On July 21, 2022, probably the most high-profile acquisition within the well being care area in latest 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 business has been no secret in recent times, however that is undoubtedly their largest wager so far. One Medical’s core enterprise is a subscription primarily based digital platform providing telehealth companies, but it surely has additionally made inroads in growing in-person brick and mortar clinics as properly. One Medical additionally provides its personal proprietary EMR system as employer-oriented choices (with Google identified to be a serious shopper).
Given Amazon’s large scale and ambition, members within the area will little doubt be watching this transaction carefully and listed here are 5 areas we will probably be being attentive to:
1. Major care is a pretty goal.
As many commentators have famous, with a purpose to deliver down prices and improve the standard of affected person care, innovators want a big inhabitants to gather information 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 extensively dispersed geographies, it lacked adequate market energy to deliver down the prices of well being care companies 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.
Not like the Haven three way partnership, the One Medical acquisition represents an funding in value-based major care which provides 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 usually entails growing extra income streams by including ancillary services. Alternatively, 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 information analytics to enhance care administration and ship evidence-based care, many within the well being care business imagine that major care has the potential to revolutionize care supply in the USA, shifting away from costly, procedure-based care to patient-centered care led by physicians. Lastly and maybe most critically, One Medical’s present attributable Medicare lives supply a chance for Amazon to interrupt into the value-based Medicare mannequin at a scale that may be inconceivable with its personal staff.
2. Well being programs – be cautious.
The One Medical acquisition has repercussions past the members to the transaction. Direct Major Care has seen an explosion of curiosity in recent times, 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 offered by hospitals and different costlier actors.
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 invaluable 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.
Even past that, nonetheless, Amazon now has an amazing alternative to innovate with respect to the employer’s function within the supply of well being care companies with out the stress of that being the core of the enterprise. New alternatives on this area embrace 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 largest alternatives within the well being care area – the roughly one quarter of American who don’t have a major care physician.
4. Improvements in information and supply.
Many doctor practices, both as stand alone entities or when operated by hospitals or well being care programs, endure from lack of assets to develop and innovate in data programs, information administration, and improvement of medical protocols, significantly as a result of, as famous above, there’s often a powerful give attention to offering extra profitable episodic care to the detriment of preventive medication. Now we have no doubts that Amazon will additional One Medical’s information analytics capabilities in a approach that may allow it to handle well being care and price information throughout the heath care continuum. Equally, we anticipate that One Medical will proceed to supply (and even broaden) its choices of telehealth and different companies which are value efficient, handy, and allow the immediate administration of affected person well being to reduce subsequent, pricey interventions.
5. Enticing to physicians.
The One Medical observe mannequin is prone to seem enticing 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 extensively documented that the variety of physicians in impartial observe is reducing. 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 relies on hospital companies – which means that the physicians are in a secondary place with respect to their capacity to command monetary and administration assets. Amazon and One Medical are positioned to reap the benefits of these dynamics. With One Medical’s present infrastructure and Amazon’s market penetration and presence throughout the USA, 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.
and are members of Thompson Coburn’s well being care observe.