I’ve read commentary about Amazon’s purchase of One Medical suggesting it’s not a big deal: One Medical is too small and treats largely affluent patients; healthcare is too complex even for Amazon (witness the Haven failure); the real problem is waste and abuse.
Here are four reasons I think it’s an important acquisition:
The clinical team: One Medical has built a thriving digital-first clinical workforce made up of physicians, nurse practitioners, nurses, and other healthcare professionals who are engaged in a new type of practice, and are ready to teach others how to provide a great consumer experience. This team-building success shouldn’t be taken for granted.
Experience with payment models: One Medical has experience with three payment models - they sell an employee benefit plan to self-insured employers (including Google); they sell subscriptions to individuals; and they bill insurance companies for services provided. There’s a lot of revenue-generation experience here.
Patient experience: Like Amazon, One Medical focuses on the consumer experience, and it’s excellent (I’m a subscriber). This is hard to do in the service industry, particularly when everyone you hire trained in a traditional medical organization. Just think about the consumer experience most patients have when they go to their traditional provider - I gave up on my primary care provider when it took nine-months to schedule a physical.
Value insight: Iora - acquired by One Medical last year - spent a decade iterating on a value-focused primary care practice model that now serves patients on Medicare. This is a far different population than One Medical serves, adding depth to the clinical bench as well as enormous experience thinking about value-based care.
I’m looking forward to watching Amazon bring its experience with data and the consumer experience to One Medical, and then see how it scales.
What’s missing? Amazon doesn’t yet own a third-party administrator (TPA) that knows how to think about healthcare claims and the complexity of coding and adjudication that contributes to administrative cost, fraud, and abuse. Amazon also doesn’t own a hospital, which brings its own set of headaches to the healthcare equation. My bet is that the next healthcare acquisition Amazon makes in the next 3-5 years is one of these beasts.