5 takeaways from the Amazon/One Medical transaction

On July 21, 2022, essentially the most high-profile acquisition within the well being care area 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 greatest wager so far. One Medical’s core enterprise is a subscription primarily based digital platform providing telehealth companies, but it surely has additionally made inroads in creating in-person brick and mortar clinics as properly. One Medical additionally presents its personal proprietary EMR system as employer-oriented choices (with Google identified to be a serious shopper).

Given Amazon’s large scale and ambition, members within the area will little question be watching this transaction carefully and listed here are 5 areas we can be taking note of:

1. Main care is a gorgeous goal.

As many commentators have famous, as a way to convey down prices and enhance the standard of affected person care, innovators want a big inhabitants to gather knowledge 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 enough market energy to convey down the prices of well being care companies 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 entails creating further income streams by including ancillary services. Then again, major care suppliers are typically well-positioned to direct and handle the care of their sufferers as a result of length and frequency of contact with them. Coupled with superior knowledge 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 the US, shifting away from costly, procedure-based care to patient-centered care led by physicians. Lastly and maybe most critically, One Medical’s current attributable Medicare lives provide a chance for Amazon to interrupt into the value-based Medicare mannequin at a scale that might be unattainable with its personal workers.

2.  Well being techniques – be cautious.

The One Medical acquisition has repercussions past the members to the transaction. Direct Main Care has seen an explosion of curiosity in recent times, and One Medical doesn’t place itself as a competitor to well being techniques. Nevertheless, if One Medical is ready to enhance the standard and entry to care and higher handle high quality of care, it’s more likely to scale back the necessity for the episodic care offered by hospitals and different dearer actors.  

3. Improvements in employer choices.

Whereas this acquisition may be seen in some ways as a departure from Amazon’s earlier forays into well being care, it’s vital to notice essentially the most invaluable 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 amazing alternative to innovate with respect to the employer’s function within the supply of well being care companies with out the strain of that being the core of the enterprise. New alternatives on this area embrace the addition of localized clinics being positioned subsequent to main workplaces (assume Amazon warehouses).  If Amazon can create its personal market strategically, they might drastically make inroads in one of many greatest alternatives within the well being care area – the roughly one quarter of American who don’t have a major care physician.

4. Improvements in knowledge and supply.

Many doctor practices, both as stand alone entities or when operated by hospitals or well being care techniques, endure from lack of sources to develop and innovate in data techniques, knowledge administration, and improvement of medical protocols, notably as a result of, as famous above, there’s often a powerful deal with offering extra profitable episodic care to the detriment of preventive medication. Now we have no doubts that Amazon will additional One Medical’s knowledge analytics capabilities in a method that may allow it to handle well being care and value knowledge throughout the heath care continuum. Equally, we anticipate that One Medical will proceed to supply (and even develop) its choices of telehealth and different companies which can be value efficient, handy, and allow the immediate administration of affected person well being to attenuate subsequent, pricey interventions.

5. Engaging to physicians.

The One Medical follow mannequin is more likely to seem engaging to many major care physicians as a result of it locations them on the middle 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 similar time, many major care physicians are leery of changing into employed by well being techniques as a result of a lot well being system income relies on hospital companies – that means that the physicians are in a secondary place with respect to their potential to command monetary and administration sources. Amazon and One Medical are positioned to benefit from these dynamics. With One Medical’s current infrastructure and Amazon’s market penetration and presence throughout the US, they need to be enabled to draw sufferers whereas on the similar 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.