Amazon has agreed to buy out One Medical for $3.9 billion in cash. That’s a huge deal. One Medical is a primary healthcare provider based out of Boston, Massachusetts that provides both physical locations, as well as telehealth services. They operate in 29 U.S. markets, and as of the end of March 2022, they have 767,000 patients. They offer a mobile app that allows access to virtual doctor’s visits, a fitness tracker, the ability to check lab results, and prescription renewal. They primarily service commercially insured patients, but in 2021, bought out another primary healthcare provider, Iora Health, for $2.1 billion, giving them access to the Medicare market. So why is Amazon, a company that already has a hand in so much including streaming, web hosting, online retail, and advertising, buying a network of doctor’s offices?
For the last four years, Amazon has been attempting to break into healthcare with a mixed record. On January 30, 2018, Amazon alongside JPMorgan and Berkshire Hathaway announced Haven Healthcare, a non-profit entity with the lofty goals of improving healthcare services, lowering costs, making primary care easier to access, making prescription drugs more affordable, and making insurance benefits easier to understand. The entity partnered with Aetna and Cigna and brought in a swath of highly qualified executives. It was a spectacular failure. Within months, the CEO and COO both left the company. They failed to gain market power because the three companies involved lacked geographical concentration. To make things worse, the Covid pandemic hit shortly after its establishment. By February of 2021, Haven was defunct. Despite Haven’s failure, Amazon went on to see some success in disrupting the pharmacy industry with their purchase and integration of PillPack. PillPack operates as a full-service, online pharmacy that sends medications to your doorstep. It allows consumers to easily compare prices of prescription drugs, as well as gain some transparency on their copay coverage. On the supply side, it also allows for improved data collection for providers. The Amazon acquisition grew PillPack to such a scale that it forced legacy pharmacies to restructure policies to the consumer’s benefit. Shortly thereafter, Amazon Care launched. It functions as an in-house telehealth provider for Amazon employees.
With One Medical, Amazon is hoping to accomplish what they accomplished with PillPack, and what they couldn’t with Haven. The goal is to expand access to primary care while bringing transparency to the billing process, benefiting consumers. The One Medical acquisition has the potential to expand access to primary care practitioners. About 44% of Americans have an Amazon Prime membership. For comparison, HCA Healthcare, the nation’s largest health system, only services about 1% of the U.S. population. If integrated and run effectively, as PillPack and Amazon Care have been, the One Medical acquisition may prove to disrupt primary care, benefiting consumers as well as Amazon themselves.
