How Will Amazon Care Impact the Healthcare Sector?

By Anna Farley

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Amazon's latest offering might be its most disruptive yet. Combining in-person care and telehealth, Amazon Care could drastically disrupt healthcare.

Investing in healthcare - Amazon Care - Source: Adobe Stock Images

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Amazon (NASDAQ: AMZN) is already making waves in the healthcare world, but the tech giant’s new offering might be its most disruptive endeavor yet. Indeed, by combining in-person care and telehealth, Amazon Care could drastically disrupt healthcare as it stands.

And if it succeeds, it could be a powerful force for change in the healthcare sector in spite of fierce competition and multiple challenges.

What is Amazon Care?

Amazon Care is the tech giant’s latest potentially game-changing offering in the world of telehealth. It’s an area many of us are much more familiar with following the pandemic.

Taking photos of rashes or injuries to send to a clinician, instead of dragging yourself to the doctor’s office in person, is now a common occurrence.

And with Amazon Care, patients can now access primary or urgent care through text and video chats with clinicians 24-hours a day, including on weekends and holidays.

Depending on the area, it’s also possible to get contact-free prescriptions delivered to your home through Amazon Care. It makes sense after the launch of Amazon Pharmacy late last year, which allows users to shop around for the best price and have medication delivered to their door.

The company launched Amazon Care as a pilot back in September 2019 for its Seattle-based employees and their families. It has been expanding ever since.

In Seattle, clinicians can even send nurses supplied by Care Medical to a patient’s home. There, these nurses can conduct tests and provide treatment.

According to a Business Insider article, which cites three people familiar with Amazon’s plans, the next step will be an expansion into more than 20 major US cities in 2021 and 2022.

And, if these plays out, it will present a serious challenge to established players in the healthcare space.

How Amazon Care could disrupt the existing healthcare market

With the expanding presence of telehealth, and in combination with Amazon Pharmacy, Amazon Care could have the power to make real waves in the world of healthcare.

The presence of such a major and powerful player in the space could lead to serious disruption. Look at it this way, Amazon is sitting on a market cap of $1.7 trillion!

UnitedHealth (NYSE: UNH), the largest health insurance company in the US, has 70 million members and a $387 billion market cap. CVS Health’s (NYSE: CVS) $112 billion market cap, meanwhile, is the highest among all US pharmacies.

Amazon has close to three and a half times the combined market caps of both those companies.

For that reason, the company might be able to compete for better deals and offer services and drugs cheaper than the competition. Indeed, drug makers and other organizations could be willing to accept lower prices in exchange for access to Amazon’s huge subscriber base.

After all, there are more than 200 million Amazon Prime users worldwide. The number of US subscribers alone stands at 126 million – that’s far more subscribers than UnitedHealth has members. In fact, a majority of the adult population in the US has Prime membership.

Already, with Amazon Pharmacy, Prime members can review prices and pharmacies.

Other organizations, aiming to compete with Amazon, could drive down prices too. And this might be the best time for this kind of disruption.

After all, so many people have had to get used to telehealth services during the Covid-19 pandemic. The idea of a video call or text chat with a clinician doesn’t seem unusual at all.

Then there’s the possibility of integrating existing Amazon technology with Amazon Care like the Amazon Halo Band. The Halo Band can measure heart rate, count steps, determine body fat, track sleep, and even analyze tone of voice.

Imagine this scenario

  1. You’re a Halo Band user and the device flags an issue with heart rate or sleep.

  2. You bring up the issue with Amazon Care.

  3. The clinician you speak to over video chat sends a nurse round.

  4. The nurse conducts some at-home tests and finds a health issue.

  5. You get a prescription for a medication, which you fill through Amazon Pharmacy and have delivered straight to your door.

  6. You have an Amazon Alexa installed at your home. The device sends out helpful reminders to take your new medication and request a prescription refill.

