With its new model of outsourced virtual care, will the third time be the charm of Amazon?

After announcing its intention to close Amazon Care, Amazon is taking a different path with its new Amazon Clinic avatar. Instead of building its own network of suppliers and offering it to employers as it did with AmazonCareAmazon Clinic caters directly to consumers and outsources care to third-party providers.

And it will likely be the most successful direction for the retailer, an expert says.

“That’s what Amazon is really good at: customer experience combined with logistics,” said Daniel Grosslight, senior health technology research analyst at Citi. “It’s a fairly easy solution to implement. They don’t build the network themselves, they just provide a marketplace. So they should be able to do it quite well. Whereas with Amazon Care, I’ve always been very skeptical about it because it’s so difficult to scale a national provider network.

Amazon Clinic, which was unveiled Tuesday, is a virtual service for over 20 common health issues, including allergies, acne, and hair loss. Those who want to use it start by selecting their condition and choosing a provider. After completing a questionnaire, clients are connected to their clinician through a message-based portal, where they will receive a treatment plan and any necessary prescriptions. It currently does not accept insurance, but consumers pay around $30-40 per consultation. Amazon Clinic is starting in 32 states and will likely expand in the future, according to a press release.

The benefit of the whole model is cost, Grosslight said.

“It’s a very lightweight way of doing it, and that’s what Amazon does with other third parties on its website, third-party sellers,” he said in an interview. “It’s not Amazon that sells directly, it’s a third party that sells directly… It’s very difficult to recruit providers at the moment, it goes from very high level to nurses. So it’s a way for Amazon to grow quickly without spending on vendors.

Another industry expert agrees that this outsourcing model is the best, least expensive option for Seattle-based businesses. Amazon.

“It is probably cheaper and more efficient for Amazon to set up a telehealth platform – something the retailer is already good at, the distribution – rather than finding the suppliers and building their own model themselves. virtual care (something they struggled with twice from Haven and more recently, Amazon Care),” Blake Madden, Founder of Industry Newsletter Hospitalology, wrote in an email. “A number of large telehealth providers already exist in the wild in 2022. By outsourcing care delivery functions, Amazon can focus more on the consumer side of the Amazon Clinic model, including the obvious synergy with Amazon Pharmacy and potential downstream revenue from health upselling. and wellness products.

For providers, partnering with retail companies allows them to scale, said Ashraf Shehata, partner and health plan advisory industry leader at KPMG. He declined to speak specifically about Amazon, but spoke about retail businesses in general.

“The problem on the vendor side is that it’s hard to get scale across the country, when you’re talking about doing something in 30, 40, 50 states,” he said in an interview. “That’s the good thing about the retail model is that it has a national and even international scale in some cases.”

The news from Amazon Clinic comes after the company announced plans to to acquire primary care provider A medical, which is likely why Amazon chose to shut down Amazon Care because they are very similar, Grosslight speculated. The retail giant also manages Amazon Pharmacy, which dispenses prescriptions to Prime members in two days. Amazon Clinic is a way for the company to drive even more consumers to its pharmacy, Grosslight said.

This will put the Seattle-based online retailer in direct competition with companies like Him and her and Roalbeit with a slightly different price setup, Madden wrote in his Thursday newsletter.

It’s worth noting that Amazon charges for the consultation since Ro and Hims seem to be providing it for free, but I suspect this pricing strategy could be a way to attract and pay vendors more,” he said. .

That said, Grosslight doesn’t think Hims & Hers and Ro should be concerned. Although on the surface they seem similar to Amazon Clinic, they actually have different models.

“On a basic level, it’s very similar, meaning you see a provider asynchronously and get prescriptions filled and mailed directly,” Grosslight said. “But with Hims and Hers, it’s a big brand product, it’s customizable through their compounding pharmacy for a lot of their dermatology prescriptions and even hair…I don’t think Hims and the other virtual products direct-to-consumer brands healthcare/drugstores have reason to worry.

While Amazon Clinic may prove to be a financial success, given its original purpose, it is unlikely to introduce lasting change to the industry.

“Centralizing and simplifying access to health care is important to addressing health care disparities,” said Jack Stockert, CEO of Health2047, wrote in an email. “Amazon Clinic has the ability to solve fundamental healthcare issues such as access, outcomes and costs. However, the types of ailments he chose to focus on initially are not necessarily important drivers of health care costs, rather convenience issues, and therefore unlikely to materially change the way health care works or to really affect the actual prevalence of the diseases that cause the bulk of health care expenditure. . At least not in the short term.

Photo: Flickr, Cerlion Skyline

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