On July 21, 2022, probably the most high-profile acquisition within the well being care house in latest reminiscence was introduced, when Amazon publicized the acquisition of One Medical, a major care group, for $3.9 billion. Amazon’s curiosity within the large US well being care business has been no secret in recent times, however that is undoubtedly their largest guess up to now. One Medical’s core enterprise is a subscription primarily based digital platform providing telehealth providers, nevertheless it has additionally made inroads in growing in-person brick and mortar clinics as effectively. One Medical additionally presents its personal proprietary EMR system as employer-oriented choices (with Google recognized to be a significant consumer).
Given Amazon’s large scale and ambition, individuals within the house will little doubt be watching this transaction carefully and listed here are 5 areas we shall be listening to:
1. Major care is a pretty goal.
As many commentators have famous, with a view to deliver down prices and improve the standard of affected person care, innovators want a big inhabitants to gather information and unfold danger. Amazon tried this as soon as already with its notorious three way partnership, Haven. Between Amazon, Berkshire Hathaway and JPMorgan Chase, Haven had 1.2 million U.S. workers in its system, however as a result of these workers have been in broadly dispersed geographies, it lacked ample market energy to deliver down the prices of well being care providers for its workers. Equally, well being care suppliers had little incentive to retrain their focus from offering (costly) episodic care to specializing in total well being care outcomes primarily based upon worth.
Not like the Haven three way partnership, the One Medical acquisition represents an funding in value-based major care which presents some distinct advantages. Whereas many personal fairness investments deal with fee-for service and outpatient specialties, garnering a return on such an funding typically includes growing extra income streams by including ancillary services. However, major care suppliers are typically well-positioned to direct and handle the care of their sufferers because of the period and frequency of contact with them. Coupled with superior information analytics to enhance care administration and ship evidence-based care, many within the well being care business consider that major care has the potential to revolutionize care supply in america, shifting away from costly, procedure-based care to patient-centered care led by physicians. Lastly and maybe most critically, One Medical’s present attributable Medicare lives supply a possibility for Amazon to interrupt into the value-based Medicare mannequin at a scale that might be unattainable with its personal workers.
2. Well being methods – be cautious.
The One Medical acquisition has repercussions past the individuals to the transaction. Direct Major Care has seen an explosion of curiosity in recent times, and One Medical doesn’t place itself as a competitor to well being methods. Nevertheless, if One Medical is ready to enhance the standard and entry to care and higher handle high quality of care, it’s prone to cut back the necessity for the episodic care offered by hospitals and different costlier actors.
3. Improvements in employer choices.
Whereas this acquisition might be seen in some ways as a departure from Amazon’s earlier forays into well being care, it’s vital to notice probably the most beneficial factor Amazon brings to this transaction remains to be its large worker base. If Amazon began with their worker base within the Haven three way partnership, right here they’re beginning with a confirmed major care mannequin and plugging their worker base into that.
Even past that, nevertheless, Amazon now has an incredible alternative to innovate with respect to the employer’s position within the supply of well being care providers with out the strain of that being the core of the enterprise. New alternatives on this house embrace the addition of localized clinics being positioned subsequent to main workplaces (assume Amazon warehouses). If Amazon can create its personal market strategically, they may drastically make inroads in one of many largest alternatives within the well being care house – the roughly one quarter of American who don’t have a major care physician.
4. Improvements in information and supply.
Many doctor practices, both as stand alone entities or when operated by hospitals or well being care methods, undergo from lack of assets to develop and innovate in info methods, information administration, and improvement of scientific protocols, significantly as a result of, as famous above, there’s normally a robust deal with offering extra profitable episodic care to the detriment of preventive drugs. We have now no doubts that Amazon will additional One Medical’s information analytics capabilities in a means that may allow it to handle well being care and value information throughout the heath care continuum. Equally, we anticipate that One Medical will proceed to offer (and even broaden) its choices of telehealth and different providers which can be price efficient, handy, and allow the immediate administration of affected person well being to attenuate subsequent, expensive interventions.
5. Enticing to physicians.
The One Medical follow mannequin is prone to seem enticing to many major care physicians as a result of it locations them on the heart of well being care decision-making for his or her sufferers. It’s broadly documented that the variety of physicians in impartial follow is reducing. On the identical time, many major care physicians are leery of changing into employed by well being methods as a result of a lot well being system income depends on hospital providers – that means that the physicians are in a secondary place with respect to their potential to command monetary and administration assets. Amazon and One Medical are positioned to reap the benefits of these dynamics. With One Medical’s present infrastructure and Amazon’s market penetration and presence throughout america, they need to be enabled to draw sufferers whereas on the identical time relieving physicians of administrative burdens that overwhelm many well being care suppliers.
Nathan Viehl is a member of Thompson Coburn’s well being care follow.
