In mid-February, Amazon announced plans to expand its telehealth program, Amazon Care, nationwide, after previously offering it only to its own employees and select employers. In addition, the company announced plans to launch in-person healthcare services, which it is also selling to employers, who would then offer Amazon Care as an employee health benefit.
It’s become a bit of a cliche that every few years, big tech — hungry for a multi-billion-dollar growth opportunity — shifts its sights to reforming healthcare. Yet most of the time, these attempts fail to deliver on their promise. Even Amazon itself isn’t immune: its last attempt, a joint venture with J.P. Morgan and Berkshire Hathaway dubbed Haven, fizzled out after great fanfare, disbanded after just three years.
There are some lessons in Haven’s failure, and the failure of other big-tech healthcare ventures such as Google Health and Apple Health Habit, that Amazon needs to learn to avoid getting burned a second time.
- Go beyond a purchasing coalition. Haven didn’t work because simply aggregating millions of lives does nothing to change healthcare’s warped incentives and bloated care delivery model, leading only to incremental progress. Amazon needs to start with the underlying value chain and innovate with the care delivery model. Amazon has already taken the first steps with its hybrid virtual and home-based care approach – this is a good sign.
- Focus and partner. Healthcare is complex and network effects aren’t as prevalent as they are in the consumer internet. It’s hard to do everything well and no one company can “own” all of healthcare. Amazon has done well by selecting urgent and primary care as its beachhead, but 90% of the nation’s healthcare spend is the result of chronic and behavioral health conditions that often require complex specialty supervision. Digital clinics have proven to be a cost-effective and accessible solution to complex chronic conditions such as diabetes, musculoskeletal and substance use disorders. To maximize effectiveness, Amazon will need to shed its aggressive, winner-takes-all reputation, and partner with already existing tech-enabled digital clinics with specialized care capabilities.
- Be patient-obsessed, not customer-obsessed. Amazon is famously customer-obsessed, but how does that translate to healthcare where the “customer” footing the bill may not be the patient, but rather a health plan or employer? Patient-obsession goes beyond an excellent patient experience and high NPS. Amazon must also improve population health outcomes and do so at a lower cost than traditional providers in order for employers to take a chance on their new program. Employers are increasingly looking for evidence-based care.
- Innovate in value-based care. Payers have been slow to replace fee-for-service reimbursement with a capitation model that is tied to health outcomes, but without doing so, there is little incentive to control costs. There are many ways to achieve alignment towards value in healthcare. Amazon isn’t currently disclosing pricing for its virtual care platform but the reimbursement model the company ultimately chooses will be a litmus test for how serious it is about truly innovating in healthcare.
Innovation is desperately needed in all areas of healthcare. But bigfoot approaches that disregard existing care delivery models, rather than try to improve them, do not have a track record of success. Learning from its own past failures, and well as failures of other big-tech healthcare initiatives, could go a long way towards ensuring the survival of Amazon Care.
Photo: Flickr, Cerillion Skyline