Amazon to Leverage One Medical’s ‘5-to-1 Model’, Prof Explains

Amazon (AMZN) keep going redefines your reach with the latest acquisition from a healthcare provider one doctor (A) for $3.9 billion.

The e-commerce giant’s latest expansion into healthcare follows a pattern of buying companies that complement its existing digital services, from its acquisition of Whole Foods in 2017 to its deal with MGM completed this year.

“What One Medical has, which I think Amazon likes and there’s a lot of synergy, is that they have a subscription model,” Meghan Fitzgerald, a professor of health care policy at Columbia University, told Yahoo Finance Live (video up). “They have what’s called a 5-to-1 model. You get five virtual telehealth visits and one in-person visit, right? Now that fits the Amazon model for possibly having an online experience.”

FILE - In this Feb. 14, 2019, file photo, people stand in the lobby of Amazon's New York offices.  Amazon will add more than 1,500 package pickup locations in partnership with drugstore chain Rite Aid.  Starting Thursday, June 27, customers will be able to pick up packages at more than 100 Rite Aid stores and that will increase to more than 1,500 by the end of the year.  (AP Photo/Mark Lennihan, File)

FILE – In this Feb. 14, 2019, file photo, people stand in the lobby of Amazon’s New York offices. (AP Photo/Mark Lennihan, File)

Amazon entered the healthcare sector in 2018 when it acquired PillPack, which subsequently changed its name to Amazon Pharmacy in late 2020. The platform is now a hub for ordering prescription drugs at discounted prices.

The tech giant was also successful when it created amazon care, a telehealth benefit that allowed Amazon workers to consult doctors through faster selection processes. The Amazon Care pilot program began in Seattle in 2019 and has since expanded to 20 other cities and other companies like Hilton (HLT), true blue (TBI), and Silicon Labs (SLAB). As of 2021, the program had coverage for up to 40,000 workers.

But not all of Amazon’s health initiatives have paid off. In 2019, Amazon, Berkshire Hathaway, and JP Morgan embarked on a joint project known as Haven that was intended to disrupt the health care industry. Instead, it was disbanded in 2021.

“Amazon has learned to be very resilient and to fail quickly,” Fitzgerald said. She added that the company’s success with PillPack and Amazon Care was “really what gave them the confidence to do this acquisition and try to add doctors in 25 markets.”

Primary Member Benefit

It remains to be seen how Amazon’s One Medical deal will affect competitors like UnitedHealth Group (UNH) and its subsidiary Optum Health or CVS Health Aetna.

Fitzgerald characterized One Medical’s membership-based coverage, which starts at about $200 a year, as an asset that “fits the Amazon model.”

“I imagine they will add it to Prime or there will be a surcharge for being a Prime One Medical subscriber,” Fitzgerald explained. “In many cases right now, the One Medical fee is being paid for by commercial pay employers for their employees and it is being used as a benefit.”

Tareco Timothy receives a briefing after receiving the monkeypox vaccine at Northwell Health's Immediate Care Center on Fire Island-Cherry Grove in New York, U.S., July 15, 2022. REUTERS/Eduardo Munoz

Tareco Timothy receives a briefing after receiving the monkeypox vaccine at Northwell Health’s Immediate Care Center on Fire Island-Cherry Grove in New York, U.S., July 15, 2022. REUTERS/Eduardo Munoz

The move would add value for Amazon Prime members, who saw increased subscription fees from $20 to $140 per year in the US and up to 43% more in Europe, depending on the region.

However, the deal, which “is more on the doctor enablement model,” poses a challenge even to Amazon’s logistics prowess, Fitzgerald said. Practices that opt ​​for telehealth visits continue to have mixed success in addressing issues of scale and availability for growing patient lists.

“I think adding primary care physicians has been the hardest thing to do in the United States,” Fitzgerald said. “There was skepticism as to how you can scale and still deliver quality, which is really all that matters in healthcare, especially if you’re on a value-based contract where you only get paid for quality. So Amazon will have to learn to put those kinds of numbers.”

In other words, while the health care industry’s turmoil represents a huge opportunity for Amazon and other investors who have tried to cash in, it’s also fraught with potential pitfalls.

“There is a symbiotic benefit to helping One Medical scale,” Fitzgerald said. “But I don’t think the Amazon team should be the one managing a clinical asset; they should leave that to the clinical experts.”

SAN RAFAEL, CALIFORNIA - JULY 21: A sign is posted in front of a One Medical office on July 21, 2022 in San Rafael, California.  Amazon announced plans to acquire health provider One Medical for an estimated $3.9 billion.  (Photo by Justin Sullivan/Getty Images)

SAN RAFAEL, CALIFORNIA – JULY 21: A sign is posted in front of a One Medical office on July 21, 2022 in San Rafael, California. Amazon announced plans to acquire health provider One Medical for an estimated $3.9 billion. (Photo by Justin Sullivan/Getty Images)

‘A river too dangerous’

There are also concerns about the privacy of patient data.

Some they have speculated that Amazon could potentially use medical records to try to sell products on its e-commerce platform, prompting experts like Fitzgerald to ask, “What’s the HIPAA restriction around that?”

Amazon stated that, as required by law, it would never share the health data of One Medical patients without their permission, a spokesman said. market clock.

But that’s not to say that Amazon’s foray into the medical space doesn’t fuel existing concerns about how data is being used.

“I think it’s a fair question for consumers to ask Amazon how that relationship will be protected,” Fitzgerald said. She explained that although HIPAA is enshrined in the law, “that doesn’t mean people aren’t concerned on the fringes. [about] what it can mean to have a total image of you now as a consumer”.

“I think it would be too dangerous to cross a river for Amazon to start taking patient data and then try to monetize and use it,” Fitzgerald warned.

Luke is a producer for Yahoo Finance. You can follow him on Twitter @lukecm.

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