AMAZON TREKS DEEPER INTO HEALTHCARE: “AMAZON CARE”
…Amazon is launching an employee health clinic encompassing in-patient visits, telemedicine, in-home nurse follow-ups and other care services for Seattle headquarters staff…
Amazon Care is the incubator for a new employee healthcare model
Amazon ( NASDAQ: AMZN ) is launching an employee health clinic in Seattle for corporate staff named “Amazon Care”. It was introduced via the website, “Amazon. Care”, a venue presently accessible to outside audiences but not formally announced to the public or investors.
Employer Healthcare Costs are a concern for Amazon and other organizations
Amazon is looking at their immediate and long term employee ( and their dependents ) healthcare needs and costs. Knowing Amazon’s penchant for disrupting marketplaces, how will this impact healthcare providers and payers currently supporting Amazon headquarter staff members and what plans may Amazon have to commercialize it outside of their organization?
Amazon Care’s program attributes
Initial details convey Amazon has made significant investments in the program for it to be successful. The clinic component features a combination of telemedicine and in-person services including an in-app video visit with a doctor, nurse practitioner or registered nurse for consultation, diagnosis, treatment, referrals and other patient care support. In-person clinic appointments are available and Amazon Care can arrange for a nurse to follow up with a home visit if required.
Amazon Care features a preferred retail pharmacy network
Prescription benefits are also addressed as part of the program. Amazon will also prescribe medications via Amazon Care within a few hours and offer an option for employees to pick them up at a preferred pharmacy. It is not certain if PillPack, Amazon’s online mail order pharmacy unit, has a role in the program due to HIPAA and PHI concerns.
Oasis Medical Group is contracted with Amazon
To administer the program, Amazon has an agreement with Oasis Medical, a family practice medical group located in Seattle. Oasis Medical is not owned by Amazon, it is a contracted provider. Conceivably, Amazon may add other specialties and providers (OB/GYN, internal medicine, allergy, etc.) as they gain more experience with the care model, gauge employee satisfaction and weigh economic factors.
Haven Healthcare is a partnership Amazon is a member of
Amazon is a partner in Haven Healthcare, a joint venture consisting of Berkshire Hathaway ( NYSE: BRK ), JPMorgan Chase ( NYSE: JPM ) and Amazon. The organization was formed to share insights, explore options and collaborate on developments in finding new and better ways to provide healthcare for their employees and their families. It encompasses primary care access plus medical and prescription benefits. Haven Healthcare is a non-profit entity based in Boston, Massachusetts with offices in New York City.
…Amazon Care is an ideal incubator for Amazon and its partners in Haven Healthcare to strategically immerse themselves to gain experience plus collect clinical, financial, technical and risk data from the concept…
The Amazon Care program needs to prove itself based on economics, performance and convenience
Once it is fully operational, Amazon Care is going to be heavily scrutinized. The concept has to be proven in practice and demonstrate its viable for it to be continued or even expanded beyond whatever trial period Amazon corporate has defined in its goals.
Does Amazon Care improve employee productivity?
How does it provide better care, in quantifiable terms, for employees and their dependents?
Is it able to be cost-effectively managed over the long term?
Could it be successfully introduced to other Amazon facilities?
How does it lower costs for Amazon?
Based on recent technology and competitive challenges at PillPack, what may Amazon Care be confronted with down the road?
What happened at Whole Foods, an Amazon business unit, and medical benefits for part-time staff?
Just before the launch of Amazon Care, Amazon decided to reduce medical benefits for part-time employees at their Whole Foods grocery business unit. Almost 2,000 workers were impacted which is reportedly less than 2% of their workforce. Amazon communicated it has provided these employees with resources to find other healthcare coverage options as well as encouraged them to explore full-time, healthcare-eligible positions starting at 30 hours per week with Whole Foods.
Based in Austin, Texas, Whole Foods has about 500 stores and was acquired by Amazon in 2017 for approximately $13.7 billion. Competing grocery stores have aggressively supplemented standard offerings with food free of hydrogenated fats, artificial colors, flavors and preservatives which Whole Foods built its unique business on.
This has put pressure on Whole Foods to compete. Other grocers can expand lines with more health-oriented products; conversely, it would go against Whole Foods’ business model if it were to feature conventional grocery store products. This makes for an uphill challenge in category management, operations and profitability for them.
…There are big and small players in the grocery sector plus the universal competitor and foe of all grocers which is spoilage…
The U.S. grocery market is a battlefield of rivals going after the baked, dairy, fresh, frozen, prepared, produce, meat and other foodstuff dollars of American shoppers. An interesting footnote is Germany-based Lidl, a grocery store operator who opened its first U.S. store in 2017 promises to offer their 1,200 part-time workers medical benefits effective January 2020.
Lidl has over 70 stores in 9 states (globally, they have almost 11,000 stores located in 32 countries). Aggressive competition, thin margins, logistics expenses, facility overhead and other factors (i.e. spoilage) make the grocery market a tough sector to compete in even for Whole Foods with Amazon as its owner.
New and old employer health ventures encompass Apple, Cisco, Discover, Goldman Sachs, Kaiser, Mars, USAA
Many firms, including Apple ( NASDAQ: AAPL), Cisco Systems ( NASDAQ: CSCO ), Discover Financial ( NYSE: DFS ), Goldman Sachs (NYSE: GS ), Mars, USAA and others have enriched their employee healthcare offerings with company-sponsored care clinics. While developing and launching pilot programs or turn-key initiatives requires time, financial and technical resources there are several benefits for employers to explore such ventures:
· It serves as an additional benefit for use as a retention tool
· Provides a more direct way to manage employee and dependent healthcare costs and care
· Provides benchmark data for discussions with employee benefit consultants, managed care organizations, health insurers who may be vendors or partners
The approach of an “employer as healthcare provider” for its workers is not necessarily new. One leading example of this is Kaiser Permanente. Located in Oakland, California, Kaiser Permanente evolved from employee healthcare programs for construction, shipyard and steel mill employees for the Kaiser industrial companies during the late 1930s and 1940s.
Founded by industrialist Henry J. Kaiser and physician Sidney Garfield, its access, cost and quality benchmarks were so well achieved the program became fully commercialized and opened to public enrollment in July 1945.
…Kaiser Permanente now covers about 12 million people in Washington, D.C. and 8 states…
Moving forward, Amazon Care is an investment for employees and corporate organizations
Amazon Care is a noteworthy development for a company that has built a successful enterprise through commercially re-engineering and refining established business models. An even more novel phase would be for Amazon to replicate the arrangement for its offices and warehouse facilities located in other parts of the United States including Whole Foods.
…That’s a big ask but so is developing a company valued at approximately $1 billion through launching an online bookstore…
Regardless of how they pursue other employee healthcare measures, Amazon Care will provide them value based on data and provider contracting experience alone. It is almost certain Amazon Care is not an isolated element in Amazon’s healthcare initiatives. They are likely nurturing its success and earmarking its best attributes for other potential uses and insights which may or may not be tied to its Haven Healthcare nonprofit joint-venture. Amazon employees and investors can be hopeful for its positive potential and competitors watchful of its threats.
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