Amazon has announced plans to buy OneMedical for $3B. OneMedical is a brick and mortar plus digital healthcare marketplace that operates in several major U.S. markets. The acquisition is Amazon’s latest move in the healthcare sector, and analysts say it could be a sign of bigger things to come. This is not Amazon’s first foray into the healthcare market, but after the Haven experiment closed down, the company has kept a relatively low profile while it tests new business models. In June, Amazon was among several investors that participated in a $35 million funding round for Zscaler, an Austin-based cybersecurity firm that offers an edge security service for cloud networks and internet-facing applications and services. A few months earlier in March, news broke that Amazon had hired former pharmaceutical executive Bernard Jegou as its new vice president of e-commerce strategy and new business development.
And in a very public failure back in 2017, Amazon partnered with Berkshire Hathaway and JPMorgan Chase to form an independent healthcare company called Haven, which it quietly scuttled mid-pandemic, February, 2021. Read on to learn more about how this acquisition could indicate continued interest from Amazon in the healthcare space — or if it is just another pivot from one of its many subsidiaries.
What is OneMedical?
OneMedical is a primary care practice and digital healthcare marketplace that uses technology to reduce healthcare costs and increase convenience for patients. The company has built a network of more than 500,000 doctors and has partnered with health insurance providers across the country to serve more than 3 million members. OneMedical offers a range of services, including access to an online portal for patients and a concierge service for their members. OneMedical’s network of doctors comes from a variety of specialties, including general practice, pediatrics, OB/GYN, and family medicine. OneMedical also offers telemedicine services, including video visits with doctor consultations and prescription refills.
Why might Amazon be buying OneMedical?
While Amazon has not released any details about why it is acquiring OneMedical, analysts say this acquisition may be a sign that the company has larger ambitions in the healthcare sector. Amazon has a track record of acquiring companies in sectors where it sees potential for disruption and then gradually building out its business there. This could be a way for Amazon to expand its e-commerce business into health insurance. It could also be a sign that Amazon wants to become a one-stop shop for healthcare services. Amazon has been experimenting with new business models in the healthcare space for several years now. The partnership with Berkshire Hathaway and JPMorgan Chase formed an independent health company called Haven began with promise, but was quietly closed a few short years later. And in June, news broke that Amazon had participated in a $35 million funding round for Zscaler, an Austin-based cybersecurity firm whose edge security service could help internet-facing applications and services like those that run on Amazon’s AWS platform.
Possible reasons for the acquisition
Analysts say there are a few reasons why Amazon might be interested in acquiring OneMedical. Amazon may be looking to expand its reach into healthcare marketplaces beyond its partnership with Berkshire Hathaway and JPMorgan Chase to form an independent health company called Haven. Acquiring OneMedical could give Amazon a foothold in the digital healthcare space, which has been growing rapidly. Amazon could also be interested in OneMedical’s digital platform for its members. Having an online presence and digital tools for patients and doctors could let Amazon expand into other healthcare sectors, including pharmacy. And Amazon might be interested in the data that OneMedical has on its members, which could be useful for the company’s future endeavors in the healthcare space.
Amazon has bigger plans in healthcare
Analysts say the acquisition of OneMedical could signal Amazon’s intent to become a major player in the healthcare space. It is unclear exactly what the company’s strategy will be, but it is likely that Amazon will focus on improving the customer experience across the healthcare sector. Amazon is no stranger to industries with high-barrier-to-entry business models. The company has made inroads in industries such as grocery and e-commerce, as well as more traditional businesses such as manufacturing and cloud computing. Amazon has long been a disruptive force in the retail sector. The company has reshaped consumer expectations of online shopping and shifted the entire retail landscape in its wake. The company’s foray into digital and bricks-and-mortar retail has been a boon for customers, and it has also provided a boost for shareholders: Amazon’s stock is up almost 102% over the past year.
Value-Based Care and Risk Adjustment
Experts say that Amazon’s involvement may help OneMedical’s risk management as the adoption of more value-based care programmes continues. Most of One Medical’s business has traditionally been generated from charging commercially insured patients per-visit fees, but since the acquisition of Iora last year, Medicare patients are now served, and revenue is captured as a result of savings through risk contracts. According to their website, OneMedical serves scores of Medicare Advantage plans, though patient numbers were not readily available. Scaling value-based care is challenging for providers without extensive data experience. Those in primary care, retail health, and telehealth should be concerned, experts say.
The big question: Is this a pivot or a sign of future intent?
Analysts say Amazon’s acquisition of OneMedical may be a sign that the company is pivoting from its health technology investments, like Zscaler, and looking to establish a more direct presence in the healthcare sector. But it is also possible that Amazon has more ambitious plans in the healthcare space that the acquisition of OneMedical is only the first step in. Whatever Amazon’s end goal is in the healthcare sector, it seems likely that the company will take a slow and methodical approach to growing its business. After all, Amazon has plenty of experience building new businesses from the ground up, and it has a track record of entering new sectors and disrupting existing players with a more customer-friendly approach.