Amazon continues its expansion in healthcare, announcement on Thursday that it will acquire One Medical, a “technology-driven” combination of primary care and telehealth, for nearly $4 billion. That makes this one of Amazon’s biggest acquisitions to date and shows that the e-commerce giant takes its plans for consumer-centric healthcare very seriously. But given the increasing scrutiny of Amazon’s antitrust issues, it’s unclear whether the merger will make it past regulators.
“I think this is about improving the health consumer shopping experience, which has been talked about for decades but no one has done yet,” Chrissy Farr, a health technology investor, told Recode. “Where I Think They’re Going Is” the player in consumer health.”
In the United States, health care can be expensive and hard to come by — and quality doesn’t always match cost. It’s possible that tech companies like Amazon have the answer to what’s wrong in the industry that’s supposed to fix what’s ailing us. It’s also possible that their entry into that sector will give them even more power over us and yet another industry to dominate. And while antitrust regulators have been concerned about the growing power of Big Tech and will likely scrutinize the deal, they may not be able to do much to stop it.
Amazon has been in the healthcare industry for years. It bought PillPack, an online pharmacy, in 2018 and then launched Amazon Pharmacy in 2020. Prime members get special discounts on drugs not covered by their insurance. Amazon has moved to diagnostics in recent years, doing its own Covid-19 test (which was) recently discontinued). The company launched Amazon care, a primary care service, in 2019 for some of its own employees, before being rolled out to other companies earlier this year as a workplace benefit. Amazon has even branched out to medical equipment and health wearablesand behind the scenes, Amazon is also investing in develop technology that drives the industry.
So in just a few short years, Amazon owns (or will) parts of almost every aspect of the healthcare industry — seemingly everything but hospitals and health insurance.
One Medical is one of several telehealth or virtual care-focused, tech-advanced health companies that gained popularity during the pandemic, when physical visits were much harder to come by. For up to $199 per year, patients get 24/7 virtual healthcare access to healthcare providers through a telehealth app, though it’s worth emphasizing that the service is intended to complement your regular health insurance policy, not replace it. One Medical also has physical offices in many major cities in the United States. It has also made a place for itself as an employer advantage for businesses, including Google and Yelp, although membership is open to everyone.
In non-patients, One Medical is perhaps best known for: accusations that it was giving Covid-19 vaccines to people who were ineligible for them at a time when vaccines were in high demand and supply was low. (One Medical denied this.)
Farr also noted that One Medical has a lot of data (the company had 767,000 members in its most recent earnings report) and possession Iora Health, a primary care facility for Medicare patients. One Medical will also include its physical clinics — a feature Amazon Care lacks — in Amazon’s portfolio, which Amazon says is necessary to grow its healthcare ambitions. Just look at how the purchase of Whole Foods, which is still Amazon’s largest acquisition, has given the company a bigger physical presence.
Amazon’s critics weren’t thrilled with the news. Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, describes the proposed acquisition as “Amazon’s latest move to expand its tentacles into healthcare.”
“As with the other movements in this industry, the goal is to mediate the delivery of health care by becoming the intermediary between patients, physicians and insurers,” explains Mitchell. “It’s exactly what Amazon has done in other key sectors, including e-commerce, cloud services and voice.”
Again, the deal is pending regulatory approval, meaning the Federal Trade Commission, chaired by Amazon critic Lina Khan, has agreed. Under her tenure, the FTC has already had to deal with one major Amazon merger: the purchase of MGM studios, which closed last March after the FTC did nothing to block it. At the time, however, the bureau missed a crucial casting vote from the Democratic commissioner. It now has that commissioner and may be able to challenge the MGM merger, if not this one.
Mitchell and Krista Brown, a senior policy analyst with the American Economic Liberties Project, an antimonopoly advocacy group, both said they hoped and believed the merger would be challenged by regulators.
“The acquisition of One Medical will strengthen Amazon’s growing presence in healthcare and undermine competition,” Brown said. “Amazon has nothing to do with being a major healthcare player, and regulators should block this $4 billion deal to make sure it doesn’t become one.”
But some antitrust experts weren’t so sure that regulators would have a case to stop the deal, arguing that Amazon was too new to, and not enough of, a major player in healthcare.
“While Amazon is currently in the spotlight with the antitrust agencies, I expect this deal to go through as this is a relatively new market for the company,” said Kellie Lerner, co-chair of the Antitrust and Trade Regulation Group at Robins Kaplan LLP. , said.
But if agencies looked at the acquisition through a “traditional antitrust lens,” the merger shouldn’t be a problem, according to Abiel Garcia, an antitrust attorney at Kesselman Brantly Stockinger. He added that problems could arise if enforcers raised concerns about things like collecting patient data.
In the press release announcing the merger, Neil Lindsay, senior vice president of Amazon Health Services, presented the acquisition as a way to make people’s lives easier and improve their healthcare experience, with a “people-centric and technology-driven approach.” .
It remains to be seen if that approach improves healthcare, but it will certainly be consistent with how Amazon has handled everything else.
“It’s the digital front door,” Farr said. “A lot of how you access care is through a health plan or provider. Amazon could be a one-stop shop for that.”