Amazon’s $4 billion deal to buy healthcare clinic operator One Medical is about one thing: scale.
Why is this important: Amazon, already a powerful healthcare entity with tentacles in almost every aspect of the healthcare ecosystem (except insurance), now has the muscle in person to outbid most of its rivals, said analysts and industry watchers at Axios.
What they say : “Whether it’s physical interactions or virtual interactions, no one can match Amazon’s scale in either,” said Hal Andrews, president and CEO of Trilliant Health at Axios.
Be smart: The One Medical purchase of the shipping giant gives it the opportunity to evolve on several fronts, such as:
- Strengthen its expertise in consumer preferences.
- Expand its existing efforts in primary care.
- Gaining a foothold in the Medicare Advantage market.
To note : ONEM’s Medicare Advantage company, Iora Health, likely played a key role in Amazon’s decision to buy it.
- “Access to health insurance plans and employer groups is likely a key consideration Amazon has with this deal,” BTIG analysts David Larsen and Aron Corin write in a research note.
- “The sleeping giant in the deal may be One Medical’s Medicare Advantage (Iora) business because they can take huge risks,” said John Driscoll, CEO of CareCentrix.
More: Thanks to Amazon Prime, the tech giant already has in-depth insights into consumer behavior, not only about what people want and need, but also how to influence their buying behavior. , explains Andrews. By leveraging these capabilities, Amazon can scale ONEM’s network of clinics to its advantage in virtual and in-person care.
- From there, “it’s just about creating bricks and mortar where you need bricks and mortar,” says Andrews. “There are consumers who love virtual and telehealth and Amazon knows who those people are.”
- “We see the acquisition of ONEM adding to Amazon’s shift to telehealth, as ONEM performs 5:1 digital-to-in-person visits, providing Amazon with greater scale in telehealth,” the authors write. Cowen analysts, including Gary Taylor and Charles Rhyee, in a note. .
Threat level: Amazon has access to about 44% of US residents through Prime, according to a recent Trilliant report.
- By comparison, the nation’s largest healthcare system, HCA, serves just 1% of the people of the United States.
- “No healthcare system can match the scale of Amazon — or Walmart — in terms of next interaction,” Andrews says.
The first takeaway: The impacts of Amazon’s purchase of ONEM will only continue to ripple through the entire healthcare ecosystem from here.
- “Amazon is really committed to this,” Andrews says. “It’s a big investment and sends a significant message that they’re serious.”