Amazon’s charge into healthcare: How it got here

As physicians move away from private practice toward employment models, five major healthcare disruptors have been making waves in the race to acquire them.

Retail giant Amazon has expanded its service offerings to include healthcare in recent years, leaving executives and physicians wondering how the company will disrupt the industry moving forward. But how did what was originally an online bookseller become an all-encompassing player in healthcare?

In its nearly 30 years of operations, Amazon has continually increased its foothold in new markets, now boasting a valuation of $1.6 trillion.

As early as 2016, Amazon was already shaking up the healthcare industry. A CNBC report from that year revealed that one in three physicians used Amazon for buying medical or dental supplies.

The next year saw dental supply company Henry Schein's shares fall by 5% when Amazon began directly buying products from dental manufacturer Dentsply Sirona, as reported by CNBC.

In 2018, Amazon teamed up with JPMorgan and Berkshire Hathaway to form a new venture aimed at fixing the healthcare system and cutting costs for employees. They also introduced "Basic Care," their own brand of over-the-counter health products, including ibuprofen and hair regrowth treatment. Additionally, Amazon partnered with the Arcadia Group to sell medical devices for home users focused on managing conditions like high blood pressure and diabetes.

Amazon's digital assistant, Alexa, got an upgrade to help patients book appointments with participating healthcare providers, thanks to a collaboration with healthcare AI firm Nimblr. Amazon also filed a patent for Alexa to detect when users might be ill and help them order medications.

The company didn't stop there; it bought the online pharmacy service PillPack for around $1 billion.

In 2019, Amazon introduced Amazon Care, a medical service initially for Seattle-based staff, offering virtual clinic visits and home care. By the end of the year, they widened these services in Washington and acquired Health Navigator to enhance Amazon Care.

The year 2020 saw Amazon launching Halo, its first fitness wearable, and its own online pharmacy service. Amazon also partnered with Crossover Health to set up 20 health centers for employees in five cities.

Amazon expanded Amazon Care nationally for its staff in 2021 and started offering it to other companies, landing fitness firm Precor as its first external customer. The company further catered to employee well-being with virtual mental health support.

As 2021 came to a close, Amazon took significant steps to widen the scope of its healthcare service, Amazon Care. Originally launched as a pilot for its employees in Seattle, the company extended these in-person services to additional locations, including the metropolitan areas of Seattle and Washington, D.C. This expansion marks Amazon's ongoing commitment to directly providing health services, merging the convenience of digital consultations with the personal touch of face-to-face interactions with healthcare professionals. Consumers in these cities can now access a blend of virtual and in-person medical consultations, emphasizing Amazon's innovative approach to modern healthcare solutions.

In 2022, Amazon announced it would acquire One Medical for $3.9 billion. Later, it shared plans to shutter employer-focused Amazon Care and introduced Amazon Clinic, a virtual care service.

As the year 2023 unfolded, One Medical entered into strategic partnerships with several established health systems across New Jersey and Virginia. The purpose of these collaborations was to expand the scope of care, particularly by integrating specialist medical services for individuals enrolled in Amazon's primary care program. This move aimed to provide a more comprehensive healthcare experience for patients by bridging the gap between primary and specialized care.

In parallel, Amazon made a notable foray into the pharmaceutical space with the launch of RxPass, an innovative subscription-based service. For a nominal fee of $5 per month, this service grants subscribers access to a wide array of generic medications, addressing a multitude of health conditions. RxPass represented a significant step toward making essential medications more affordable and convenient to obtain for consumers, thereby enhancing medication adherence and overall health outcomes.

Further illustrating its commitment to technological advancement in healthcare, Amazon announced a substantial investment of $100 million towards the establishment of a state-of-the-art artificial intelligence development center. This center is set to become a hub for cutting-edge AI research, with the potential to drive significant breakthroughs in how healthcare is delivered and experienced. Amazon's investment underscores the company's vision to lead innovation in technology-infused healthcare solutions that could change the face of medicine in the years to come.

