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Amazon makes a new push into health care

by Ozva Admin

AGREAT Tech companies are facing a brutal slowdown – the search for new areas of expansion is on. Amazon, now the second-largest company in the United States by revenue, is a case in point. In the last quarter of 2022, its sales are expected to increase by just 6.7% year-on-year. Last week, on November 17, Andy Jassy, ​​the firm’s chief executive, confirmed that he had begun laying off employees and that he would continue to do so next year. Jassy said it was the hardest decision he had made since he became boss. But he also noted that “great opportunities” were ahead. One that stood out is America’s biggest, most lucrative and terribly difficult business: health care.

Many tech companies have healthcare ambitions. Apple tracks wellness through the iPhone; Microsoft offers cloud computing services to healthcare companies and Alphabet sells wearable devices and is pumping money into biotech research. But Amazon is now busy creating the most ambitious offer of all. Two days before Mr. Jassy’s statement, on November 15, he launched “Amazon Clinic,” an online service that operates in 32 states and offers virtual medical care for more than 20 conditions, from acne to allergies. Amazon describes the new service as an online store that connects users with third-party healthcare providers.

The launch of Amazon Clinic follows the $3.9 billion acquisition, announced in July, of One Medical, a primary care provider that offers online telehealth services and runs brick-and-mortar clinics (the deal has yet to close). It has 790,000 members. The deal was led by Neil Linsday, the former head of Prime, Amazon’s subscription service, who said healthcare “is high on the list of experiences that need to be reinvented.”

These latest moves complement the existing assets Amazon has. His Halo band is a wearable device that monitors the wearer’s health status and went on sale in 2020. In 2018 he bought PillPack, a digital pharmacy now part of Amazon Pharmacy, for $753 million. Amazon Web Services launched cloud services specifically for healthcare and life sciences companies in 2021.

The move to primary care, slang for the role of the traditional family doctor, is a big step but one with obvious logic. Walgreens, a drugstore chain, reckons the industry is worth a trillion dollars a year. About half of Gen Z and millennial Americans don’t have a primary care doctor, and One Medical’s membership has nearly doubled since 2019. Amazon Clinic will accept cash for its services, instead of relying on the system America’s nightmare insurance company to recover costs.

The company is betting that primary care becomes more digital. And it will likely look to integrate these services with other parts of Amazon’s healthcare offering. New Amazon Clinic users can purchase medications at Amazon Pharmacy. Over time, the company could add features to the Halo band that give people reminders to take medicine or set up clinics at branches of Whole Foods, the grocery chain it acquired in 2017. And it could include healthcare on Prime. , which now has about 200 million members. all over the world. “The low hanging fruit is offering membership discounts to Prime members,” says Daniel Grosslight of Citigroup, a bank.

Amazon’s health boost comes with several risks. One is that its own record is far from perfect. It is shutting down Amazon Care, which it launched to provide health services to its own employees and has expanded to offer some services to outside customers. Haven, a collaboration with Berkshire Hathaway, Warren Buffet’s investment firm, and JPMorgan Chase, a bank, to get low-cost health care for employees was established in 2018 but died less than three years later.

Another danger is competition. resume, an American retail pharmacy, reportedly overtook Amazon by Signify Health, a large primary care provider in September. In October, Walgreens increased its stake in VillageMaryland with an investment of 5,200 million dollars. JPMorgan recently opened its own primary care centers. Amazon’s new venture will also compete with companies like Ro and Hims & Hers, both tech startups that are dedicated to providing virtual healthcare.

Ultimately, Amazon will have to deal with regulators. The Federal Trade Commission, an antitrust agency, is reviewing the One Medical deal. The acquisition and launch of the Amazon clinic will raise questions about who should be allowed to have sensitive healthcare data. Amazon has said that “we remain focused on the important mission of protecting customers’ health information.” The company may need to set up strong firewalls to separate customer information held by clinics from that collected through other products and services. But satisfying data privacy concerns could kill off many of the data-sharing opportunities that Amazon cleverly implements throughout the rest of its business.

Amazon’s attempts to disrupt healthcare will be subject to intense scrutiny. However, it should have a positive effect on health care in the United States. His experience in keeping customers happy while generating minimal margins could improve primary care and force other providers to up their game. It may also spur other tech giants to do more to disrupt healthcare. All of this may be just the medicine that America’s health care system, and Jassy’s tenure as head of Amazon, sorely needs.

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