Why Amazon's push into healthcare could be its most important project yet

Amazon's not shy of placing big bets: here's what could be next for its telehealth offering Amazon Care.

It might be a company that started out selling books out of CEO Jeff Bezos' garage in the early days of the dotcom boom, but Amazon has made diversification its hallmark. It's now a vast retail empire, and also one of the biggest providers of cloud services, it owns a movie studio, and its own line of technology from tablets to fitness bands and smart speakers. 

And its latest expansion – into the healthcare market – could be its most consequential yet.

Earlier this year, Amazon made Amazon Care available to businesses in Washington state, and plans to roll out the service to all 50 states by the summer. 

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Amazon Care is built largely around a telehealth model: users make their first contact with a medical professional via video-conference or chat through the Amazon Care app. If users then need to see a healthcare professional in person, Amazon Care can arrange a doctor or nurse to visit the user's home to carry out examinations or investigations, such as taking blood, as well as routine primary care, such as giving vaccinations and flu or COVID-19 testing. 

While use of telehealth has been growing for years, launching a healthcare service that's primarily virtual is well timed given the continuing pandemic: according to consultant McKinsey, before COVID-19, around 11% of US consumers were using telehealth appointments; that number has since risen to 46%.  

Amazon Care's own offerings have been shaped by the challenges of the pandemic: as part of the package for its launch this year, Amazon Care is providing a service for users to check whether their working-from-home office setups could be causing any musculoskeletal and joint-health problems, and there's also a program for people struggling to sleep.

While both joint and sleep problems are a common source of visits to primary care doctors, Amazon's focus on these areas is likely to be with one eye on employers' bottom line: musculoskeletal disorders are one of the biggest health-related causes of employee absenteeism in the US, while poor sleep is thought to cost employers billions in lost productivity every year. 

And one of those employers, of course, is Amazon itself. Amazon Care was initially launched in 2019 in Washington state, where the company is headquartered, as a pilot for Amazon's own employees and their families. Medical spend for employers in the US is significant, and Amazon Care would have offered a way for the company to manage its spend on healthcare and improve health outcomes for its staff, while improving productivity.

As well as providing virtual care through Amazon Care, Amazon also provides in-person services through a partnership with Crossover Health. Amazon said it plans to open 20 bricks and mortar clinics with Crossover Health, where Amazon employees and their families can access services in population centers where there are lots of Amazon staff working from home. 

While the Crossover clinics are, for now, separate from Amazon Care, it's possible that they too could end up being made available to other employers.

"Amazon is going to be looking strategically at which other cities or areas they could put a clinic in to support their employees, but I doubt there's a critical mass of employees to give them a return on that investment, so they will have to get other employers to also use the services, or down the road, look at how they can offer direct-to-consumer services," Arielle Trzcinski, a principal analyst in Forrester's healthcare practice, told ZDNet.

That's not to assume that getting into healthcare is easy; Amazon has already folded its first healthcare project, a joint venture with JP Morgan and Berkshire Hathaway called Haven, three years after setting it up. The trio will still continue to work together informally, and Amazon is planning to use its learnings from the venture elsewhere, according to CNN Business – presumably in Amazon Care. 

But Amazon's company culture and inflated coffers makes it one of the few companies that could make such a radical shift – from big-box retailer to healthcare provider – and either flourish or fail without having significant scars to show for it. 

"If anyone can break into spaces as entrenched in healthcare, it's probably someone like Amazon," Sandeep Unni, senior direct at technology analyst Gartner, told ZDNet, adding: "I view them as a pretty unique business that can make these big, bold bets, not all of which pan out. I think they have a structure that allows them to take those measured risks. And if they do stumble, if it doesn't pan out, they just fold and move on."

Amazon Care may have been the company's highest-profile launch in the healthcare space, but it builds on a series of initiatives it's rolled out over the past few years. 

In 2018, Amazon bought PillPack, a company that's the equivalent of Prime for medications, delivering drugs through the post to people who take several medications in a day, and refills their prescription when needed. That acquisition is being put to work as part of Amazon Care, with meds delivered to users' homes. Healthcare has been something of a focus among its hardware products, too: Alexa-powered devices, like the Echo and Dot, already have some health-related skills, including delivering breastfeeding advice and helping with first aid, for example. The most notable example of its hardware business tacking towards health, however, came in the form of the Amazon Halo, a fitness band with health-related functionality, such as sleep tracking, temperature measurement, and body-fat composition sensing. 

Amazon's strengths in hardware, as well as its vast computing and analytics resources through AWS, could help Amazon Care in managing one of the biggest healthcare challenges, not only for employers, but globally: chronic diseases. People are living longer with long-term conditions like diabetes and heart disease, which require a lot of healthcare support but where good care makes a difference, helping extend people's lifespans and improve their quality of life. 

And it's not all that hard to see how Amazon could at some point join up the dots and link these different initiatives into a significant healthcare strategy.

"Over time, one could envision these consumer devices connecting with Amazon Care: think 'Alexa, I'd like to schedule an Amazon Care appointment'," Lynne Dunbrack, IDC's group vice president for Public Sector, told ZDNet. "Or the Halo Band could be used to support chronic condition management by sending data from patients with chronic conditions for monitoring, and alerts could be sent to Amazon Care healthcare providers to flag up when clinical intervention is required."

Giving out monitoring devices, such as medical-grade sensors, could also allow Amazon to track employees' health over a long period and build up a useful body of data that could help the healthcare industry establish which care models are the most effective for managing chronic care, Forrester's Trzcinski said.

"As they start to get more into that space, there's a lot of data that could suddenly become very important and could find its way into AWS, for instance, and it could be used to help train analytic models, or as a commercial data set that is provided to AWS clients, in an anonymized and privacy protected way, but that could be a really valuable asset."

As Amazon steps up its healthcare presence, it will face competition, not only from start-ups such as HelloMD, Teladoc Helath, or Doctor on Demand, but also from other retail giants looking for a slice of the healthcare market: Wal-Mart announced an agreement to acquire telehealth provider MeMD earlier this year. 

"If I look at the US healthcare space as a patient, it's a pretty complex, and convoluted system, with a lot of guarded incumbents and pretty steep barriers to entry in some areas. But the virtual care segment might be one that doesn't have the same high barriers of entry, which is one of the reasons why you're seeing a lot of these outsiders looking to explore the next era of expansion," Gartner's Unni said.  

It's perhaps not surprising that retail giants are looking to enter the healthcare space. Aside from being a huge market – healthcare accounts for around one-fifth of all spending in the US – it's also largely resistant to economic ups and downs that can buffet other verticals. In addition, it's an area that's ripe for change. Thanks to the likes of companies like Amazon, consumers are used to doing everyday things – from banking to booking travel or using government services – quickly and easily over the internet, but dealings with the medical profession can still take time and become an inconvenience. 

Through services like Prime, Amazon has got consumers used to being able to expect to get things delivered in hours with just one click: it's raised our expectations of how businesses should work and now we're finding that old school business models – waiting on the phone to book a doctor's appointment, travelling to their offices, waiting for the doctor to be free – are increasingly frustrating. That's something that Amazon Care is looking to change, offering 24/7 consultations and healthcare professionals that will come to users where they are, rather than the other way around.