Kicking off 2024, Amazon made headlines by launching digital health monitoring with Omada Health and integrating One Medical with Amazon Pharmacy to streamline medication consultations for patients and doctors.

Now, let's delve deeper into the topic of major companies vying to acquire physicians in the United States. This trend underscores a significant shift in the healthcare landscape, where traditionally hospitals and healthcare systems were the primary employers of medical professionals. In recent years, however, we've seen an increasing number of large corporations—outside of the usual healthcare providers—entering the fray and showing a keen interest in bringing physicians onto their teams. This could be attributed to a variety of factors, including the desire to reduce healthcare costs, integrate services, and leverage technology to provide innovative patient care. Companies from various sectors, such as technology, retail, and insurance, are recognizing the value of having doctors as part of their organizations, both to enhance their services and to gain a competitive edge in their respective industries. As this dynamic continues to evolve, it will be interesting to observe how the competition to recruit and retain top medical talent will shape the future of healthcare delivery in the USA.

Amazon

Last year, Amazon closed on a deal to buy primary care company One Medical for $3.9 billion, giving the company access to more than 200 brick-and-mortar physicians offices and roughly 815,000 One Medical members.

One Medical has since formed collaborations with Edison, N.J.-based Hackensack Meridian Health and Chicago-based CommonSpirit Health's Virginia Mason Franciscan Health, allowing specialists from both health systems to deliver care to Amazon's primary care patients. Amazon has 221 One Medical primary care offices in more than 20 markets.

CVS Health

CVS Health is placing a strong emphasis on the expansion and enhancement of its primary care services. In a significant move this past May, CVS successfully completed a major transaction, acquiring the Chicago-based primary care organization Oak Street Health for a substantial sum of $11.5 billion. Looking ahead, CVS Health has ambitious plans to grow its network substantially; by the year 2026, the company projects to have a presence with over 300 clinic locations.

Earlier in the year, in March, CVS Health took another considerable step in increasing its footprint in the healthcare sector by finalizing an $8 billion deal to purchase Signify Health. This acquisition added a remarkable 10,000 clinicians to its roster. The strategic alliance formed between CVS and Signify Health is rooted in a shared commitment: they are both dedicated to collaborating in ways that aim to bring down healthcare costs while simultaneously enhancing the quality of care provided to patients. They also strive to increase patient involvement and improve accessibility to healthcare services, with a special focus on individuals enrolled in Medicare Advantage plans, who represent a significant segment of their customer base.

Beyond these recent acquisitions, CVS Health possesses a robust network of 1,100 MinuteClinic locations that span across 36 states in addition to Washington, D.C. These clinics are conveniently located and offer a range of healthcare services without the need for an appointment. The purchase of Oak Street Health has further strengthened CVS Health's portfolio by bringing an additional 130 primary care clinics into the fold. This move reiterates CVS Health’s strong positioning in the primary healthcare market and underscores its commitment to accessible and integrated healthcare solutions.

Optum

In the expansive healthcare sector, Optum, a healthcare services arm of the esteemed UnitedHealth Group, successfully augmented its physician base by nearly 20,000 professionals this year. This impressive recruitment drive has enhanced its total tally of affiliated physicians to an astounding 90,000. Optum's commitment to healthcare excellence is further underscored by its current status as the nation's foremost employer of physicians. They boast an extensive network comprising over 2,200 primary care and specialty clinics, strategically dispersed across 16 states to ensure comprehensive healthcare coverage.

Optum's aggressive expansion strategy extends beyond just physician recruitment. The company has set its sights on a significant acquisition—Amedisys, a renowned provider of home health and hospice care based in Baton Rouge, Louisiana. This proposed transaction is valued at a hefty $3.3 billion, signifying Optum’s intent to deepen its roots in the home health care landscape.

