Amazon is Well Positioned to Shake Up Healthcare

Amazon has begun an ambitious plan to tackle the unrelenting healthcare problem most Americans face. High insurance premiums and deductibles have made healthcare a major financial concern for people with medical issues. This concern is causing people to turn to other solutions. Instead of purchasing insurance, many are now going without and, instead are either self-funding the cost or using alternative financing options.

In an effort to streamline healthcare insurance and minimize out of pocket expenses, some major technology companies have thrown their hat into the ring.

As we noted in our recent article, Amazon, known mainly for its online shopping platform, has recently announced a partnership with JPMorgan Chase and Berkshire Hathaway, two well-funded financial institutions, to deliver on this task.

Though the newly formed company is still in early stages and is limited to employees of the three partners, other insurers and major healthcare companies are sitting up to take notice. Driven by their advanced understanding of technology and supply distribution, Amazon seems poised to be a major player in the healthcare space.

What does this mean for the healthcare industry?

A new report by L.E.K. Consulting report describes five scenarios through which Amazon could dominate the industry:

1. Durable medical equipment and medical supplies
   Amazon already sells a broad array of general medical supplies and durable medical equipment. Building on its logistics and distribution savvy would make it easy to get into the hospital and provider supply chain. What’s more, the company already obtained licenses to distribute medical supplies to providers in 43 states.
2. Mail order and retail pharmacy
   Amazon has secured approval as a wholesale distributor from 12 state pharmaceutical boards, meaning it could also build pharmacies into its recently-acquired Whole Foods stores.
3. Pharmacy benefit manager
   Pharmacy benefit managers, or PBMs, drive prices down by taking advantage of the combined purchasing power of health plan enrollees.
4. Telemedicine or in-home healthcare
   Amazon’s Echo and Alexa also give the company an enormous platform for new voice-activated services, and healthcare organizations are already starting to conduct proofs-of-concept with them.
5. AI-powered diagnostics and continuous care
   This could be fully automated, AI-driven, in-home healthcare and diagnostics. Machine-learning already drives many of its Amazon’s offerings, from its customer recommendation engine to its service centers

Amazon has the ability to change the healthcare industry. They already have many of the core competencies in place to compete with other healthcare providers. A massive distribution infrastructure, a strong technology base, and robust data analytics capability, makes them a very formidable opponent to other healthcare providers.