Tech giant Amazon shocked everyone with the closure of its telehealth service, Amazon Care. In an email to employees, Neil Lindsay, Senior Vice President of Amazon Health Services, said the company has “determined that Amazon Care isn’t the right long-term solution for our enterprise customers and have decided that we will no longer offer Amazon Care after December 31, 2022.”
Amazon Care: Foundation and Growth
Amazon Care was founded in 2019 to provide virtual healthcare services to Amazon’s employees in and around its headquarters in Seattle. Along with 24-hour remote access to doctors and nurses, Amazon Care also offered in-person doctor visits and services like vaccination and flu-testing within an hour of contact.
In February 2021, Amazon expanded the initiative for other companies across the US, revealing its broader ambitions for healthcare services. In June 2022, Babak Parviz, vice president of Amazon Care, stated that Amazon had attracted companies like Hilton, Silicon Labs, TrueBlue, Whole Foods Market, and Precor as clients. Amazon also had plans to expand its behavioural health solutions through a partnership with mental health company Ginger.
What went wrong with Amazon care? Why did the announcement come as a shock?
Amazon Care was the foundation of Amazon’s efforts to disrupt the healthcare industry. However, as state and federal rules strictly oversee the healthcare industry, Amazon Care could hardly crack it. It also faced difficulties in proving its product’s value proposition to potential new customers amid the national nurse shortage.
Amazon Care struggled to grow beyond its staff network and maintain a large clientele. Despite all the obstacles, Amazon didn’t give up on Amazon Care; instead, it acquired companies and formed partnerships to establish a strong foundation.
The decision to discontinue Amazon Care came in as a shock as earlier this year, Amazon’s Chief Executive, Andy Lassy, declared healthcare a priority. The company had also shared its plan to extend the in-person care service to 20 other cities. Last month, Amazon also announced its decision to acquire membership-based primary care provider One Medical for $3.9 billion. Until now, experts believed One Medical would be the tipping point for Amazon Care services.
Also, Amazon Care faced significant competition from its rival, like UnitedHealth. Being the largest health insurer in the US, UnitedHealth has built-in relationships with employers and a trove of healthcare data.
Despite Amazon Care’s goal to expand swiftly, it came a long way from being a pilot programme for employees to being available statewide, citing increased demand.
“Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting and wasn’t going to work long-term.”
– Lindsay
Amazon’s strides to disrupt the healthcare sector
Amazon has been edging into the healthcare space for quite some time now. It has:
- Launched Amazon Pharmacy service
- Acquired Whole Foods
- Acquired PillPack
- Expanded its employee benefits program Amazon Care for the whole of the US
- Is providing web services with AWS for healthcare
- Runs a healthcare accelerator and whatnot.
However, Amazon is yet to crack the $6.2 trillion healthcare industry. Their in-house pharmacy business has not been a key driver of Prime subscriptions. Also, this isn’t the first time Amazon has unexpectedly shut down a health endeavour; Haven, a project established with Berkshire Hathaway and JPMorgan Chase to disrupt the healthcare market, failed in 2021.
Amazon has also taken a keen interest in Signify Health, the home-based healthcare provider, and was amongst its bidders. However, Signify Health closed deals with CVS Health, Amazon’s large competitor in the US healthcare market.
Expert’s opinions on Amazon Care closure
Following the news of the shutdown, some analysts claim it is a “strategic decision,” while others remain sceptical saying, “Amazon is no longer serious about the healthcare industry,” as the tech-giant invested $3.9 Billion in One Medical rather than focusing on Amazon Care.
Well, the answer is No!
Amazon still wants to take on healthcare, but is clarifying its approach. Instead of building from scratch, it’s taking over things that already work, similar to building the Amazon pharmacy over Pillpack.
“Amazon has likely realised it’s easier to sell established brands like One Medical to employers. Adding Amazon Care and One Medical overlap is unnecessary.”
– Jacob Effron, a principal at venture capital firm Redpoint Ventures.
What will happen to Amazon Care employees and health records collected by Amazon Care once it is shut down?
The tech giant didn’t disclose the number of employees impacted by shutting down Amazon Care. In the email, Lindsay wrote, “Many Care employees will have an opportunity to join other parts of the Health Services organisation or other teams at Amazon—which we’ll be discussing with many of you shortly—and we’ll also support employees looking for roles outside of the company.”
When it comes to medical records, Amazon says Amazon Care patients can request copies of their medical records by emailing help@amazon.care or calling 1-855-594-6478 until Dec 2022. After the shutdown, the records will be preserved through a medical record retention service. Further information regarding this will be provided to the patients. The company assures it will comply with all applicable laws for patient medical records.
Amazon’s zeal to stride in healthcare despite its failures
Tech giants looking to disrupt the healthcare space are nothing new. Amazon, Google, Apple, and Meta started forecasting their health-related ambitions five to eight years ago. Their early attempts were successful. But after the pandemic, everything changed even for reputed brands. As millions of innovative startups edge their way into the healthcare industry, it has become oversaturated. Finding a “complete enough offering” became even more difficult.
Also, the stringent regulation levied on the healthcare industry makes it difficult for the tech giant to disrupt the industry. However, Amazon is not the one to leave the hard path. It’ll be interesting to see how Amazon will bring value to such an overwhelmed space.
“I believe the health care space is ripe for reinvention, and our efforts to help improve the health care experience can have an immensely positive impact on our quality of life and health outcomes.”
– Neil Lindsay wrote in the email.