See how, in that scenario, you didn’t have to look outside of Amazon at all? Everything was contained within the Amazon ecosystem.

Patients could be guided through Amazon’s offering, with prompts at each step moving them over to the next Amazon service.

It’s easy to imagine a world where the Halo app might flag up a problem with a prompt asking if a user would like to make an Amazon Care appointment. Or, a world where Alexa automatically refills a prescription with Amazon Pharmacy.

It could pave the way for wearables and other consumer tech to play a bigger role in the healthcare world. It’s an arena where Apple’s (NASDAQ: AAPL) Apple Watch and other smart watches like the Fitbit are already making their presence felt.

What is Amazon’s track record in the healthcare sector?

Amazon is certainly no stranger to the world of healthcare, as the incentive to establish a presence grows stronger all the time.

In 2019, US national healthcare expenditure totalled $3.8 trillion. According to the Centers for Medicare and Medicaid Services, it’s on course to hit an estimated $6.2 trillion by 2028.

Amazon Pharmacy is already in operation after its $753 million 2018 acquisition of PillPack. PillPack sorts medications by date and time and delivers them to people’s homes.

A regulatory filing released in late July also showed that the firm had invested millions in Nautilus Biotechnology (NASDAQ: NAUT).

Amazon held almost $15 million worth of shares at Q2 end in Nautilus, a pre-revenue biotech firm focused around proteomics. Proteomics involves studying proteins on a large scale, looking at the structure and roles of these essential building blocks for life.

This shows the company is taking an interest in the biotech side of healthcare too.

And, in July this year, the company got another healthcare win. This time in the form of emergency US approval for its at-home Covid-19 testing kit.

But it hasn’t all been sunshine and rainbows for Amazon…

Haven, the company’s joint venture with Berkshire Hathaway and JP Morgan Chase, ran from 2018 to early 2021 before shutting down. The end of such a high-profile healthcare venture could be a negative sign for the future.

And there are plenty of obstacles to overcome if the firm wants to become a major player in the healthcare world.

What challenges does Amazon face when it comes to healthcare?

With healthcare spending already so high in the US, and expected to increase, Amazon faces competition in all areas.

Amazon Care, for example, has competition in the telehealth world from more established players in the space. Players like Teladoc Health (NYSE: TDOC) and Amwell (NYSE: AMWL).

And, after many got used to accessing telehealth during the pandemic, it’s an arena that could see even more attention.

Amazon Care also has a powerful competitor in GoodRX. which not only operates a telemedicine platform but also allows users to compare the prices of prescription drugs and find coupons in a similar way to Amazon Pharmacy.

Then, there’s the question of whether trialling Amazon Care on the company’s own employees could truly prepare the firm for a wider launch with insurers.

The firm’s employees tend to skew young. The average age is 30, which means these employees might not be a very representative group.

Most Amazon employees are likely to be healthy, and have low health needs. This could mean there are challenges Amazon is not prepared for when rolling Amazon Care out in sectors with older workers.

And the collapse of the Haven joint venture shows just how much of a challenge the company is facing.

Whether the firm can truly move into any sector, or if this will prove to be a dead end, remains to be seen. But there are currently more uncertainties than certainties when it comes to the future of Amazon Care.

What is the key takeaway?

Success for Amazon in the healthcare world could be transformational, but it’s far from guaranteed.

Generating a healthcare ecosystem combining Amazon Halo, Amazon Care, and Amazon Pharmacy could change the landscape drastically…

But, on the other hand, competition is fierce and the firm is still at the start of its journey.

The question of whether or not the company can live up to the level of hype surrounding Amazon Care is miles away from being answered. But, either way, this looks to be an interesting journey.

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In this article:

Topics:
Healthcare Distributors
Healthcare Services
Healthcare Technology
Industries:
Information Technology
Healthcare
Companies:
Amazon
UnitedHealth Group
CVS Health

Author: Anna Farley

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Anna Farley does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Anna Farley has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.