Amazon has announced plans to acquire the primary care company One Medical in a $3.9 billion all-cash transaction. The purchase will represent Amazon’s third largest acquisition ever, and their biggest acquisition in healthcare. If Amazon has not seen success in healthcare so far, why have they made their biggest acquisition yet and what does it imply?
Why it’s Notable:
One Medical is a membership-based primary care model offering brick-and-mortar clinics, telehealth, and pharmacy services, with approximately 767,000 members and 200 clinics across the US. The acquisition will expand the reach of Amazon Care, the virtual care program launched in 2019 and piloted as an Amazon employee benefit.
In recent years, Amazon has primarily focused on virtual health services, acquiring the online pharmacy company PillPack in 2018, and launching telehealth services Amazon Care and Amazon Pharmacy in 2019 and 2020 respectively. The purchase of One Medical reflects Amazon’s approach to healthcare is evolving. Although Amazon has not yet seen success in healthcare, its investment signals Amazon’s continued interest in this space. Acquisition of One Medical provides Amazon the opportunity to apply its consumer-centric approach to the physical care experience.
Industry Implications:
Amazon has already tried to disrupt healthcare with Amazon Care – which allows users to access primary or urgent care virtually and also schedule visits at home from a care provider. Unfortunately, Amazon Care has struggled to scale and a majority of its customers continue to be Amazon employees. One Medical’s employer market alone spans beyond 8000 contracts with employers including companies such as Airbnb and Google. With the acquisition, Amazon will now have the scale that it can leverage to lower costs and bring more convenience to its customers.
One Medical can also help Amazon move from just another tele-health service to a more full-sized health service offering with extensive access to doctors, providers and in-person clinics. Although Amazon’s past attempts have not been fruitful, if Amazon finds even limited success with its new acquisition, it could create a model worth replicating that combines both brick-and-mortar and virtual care, opening the door for digital solutions to plug and play and create a more holistic healthcare experience.
It is becoming clear that Amazon will continue to invest and aims to become a significant player in healthcare and not just a tech provider. If Amazon is able to successfully integrate One Medical’s services with Amazon’s pharmacy and diagnostics businesses, Amazon could potentially be a fierce competitor by offering lower cost, convenience and better access to healthcare.
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