Amazon https://www.amazon.com recently announced that the company is expanding their Amazon Care telehealth service to all U.S employees starting this summer plus they are offering their virtual care program as a service for other employers nationally. Credit Suisse http://www.credit-suisse.com has published the report Healthcare Technology: AMZN Redux: Here We Go Again.
Credit Suisse reports that the announcement was expected given previous reports that Amazon was looking to commercialize what began as a pilot program for their own employees (see the note from December 20), AMZN Making a Push for Telehealth for Large Employers.
As discussed in Credit Suisse’s prior note, telehealth among large employers is nearly fully penetrated. Thus, Amazon by selling to large employers will therefore require market share shifts for an employee benefit offering that tends to be quite sticky especially since telehealth benefits make up a small fraction of overall spending for employers.
In fact, Credit Suisse highlighted in their HCIT-Related Takeaways from their annual employer Benefit Survey note in September 2020, telehealth vendor satisfaction among large employers is very high (84%). Given the critical role telehealth played during COVID, Credit Suisse’s understanding is that the satisfaction level has continued to trend higher.
While Amazon Care should not be brushed aside, analysts note there is an increasingly uphill battle for the e-commerce giant to face since the incumbent telemedicine vendors have already begun to differentiate themselves. For example, Teladoc’s acquisition of Livongo, Cigna acquiring MDLive, and most recently Doctor on Demand’s merger with Grand Rounds.
Another trend to note is that telehealth benefits are increasingly moving to carved-in benefits where employees have access to a telehealth vendor contracted through their health plan. According to Credit Suisse’s benefits survey, 81% of employers had a carved-in approach to telehealth in 2020 vs an expected 83% in 2021.
Lastly, analysts continue to expect that large employers are more likely to work with vendors/partners who have well established platforms with proven solutions vs becoming a pilot project on basic telehealth offerings from a new market entrant which is competing with employers in some way.
AMZN seems to be positioning its offering for Virtual Primary Care (VPC). Credit Suisse analysts note that all telehealth vendors have VPC offerings in place and analysts expect employers/payers to leverage these existing partnerships.
This is not Amazon’s first push into healthcare. The e-commerce giant has been trying to disrupt this industry for several years in terms of drug distribution, medical distribution, hospital GPOs, health insurance, and more recently, the pharmacy market.
However, AMZN has essentially nothing significant to show from a disruption point of view. In fact, the company has dissolved Haven, the healthcare venture formed with Berkshire Hathaway and JPMorgan Chase earlier this year. As evident from recent news flow, collaboration and consolidation are critical to succeed in this evolving digital health paradigm.
However, given AMZN’s past efforts to disrupt (or try to) several industries in healthcare, AMZN is going to have a hard time getting much success in terms of collaboration with industry stakeholders. Bottom line for Amazon Care to succeed, AMZN must quickly start getting traction with employers and/or payers. Credit Suisse analysts remain skeptical and continue to believe that the best way for AMZN to gain significant entry/foothold in healthcare, is through an acquisition of a decently sized healthcare entity.
The in-person component to Amazon Care will also be expanding to Washington D.C., Baltimore, and other cities in the coming months, Up until the announcement, Amazon Care has been exclusively available to Amazon employees and their families in Washington State. Amazon will roll out the virtual care part of the program to their employees and other companies nationwide this year, but the in-person component will initially be offered only in Washington State and near their new second headquarters in the Washington D.C., metro area.
Amazon Care will treat a wide spectrum of patient needs including primary care and urgent care situations. Patients can access, preventive care such as annual vaccinations, health screenings, and lifestyle advice through the Amazon Care app. The service also support patients’ wellness needs, including nutrition, pre-pregnancy planning, sexual health, smoking cessation, and more.
For immediate needs, patients can use Amazon Care to assess and treat illnesses and injuries on demand. For continuity of care, the HIPAA-compliant service also allows employees and their dependents to see the same dedicated teams of medical professionals to create long term relationships.
For the report Healthcare Technology: AMZN Redux: Here We Go Again, ask questions, provide feedback, or provide news, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.