offerings to employers and individuals nationwide (Bannow 2022). 

In February the company announced plans to roll out new in-person locations in 20 new cities this year, including New York City, Chicago, Miami and San Francisco. That’s in addition to in-person clinics already operating in Dallas, Boston and L.A. (Bannow 2022). 

A customer-centric approach already pervades Amazon Care, which has already discovered out how to provide pharmacy and medical care in 50 states, most of it virtually. During a virtual visit if it’s determined the patient needs a lab test, Amazon Care sends a technician to the consumer’s home to draw the lab – it doesn’t make the patient schedule an appointment. They send somebody to the patient’s home or office (Kaufman 2022)

Amazon will face new challenges with OneMedical, which has been unable to generate a profit, just yet. It’s been in the red for years, having lost almost $93 million on operations in the first quarter of 2022 (Bannow 2022). But it’s not just a pilot program anymore – it’s a significant business with a large customer base. One Medical’s reliance on staffing physicians has been expensive. Amazon is likely to add in a mix of nurse practitioners, physician assistants, and nurses – it’s already doing with virtual care, and it could help the company to right-size the cost structure (Bannow 2022). 

Some health executives have questioned whether trust in the delivery of health care  – the desire by patients for care provided in a personal and local way – will create challenges for Amazon’s model. Will consumers be comfortable with Big Tech having their most personal and private information? History says “no,” according to Rich Rogers. Senior Vice President and CIO of PrismaHealth in Greenville, S.C. (Diaz 2022). 

One thing is clear – the One Medical deal – valued at $3.9 billion – will enable Amazon to compete in the in-store market with other big players like Wal-Mart and CVS Health, according to Howard Forman, a health care management professor at Yale University (Bannow 2022). 

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