Mid-February, Amazon announcement plans to expand its telehealth program, Amazon Care, nationwide, after only offering it to its own employees and select employers. Additionally, the company announced plans to launch in-person healthcare services, which it also sells to employers, who would then offer Amazon Care as an employee healthcare benefit.
It’s become a bit of a cliché that every few years, big tech — hungry for multi-billion dollar growth opportunities — turns to health care reform. However, most of the time, these attempts do not deliver on their promises. Even Amazon itself is not immune: its latest attempt, a joint venture with JP Morgan and Berkshire Hathaway dubbed Haven, collapsed to great fanfare, disbanding after just three years.
There are a few lessons from the failure of Haven, and the failure of other big healthcare companies like Google Health and Apple Health Habit, that Amazon must learn to avoid getting burned a second time.
- Go beyond a buying coalition. Haven didn’t work because simply aggregating millions of lives doesn’t change the distorted healthcare incentives and bloated care delivery model, which only leads 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 approach to virtual and home care – that’s a good sign.
- Focus and partner. Healthcare is complex, and network effects are not as prevalent as they are in the consumer Internet. It’s hard to do everything right, and no one company can “own” all healthcare. Amazon has done well in choosing urgent and primary care as its beachhead, but 90% of the country’s health expenditures are the result of chronic and behavioral health conditions that often require complex specialist supervision. Digital clinics have proven to be a cost-effective and accessible solution to complex chronic diseases such as diabetes, musculoskeletal disorders and substance use disorders. To maximize efficiency, Amazon will need to shed its aggressive win-win reputation and partner with already existing digital clinics with specialized care capabilities.
- Be obsessed with the patient, not the customer. Amazon is notoriously obsessed with the customer, but how does that translate to healthcare where the “customer” paying the bill may not be the patient, but rather a health plan or employer? The patient obsession goes beyond a great patient experience and a high NPS. Amazon also needs to improve population health outcomes and do so at a lower cost than traditional vendors so employers can try their luck with 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 tied to health outcomes, but without it there is little incentive to control costs. There are many ways to achieve value alignment in health care. Amazon does not currently disclose pricing for its virtual care platform, but the reimbursement model the company ultimately chooses will be a litmus test of how serious it is about truly innovating in healthcare. .
Innovation is desperately needed in all areas of health. But bigfoot approaches that ignore existing models of care delivery, rather than trying to improve them, have been untested. Learning from its own past failures, as well as the failures of other large-scale healthcare initiatives, could go a long way to ensuring Amazon Care’s survival.
Photo: Flickr, Cerlion Skyline