Amazon offers peek at health efforts in annual letter
Amazon CEO Andy Jassy sees the company's multi-pronged health care efforts as having a similar potential payoff as AWS, he writes in his second annual shareholder letter.
Why it matters: The tech giant is setting the foundation to become a powerful health entity with tentacles in nearly every facet of the care ecosystem.
What he's saying: Although "further from [Amazon's] core businesses," Jassy sees Amazon's health care efforts as having the potential to pay off in the same way AWS has.
- "In 2003, AWS would have been a classic example. In 2023, Amazon Health Care [is a] potential analogue," he writes.
Zoom in: Amazon took its first health care steps in pharmacy, which Jassy notes "felt less like a major departure from e-commerce," temporarily dipped its toes in primary care with Amazon Care, and eventually decided on a buy-not-build strategy in the space with One Medical.
- "Going forward, we strongly believe that One Medical and Amazon will continue to innovate together to change what primary care will look like for customers," Jassy writes.
Between the lines: Taken together, Amazon's health care pushes could eventually be game-changing, analysts and health care leaders tell Axios.
- In addition to the plays above, Amazon has the Halo for fitness monitoring, the Alexa for voice-based commands, a diagnostics division, a powerful cloud presence with AWS, and a retail (or potential food-as-medicine) presence in Whole Foods.
- "Amazon’s customer-centric model has the potential to reinvent the patient experience by putting the patient at the center of their journey to drive value-based and quality care at every touchpoint," Forrester researchers and contributors note in a recent report.
- The company also has access to approximately 44% of U.S. residents through Prime, per a recent Trilliant Health report. (In comparison, the largest health system in the country, HCA, serves just 1% of people in the U.S.)
- "No health system can match Amazon — or Walmart’s — scale in terms of the next interaction," Trilliant CEO Hal Andrews previously told Axios.
The other side: Amazon's wide-ranging moves mirror Elon Musk's attempt to transform tech, yet it remains unclear when the sum of its parts will let the e-commerce giant become a health juggernaut.
- While some of its pushes, such as its One Medical acquisition, are big and bold, others, such as RxPass and Amazon Clinic, are less robust.
- Both RxPass and Amazon Clinic appear mostly equipped to expand Amazon’s presence as a care provider for the relatively wealthy and well-off.
- RxPass isn't available to people who use Medicare and Medicaid and are likely to need affordable medications most, while Amazon Clinic is a cash-pay, virtual care business aimed at common ailments that largely affect the worried well. Like RxPass, it cannot be paid for using Medicare or Medicaid.
The bottom line: Amazon is making big moves to become a health care "powerhouse," BTIG analyst David Larsen has written, but per Jassy's own examples, that process could take two years or two decades.