The ‘Medtail’ movement: Amazon pushes further into healthcare with acquisition of One Medical
Amazon agreed to acquire healthcare technology company One Medical for $3.9 billion as the race to lead the ‘medtail’ movement continues to heat up among the biggest players in retail.
One Medical is a national primary care technology solution that aims to make healthcare “more affordable, accessible and enjoyable” by offering a combination of conveniently located in-person sites as well as digital and virtual care services.
“We believe healthcare is high on the list of experiences that need to be reinvented,” Neil Lindsay, SVP of Amazon Health Services said in a statement. “We like to invent to make what should be easy, easier and we want to be one of the companies that will significantly improve the healthcare experience over the next few years. With One Medical’s human-centered, technology-driven approach to healthcare, we believe we can and will help more people get better care, when and how they need it.
“The opportunity to transform healthcare and improve outcomes by combining the human-centered model and technology of One Medical and its exceptional team with the customer obsession of Amazon, the story of the invention and willingness to invest for the long term is so exciting,” said Amir Dan Rubin, A medical CEO, who will remain in the role once the acquisition is complete.
But altruism isn’t the only reason Amazon and other top retailers, including walmart, SVC, Walgreens and best buy are jostling to enter healthcare – high profit margins are also a draw. McKinsey & Co. expects healthcare EBITDA to grow 6% between 2021 and 2025, adding approximately $31 billion in profits.
It’s a move Scott Galloway, clinical professor of marketing at NYU Stern School of Business, has been predicting for years. “Fundamentally, every CEO needs to be able to convince investors that their stock price has a good chance of double in five years,” Galloway explained in a 2020 interview with GeekWire. “For Amazon to do this, even if they get operational leverage, they’re running up against the law of large numbers, which means they probably have to add somewhere in between $150 billion Where a quarter of a trillion turnover dollars — add that — within the next five years. This helps us predict which companies they are heading into.
“What does Amazon do? They come into an industry and they instill trust and satisfaction,” Galloway added. “And if you look at the industry where all roads lead to – high margin, huge industry, lack of consumer satisfaction – all roads lead to the same place. That’s health.
Amazon has been on this path since 2018, when it acquired prescription-by-mail company PillPack. The company has since launched Amazon Pharmacy, which allows customers to fill prescriptions online, with free two-day delivery for Prime members (of course), and introduced Prime Rx, which offers prescription savings of up to 80% for customers without insurance. Amazon Pharmacy has also introduced the low-cost six months prescriptions just a day after Walmart launched a similar program in 2021.
All of Amazon’s previous attempts to disrupt the healthcare industry have not gone to plan. Haventhe company’s joint venture with Berkshire Hathaway and JPMorgan Chase which aimed to tackle the high cost of healthcare, was dissolved after Three years.
In the realm of primary care offerings, Amazon clearly hopes that the acquisition of One Medical will help it catch up with other retailers that have offered similar services for years:
- CVS acquired Aetna in 2017 and has since rolled out a suite of healthcare services, including the continued expansion of its HealthHub and MinuteClinic health and wellness centers;
- Earlier this year, walmart announced its intention to add five new health centers that offer a range of medical services, including primary care, laboratories, x-rays and electrocardiogram, behavioral health and counselling, dental, optical and hearing care. The first Walmart Health Center opened in 2019;
- Walmart also entered the health insurance business in 2020 with the launch of Walmart Insurance Services;
- In October 2021, best buy the acquisition of the Current Health home care technology platform, which combines remote patient monitoring, telehealth and patient engagement in a single solution for healthcare organizations; and
- Rite-Aid partnered with Homeward earlier this year to enable its pharmacists to help connect underserved seniors in rural communities with clinical providers and services.