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Op-Ed: Amazon Deepens Its Presence in Health Care Through Signed Agreement with One Medical

Amazon's Reach Into Healthcare

Op-Ed: Amazon Deepens Its Presence in Health Care Through Signed Agreement with One Medical

by Jeff Stoltey, Special to California Business Journal
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Amazon, the world’s largest online retailer and leading cloud service provider, recently expanded into health care services. In July 2022, the multinational technology company announced that it will acquire One Medical, the primary care organization. The deal, valued at approximately $3.9 billion, is one of Amazon’s largest acquisitions.

One Medical, a technology-powered primary care organization, is a membership-based service that provides patients with virtual care and in-person visits.

This pending acquisition is expected to directly impact more than 767,000 members across the US. One Medical is currently an employee benefit organization at over 8,000 companies, allowing patients to receive same-day appointments with health providers and virtual care services. Some businesses even have One Medical clinics on-site. This deal is expected to not only affect direct-to-consumer care but also transform employer-based health care.

The Amazon One Medical Acquisition – What You Need to Know

With the One Medical deal, Amazon seeks to establish a platform for users to conveniently schedule appointments, access personal health records, and renew prescriptions. One Medical, which has only been public since 2020, currently operates a sizable network of boutique primary care practices, as well as a range of telemedicine services. Its core mission is to create opportunities to make the health care experience more affordable, accessible, and practical for providers, patients, and payers.

Over the past decade, health care costs have risen faster than wages and inflation. Employers are burdened with the significant expense of offering coverage to workers in an attempt to prevent expensive hospital stays and manage chronic conditions. According to the American Medical Association, health spending in America increased 9.7 percent in 2020 to $4.1 trillion, or approximately $12,530 per person, a major leap from the growth rate of 4.3 percent in 2019.

While the One Medical acquisition may be the latest in Amazon’s journey into health care services, it is not the retailer’s first expansion into the healthcare industry. In 2019, Amazon debuted its health care business, Amazon Care, which works with Care Medical to support patients during their health care journey.

Amazon Care’s core model has always been to deal directly with employers and One Medical’s core model is the same. The Amazon One Medical acquisition seeks to disrupt traditional health insurance by creating and implementing a business model that sends patients to an optimal place to receive care and eliminates as many expensive ancillary services as possible. In terms of additional health care services, such as radiology, lab, and specialty services, Amazon aims to generate a large enough subscriber base to develop a marketplace for referrals.

Effect of the Amazon One Medical Acquisition on Businesses

The implications of the Amazon One Medical acquisitions are yet to be seen but many industry analysts believe that the deal could make consumer and employee health care more convenient. Amazon wants to bring retail and health care closer together by making it easier for patients to schedule medical appointments, access medical records, and conduct other health-related activities by using their phones or other internet-enabled devices.

In the short term, the acquisition gives One Medical streamlined entry into new markets, such as home-based care services for patients. However, in the long term, it presents the potential for industry disruption. In time, Amazon will have the means to leverage One Medical’s health system partnerships and employer relationships, make the necessary acquisitions for an insurance-like product, and offer an insurance product to employers. This would essentially cut out health insurance companies almost entirely from the employer market.

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With major changes to the healthcare industry expected in the near future, it is important for employers to consider how this acquisition will affect their business and current benefits package. One of the best ways for employers to prepare for these changes is by working alongside an experienced employee benefits consulting firm to analyze their existing offerings and find new ways to save money while providing the same or better coverage to their staff.

Op-Ed Writer Jeffrey Stoltey is Managing Partner of New City Insurance.

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Tags: Amazonamazon healthcareAmericaAmericanbenefitsbestbusinessesclosercloudcompanyexpansionfirmgrowthhealthhealth insurancehealthcareinsuranceinsurance companiesmakingmarketplacemedicalnetworkOne Medicalonlinetechnologywriter
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Jeff Stoltey, Special to California Business Journal

Jeff Stoltey, Special to California Business Journal

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