Amazon is ending its employee health service Amazon Care. While it may seem that shuttering the service marks a setback for the company in its healthcare pursuits, analysts argue the opposite.
One of the main benefits of Amazon's involvement in the healthcare industry more than traditional healthcare facilities is its ability to pause and reassess challenges and what could be done better, said Natalie Schibell, research director at Forrester Research. When a project isn't optimal, the project gets shut down and the company regroups. That's what Amazon is doing, she said.
Amazon is seizing a "huge opportunity" and has demonstrated its interest in moving away from employee healthcare and going direct to consumer care through its recently announced decision to acquire One Medical, a national primary care organization, as well as its bid on healthcare platform Signify Health.
"They're setting up for much bigger things," Schibell said. "Employee health is small potatoes for them; now they're going to provide primary care to the consumer."
Learning from pilot projects
Amazon launched Amazon Care for its Seattle-based employees in 2019, offering virtual healthcare services, prescription delivery and in-person visits for select areas.
According to an internal memo reported by GeekWire Wednesday, Amazon Health Services lead Neil Lindsay said Amazon is ending the service Dec. 31 because it is "not a complete enough offering for the large enterprise customers we have been targeting, and wasn't going to work long-term."
Natalie SchibellResearch director, Forrester Research
Indeed, Amazon Care's ability to attract corporate clients became one of its most significant challenges, said R "Ray" Wang, founder and principal analyst of Silicon Valley-based Constellation Research. However, Wang said it served as a learning experience for Amazon.
"The technology used for Amazon Care helped pilot a number of innovations they will use and reuse," Wang said. "They also learned what types of patients preferred what types of services and where the limits of telemedicine end and where you need to physically visit a physician."
By ending Amazon Care, the company is sending the message that it's learning what does and doesn't work, something expected for a "perennial innovator," Gartner healthcare analyst and senior director Kate McCarthy said.
"They don't linger in spaces that aren't working for long; they make them better," she said.
McCarthy said there's no evidence Amazon is looking to back away from healthcare. Instead, its recent moves for One Medical and Signify Health demonstrate a seriousness about the "legitimate business of healthcare" and being "much more intentional about their investments," she said.
Amazon's future in healthcare
By acquiring One Medical and bidding for Signify Health, Amazon is positioning itself to provide in-person care, Gartner's McCarthy said.
"As they move forward with One Medical, they're adding a breadth and depth of services to their portfolio that brings them into communities, gives them physical presence, gives them clinics, gives them physicians," she said.
By entering the primary care space, Forrester's Schibell said she expects to see Amazon chart a new path through an industry troubled by issues such as rising costs and staffing shortages.
"This is disrupting the model as we know it," she said.
Healthcare today isn't as effective as it could be, which has given rise to retail giants like Amazon, CVS, Walmart, and others with an "edge for innovation" to find the right offering for consumers and enterprise customers, McCarthy said.
"It's less about that larger healthcare ecosystem disruption and more about how big does that segment [of retail businesses] decide to go with healthcare," McCarthy said. "I think we're seeing real promise for the primary care of medicine for sure."
Signify Health a necessary component for Amazon's healthcare plan
Signify Health is a healthcare platform helping consumers stay healthy and age at home. It's focused on care in the home versus at a clinic.
Amazon can pair Signify Health with its AWS backbone to gather data from its services, such as prescription delivery and devices like Amazon Halo, to get a bigger picture of a patient's overall health, Schibell said.
"If you really want to get into primary care you have to have that holistic view," Schibell said. "So, if they don't acquire something like Signify Health, they're going to go after another company. And there's lots of them that are doing it well."
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.