Amazon is the “He/She Who Shall Not Be Named” of business.
Like the Harry Potter villain, captains of industry seem afraid to say the company’s name out loud for fear it might slither into their sacred space. It was cute when the company was selling books online, logical when it expanded to consumer products, even moderately eye-opening with its moves into music and movies. But recent forays into healthcare and finance have many blue chip brands more than just glancing over their shoulder, and with good reason.
Healthcare is particularly well suited for Amazon’s grand entrée – translating what it does well – distribution and delight – into the third D: disruption. Healthcare is a near universal cause of pain for consumers. By activating its world-class supply chain, unparalleled customer experience, and rapidly expanding vertical expertise, Amazon uniquely has the potential to reverse the high cost, poor outcome dynamics of modern healthcare in America.
This was brought home to me while recovering from a recent bout with strep throat. What began as scratchy throats around the house (a petri dish courtesy of my young children) – eventually required a doctor’s visit and antibiotics. What should’ve been a routine visit took days and endless driving around San Francisco, not to mention the waiting: to schedule an appointment, in the waiting room, in the exam room, at the pharmacy.
As a thought exercise, what might that process look like in the hands of Amazon Health? Perhaps a quick press on the dedicated mobile phone app to bring up a nurse practitioner or physician for a tele-health session – “see my tonsils, they’re the size of grapefruits,” followed by a review of my vitals using my Fitbit, a photo of my throat, and then a glance through my digital health records for medicinal allergies.
With the basics covered, the physician could order an antigen test kit to be delivered to my house by LyftConcierge, and would email or text me instructions on how to perform the test. When I email back a photo showing a positive result from the test, the doctor would submit a prescription to my local pharmacy that will this time be delivered by drone to my back patio. All the more interesting if Amazon decides it wants to acquire a pharmacy…maybe? And the big win is that all these moves are reconciled automatically through my Amazon cart with the insurance carriers’ – likely running on AWS, reducing one of healthcare’s biggest headaches – billing and payments.
It’s a pleasing idea, and one that feels very Amazon. Start to finish in a matter of hours with minimal financial friction by turning a complicated supply chain involving practitioners, payors, distributors and more into a simply delightful customer experience (grapefruit glands aside). The vertical integration is also very Amazon. But what would realistically have to happen before this vision could materialize in a neighborhood near you?
The reality is that the marketplace is perfectly aligned for this type of disruption – pent up demand, patient frustration, technology advances. Healthcare in America today reminds me eerily of the retail industry’s disruption beginning in the late 90s: a fragmented and inferior customer experience supported by a supply chain that is riddled with inefficiencies and inflated costs – until Amazon.
Health systems and their leadership want to do right by their patients, but are often handcuffed by regulatory complexity, payor myopia, and an overstretched bottom line. Even laudable initiatives like patient-centered care and reimbursement do not have clearly defined metrics for success and accessible paths for replication.
The resulting inefficiencies, fragmentation and opaqueness consistently leave patients and their loved ones feeling manipulated and taken advantage of by the very institutions meant to care for and heal them. Couple this angst with a rising tide of consumerism driven by patients conditioned to expect innovation and technologic disruption, and you’ll begin to recognize why Amazon Health as a future pillar of earlier intervention, more efficient care delivery and enhanced financial and clinical outcomes may not seem quite as farfetched as some may lead you to believe.
The question is whether Amazon will have to reinvent healthcare’s busted delivery system or if the e-giant would instead focus initially on not-so-gently massaging a few of the bigger inefficiencies. Can Amazon build its own mechanism that cuts out traditional distributors and Group Purchasing Organizations (GPOs)? Can it afford not to become a real player?
The one thing we’ve seen over and over again from Amazon is an unrelenting, almost maniacal commitment to customer delight and a focus on novel approaches to distribution to cut costs and deliver immediacy and instant gratification. The juggernaut will spend enormous sums of money to reshape the ecosystem, then suddenly tighten its grip on a once-dominant supply chain to deliver record breaking returns.
Their recent testing of a last mile delivery system is a perfect example. Frustrated by customer backlash from poor partner delivery service during the 2013 holiday season, Amazon decided that building its own delivery solution was the best way to ensure maximum efficiency and supreme customer satisfaction. As a result, the market maker is building drones, leasing airplanes, recruited upwards of 30,000 private truckers at an event last year (during a period of major national truck driver shortage), and testing a delivery system called, “Shipping with Amazon” in Los Angeles that could give FedEx and UPS a run for their money.
Assuming they enact a similar strategy in healthcare, what might we expect as near-term acquisitions or partnerships to build a fully integrated healthcare delivery solution? Does the $1 billion PillPack acquisition raise any eyebrows?
- Tele-health: To truly disrupt healthcare and to meet patient expectation for all things mobile, tele-health has to be part of the Amazon play. With Apps, the doctor is always close by. You don’t even need your fingers to do the dialing….”Siri…”
- Durable goods: Easily shipped to your doorstep with minimal assembly required, healthcare is an enormous yet highly fragmented industry…kind of like books used to be.
- Pharmacy: A pharmacy partnership or acquisition fills a fundamental part of the medical experience for patients. The PillPack deal does so while avoiding the intricacies and costs of a real world physical footprint. By making medications and home health supplies cheaper and easier to attain, Amazon provides immediate value, gratification and treatments.
- Ride sharing: A partnership with Lyft or Uber is a no-brainer. In fact, many hospitals are already doing this to help low income or homebound patients with rides to and from doctor appointments. Amazon could expand on this service for delivery of goods, medicine and more. Or, it might just buy a ridesharing company.
- Grocery: Why not leverage the Whole Foods acquisition into an adjacent vertical? From a folksy offer to deliver organic chicken soup during flu season, to regular delivery of vitamins or groceries that support a patient’s wellness plan, the opportunities are endless. And stop on in to your local Whole Foods ‘wellness clinic’ to pick up your specialized medicine or grab a quick diagnostic.
At the end of the day, this idealized version of an Amazon Health play is just that – an ideal. There are market realities that make healthcare different than books and toys. Federal and state oversight, the role of insurers, the impact on physical health…all make this a recipe that just might require a more complicated formula than delight + disruption. But in 1999, while working in the consumer internet arena, I thought toys online was a stretch – actually, I thought it was absolutely absurd. Now, Geoffrey the Giraffe’s memorial service was just a few months ago – less than a decade after Bezos and Amazon started selling toys online.
And Amazon is not necessarily a white knight or even a benign player. It is a ruthless business that has exploited its strengths and size to eject slow moving or smaller players mercilessly from markets. In the New York Times Best Selling book The Everything Store: Jeff Bezos and the Age of Amazon (penned by my brother, investigative journalist Brad Stone), we learned that if you type “relentless.com” into your internet browser, it takes you to Amazon.com. This just about sums it up. The question of whether the healthcare market and our health outcomes could actually improve in the hands of an Amazon remain unanswered, but I’d be shocked if we don’t experience the answer firsthand within the next 3-5 years.
The benefits of a healthcare disruptor that can deliver both patient satisfaction and reduced costs is undeniable. Healthcare is a broken industry and patients are hungry for change. We want to get better quicker, cheaper, and with less effort. Can Amazon once again deliver the goods?