It is estimated that primary healthcare in the US is worth $260 billion, and now Amazon is purchasing its starter share of this lucrative industry. The retail giant has just offered to purchase One Medical Healthcare for $18 per share. That’s a deal that tops $3.9 billion. One Medical Healthcare offers 24-hour virtual healthcare and same-day in-person visits nationally at one of 125 locations.
This is not Amazon’s first foray into the healthcare industry. In 2018, the retail giant bought an online pharmacy, PillPack, and the company published a plan to enlarge Amazon Care to include all its US employees last year. It also opened Amazon Care to other companies offering their employees healthcare reimbursement models. That was the first time Amazon entered the national direct patient care market.
The Amazon Healthcare Strategy Post Acquisition
If Amazon successfully acquires One Medical Healthcare, it will significantly expand its healthcare coverage. One Medical Healthcare has 767,000 members and 8,000 companies on its books. The Amazon healthcare strategy will likely include closer integration between Amazon virtual care and its online pharmaceutical business.
Amazon Virtual Care Has Access to Millions
Amazon has access to millions of Americans. Indeed, 44% of Americans have an active Amazon Prime membership. The company also has more advanced technology than almost any other company. This alone should be enough to drive Amazon’s virtual care expansion. Add to this Amazon’s advanced consumer data and analytics capabilities, and it becomes clear that the Amazon healthcare strategy is headed for success. However, some fear the invasion of patient data privacy with concerns that Amazon, a company with easy access to reams of customer purchasing data, will now enjoy adding highly personal healthcare data to people’s profiles through Amazon virtual care. Amazon’s healthcare strategy aims to provide better patient outcomes more efficiently and at a lower cost.
Other Non-Traditional Businesses Are Changing Healthcare Reimbursement Models
Over the last ten years, other non-traditional businesses, including payers and retailers, have shown an increased interest in the healthcare industry. Global consulting company, Bain, expects these new market entrants to transform the healthcare industry’s reimbursement models, increasing the competitive environment and driving innovation. The company estimates that almost one-third of the primary healthcare industry in the US will consist of non-traditional providers by 2030, with 5% to 10% held by retail giants.
Growing market trends of digital disruption, changing demographics, increasing costs, consumerism, and labor shortages are already transforming the industry. New players like Oak Street Health and Optum Care, a recent addition to United Health, will continue to change the industry with healthcare reimbursement models, ownership, and care innovations.
Shift of Fee-for-Service to Fee-for-Value
Bain views the transformation in reimbursement models from fee-for-service to fee-for-value as one of the most significant changes in the primary care industry today. They expect the pace of this change to increase. The small but influential group of disruptors is already producing better patient outcomes at lower cost by pursuing target marketed models to work on full capitation. Only 7% of the healthcare markets currently operate on full capitation. However, according to Bain, this will likely change as new healthcare groups push the move to value-based care (VBC) and population-specific healthcare reimbursement models.
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