Amazon has Healthcare Fever: Six Symptoms You Should Recognize

Amazon has Healthcare Fever: Six Symptoms You Should Recognize

It’s obvious that Amazon is becoming a player in the healthcare space. And it’s making plenty of people in the industry sick.

A mere sneeze out of Seattle can give anyone in the vicinity the chills. In January, Amazon announced a partnership with Berkshire Hathaway and JP Morgan Chase to form an independent health care company for their employees. Despite a lack of details, the news sent the stocks of United Health and Anthem plummeting by more than 5 percent. And that’s just one of the entry points that Amazon has established into our ripe-for-disruption healthcare industry. Here are six initiatives that Amazon has going right now, all of which signal a serious commitment to break into – if not break up – the industry:

1) Cost-control partnership: Amazon partnered with Berkshire Hathaway and JP Morgan with the intent to reduce spiraling health care costs for their employees – but exactly how the group plans to achieve that goal remains a mystery, at least publicly. Unlike Amazon’s other forays into the healthcare arena, this is not a profit-seeking business maneuver. That said, if it succeeds in driving down costs, this project could represent Amazon’s greatest impact on healthcare in the U.S. Not that it will be easy. Other large corporations have tried this ground before – like the Healthcare Transformation Alliance, a group of 46 companies, including Coca-Cola and American Express – without truly disrupting healthcare.

2) Alexa: That’s right, Alexa is going to medical school. Amazon is hiring up a 12-person health and wellness team inside its Alexa division, with the aim of maximizing the virtual assistant’s usefulness on healthcare-related issues. That could mean Alexa will be doing anything from reminding individuals about doctor’s appointments to logging their glucose levels (all while remaining compliant with privacy laws). It could also mean helping surgeons with safety checks before operations – one application Massachusetts General Hospital is already testing out. These health care applications for Alexa could give Amazon a treasure trove of data, and, provided health providers see utility in the applications, open up a huge new market for the assistant.

3) Cloud computing: It’s no secret that Amazon is competing to serve the cloud computing needs of health care providers through Amazon Web Services. This is one area in which Amazon has been less coy than others. The company has not talked about health care at any length on recent earnings calls, but on the Q3 call in October, Amazon director of investor relations, Dave Fildes, made no bones about the fact that “certainly healthcare is one of many sectors as part of Amazon Web Services that are important [to] customers that we are focusing on and building tools for.” Amazon’s competitors here – Microsoft and Alphabet – will be less easily cowed than those in other niches of the healthcare industry.

4) Medical supplies and equipment: This one is already a done deal. Amazon first joined the medical supplies business back in 2014 through a deal with Cardinal Health. It is now licensed to distribute medical supplies in 43 different states and is selling a wide range of medical supplies and durable medical equipment. The only question is how deeply Amazon can embed itself in the supply chains of hospitals and other health care providers. Some reports indicate that is proving quite a challenge, even for Amazon.

5) Pharmacy sales: Amazon’s entry into the $3 billion pharmacy business is the largest and loudest shoe that the healthcare industry has been waiting to drop. Competitors got some relief in April when CNBC reported that Amazon has decided against selling drugs to hospitals. But don’t count Amazon out; many observers have speculated that Amazon will add a direct-to-consumer prescription drug service. One argument that Amazon’s entry into the pharmacy business is inevitable: CEO Jeff Bezos has had it on his mind since the 1990s when he made an investment in Another: it makes a strong fit with Amazon’s Prime membership program (not to mention Whole Foods). And another: it already has wholesale pharmacy licenses in at least a dozen states.

6) Amazon’s OTC brand: Without much fanfare, Amazon launched its own line of over-the-counter health products last August. Made by private-label manufacturer Perrigo, the “Basic Care” brand features more than 60 products, including an allergy reliever, ibuprofen, and a hair regrowth drug. Basic Care could put serious pressure on CVS and Walgreens if it causes people to turn online for their drug purchases, reducing foot traffic in brick-and-mortar pharmacies even further. It’s one reason why CVS’s $69 billion deal for Aetna was seen as a defensive move.

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