Earlier in the annual cycle, Optum demonstrated its robust acquisition strategy by assimilating Middletown, New York's multifaceted physician group, Crystal Run Healthcare. This acquisition speaks to Optum's dedication to diversifying its service offerings. Further solidifying its presence in the home health and hospice domain, Optum concluded a multimillion-dollar transaction to incorporate the LHC Group into its growing portfolio.

Looking ahead, Optum continues to scan the healthcare horizon for potential inclusions to its expansive network. Presently, it is assessing the potential acquisition of the Corvallis Clinic, which is a physician-owned practice with a widespread presence in Oregon. This clinic is notable for its 11 operational sites and an Ambulatory Surgery Center (ASC), epitomizing the clinic's dedication to delivering versatile and convenient medical care.

Through strategic recruitments and targeted acquisitions, Optum is not only enlarging its operational footprint but is also diversifying its healthcare services to meet the complex needs of a broad patient demographic. This proactive approach positions Optum to redefine healthcare delivery and accessibility in an ever-evolving landscape.

Walgreens

VillageMD, a subsidiary of Walgreens, is actively expanding its footprint in the healthcare sector by acquiring medical practices, even amidst plans to streamline its operations and reduce expenses by shuttering 60 clinics. In a strategic move to bolster its nationwide presence, VillageMD completed the purchase of Summit Health in January 2023. This acquisition brought approximately 400 primary care and urgent care clinics under the VillageMD umbrella, significantly increasing its network to nearly 700 practices across the county. The addition of these new clinics has also enlarged VillageMD's team by 2,800 healthcare providers, enhancing their capacity to offer accessible care.

As of March, the scope of VillageMD's operations included 680 locations, with a strategic mix of standalone and Walgreens-integrated facilities. Specifically, VillageMD operates 200 clinics that are conveniently co-located within Walgreens stores, a collaborative model that leverages high traffic and accessibility. Additionally, there are 170 clinics affiliated with third parties, which are housed within Walgreens stores, further demonstrating the synergy between VillageMD and Walgreens in providing community-based healthcare solutions.

This continued growth illustrates VillageMD's commitment to integrating healthcare services and making them more available to patients, all while navigating the financial realities of the healthcare industry by optimizing its clinic portfolio.

Walmart

Walmart Health, which is currently running nearly 50 facilities focused on primary care, mental wellness, and dental services, has shown a significant interest in expanding its footprint in the healthcare industry. In a report from September, Bloomberg disclosed that Walmart is exploring the possibility of acquiring a majority stake in ChenMed, a company that specializes in primary care. Should Walmart succeed in this acquisition, it would gain control over ChenMed’s expansive network of more than 100 health centers that span across 15 different states.

In a strategic move made in November, Walmart reached a milestone by establishing its inaugural partnership with a health system. The chosen partner is Orlando Health, a reputable healthcare provider located in Florida. The main goal of this alliance is to focus on the improvement of coordinated care for patients who utilize Walmart’s network of healthcare centers, specifically those situated within the Orlando area. There are eight such centers where Walmart and Orlando Health will dedicate resources to ensure a seamless, integrated healthcare experience for their shared patients. This collaboration underscores Walmart’s commitment to enhancing health service accessibility and the quality of care available to the communities they serve.

So in summary, Amazon could enhance healthcare with tech and better access while Amazon's healthcare move may spark privacy worries and market dominance.

CVS Health's buyouts like Oak Street may improve care and cut costs and CVS Health's rapid growth could hike prices and hurt small providers.

Optum aims to expand services and boost healthcare efficiency, and Optum's large scale might reduce personal touch in healthcare.

VillageMD, backed by Walgreens, makes care more accessible in busy areas while VillageMD's rationalization could restrict local care choices.

And finally, Walmart Health's deals point to better, well-coordinated care at the same time Walmart Health's dive into healthcare may stretch beyond its retail roots, risking care quality.