Why Amazon bought One Medical
The future of healthcare is hybrid delivery
There was a huge wave of VC funded telehealth driven by COVID. That’s received significant mindshare and attention over the past couple of years. Then, Amazon bought One Medical and nobody knows what to make of it.
In my view, telehealth alone will not move the needle on healthcare innovation. And surprisingly, Amazon might lead the real innovation.
Before I continue, you should know that I don’t have any deep expertise in this topic. I’m going to share my observations, opinions, and biases. Most of what I’ve learned is from my experience at Honor, which manages a large distributed workforce of non-medical homecare professionals, and from observing my wife’s experience as an employee at multiple telehealth companies. I also care a lot about this because of its importance to all of the humans around me.
Problems with Telehealth
The challenges of the legacy, in person centric healthcare delivery model are well understood, but I haven’t seen nearly as much attention given to the problems with telehealth. It feels a little taboo.
Telehealth is very good at certain things. It’s good at solving well constrained problems that don’t require a physical exam. Eg, erectile dysfunction in a man with no comorbidities works. Telehealth solves that well.
But telehealth struggles to solve unconstrained problems that benefit from a physical exam. An obvious example is a broken bone, but a less obvious example is if that man suffering from erectile dysfunction has a history of heart disease. Now things are trickier.
In this case, the patient would benefit from seeing a provider who understands his history well or potentially a specialist. This is not in the economic interest of today’s telehealth companies. They don’t make money from referring. They make money from closing the loop, usually selling a drug.
It also creates a risky conflict of interest for the prescribing provider. They’re incentivized to prescribe, but they don’t want to risk their license on “borderline cases.” Higher quality providers will tend to avoid risks to their license, which means the demographic of telehealth providers will skew lower quality over time.
The Important Problems in Healthcare Are Not Well Constrained
Healthcare is messy. People have comorbidities. They don’t describe their symptoms well. Their symptoms change over time. They withhold information unless they have a strong relationship with their provider. They don’t take their meds. They wait too long to see the doctor. The list goes on…
This is why telehealth alone won’t move the needle. It’s not good at solving the hardest problems.
But neither is an in person only approach.
Hybrid delivery models
So to simplify and recap…
Telehealth is a good first line of defense. It can solve simple problems. It can triage difficult problems, and it’s super convenient to use.
In person is better at solving complex problems, but it’s expensive, inconvenient, and often lacks customer service.
How can we get the best of both words?
Integrated telehealth and in person services have more opportunity to move the needle. One Medical was an early adopter of this approach. While it isn’t “classically telehealth,” they do have 24/7 phone and email support for their members and telehealth visits. I’d bet One Medical will call you back 10x faster than the nurse triage line at a typical hospital or public health service, and they’ll probably give you a better answer because they have access to your clinical history.
Back to Amazon…
In 2021, Amazon had 1.6 million employees, and most of them work in fulfillment centers. All of those employees need healthcare and are more at risk of communicable diseases and muscular-skeletal issues. Health is a first order problem to deliver best-in-class logistics.
Furthermore, it has become more challenging to manage a blue collar workforce since COVID because work call-offs are more common. It’s difficult to know whether your employee is legitimately sick, or if they’re playing the game and want the day off for other reasons. It’s a dangerous game for an employer to deny sick time when an employee verbalizes any flu-like symptoms.
There are also some parallels to AWS here. One upon a time, Amazon only ran an ecommerce site, and site reliability was a first order problem. Amazon solved that problem the best, and then they sold site reliability to everyone else. Amazon’s current CEO grew AWS into a massive business. Andy Jassy is as comfortable as anyone taking big new bets at scale.
So What’s Next?
Amazon had already started a similar service to One Medical called Amazon Care. It feels like they’re doubling down on that via buying the best company in this space.
I think One Medical will continue to serve its existing customers, but that will not be the primary focus for the time being. Amazon’s employees will be the focus and will serve as a large-scale pilot to understand how the same services can be provided to everyone’s employees, not just One Medical’s existing demographic.
One More Thought
I think the most interesting new delivery models are centered around “mobile in person” visits (not sure if there’s a name for this yet). Eg, imagine a “pop up clinic” visits your office or place of employment periodically. Better yet, maybe they can be called on demand. You get most of the benefits of in person and telehealth at the same time.
It’s not a silver bullet. Hospitals will always have more equipment and specialists. Telehealth will always be faster and cheaper. But it’s nice to add another option into the mix. I’d love to see a telehealth + mobile in person + in person facility model emerge. That seems like the best optimization of resource use, quality outcomes, and customer service.
Amazon Care had already started to experiment with this idea. There are also a few seed stage startups focused on this model like Vitable Health.
If You Enjoyed This…
I’d love to hear from you. Reach out anytime.
And remember, this is mostly conjecture, probably mostly wrong, but hopefully fun nevertheless!