Monday, August 15, 2022
HomeHealth Law5 takeaways from the Amazon/One Medical transaction

5 takeaways from the Amazon/One Medical transaction


On July 21, 2022, probably the most high-profile acquisition within the well being care area in latest reminiscence was introduced, when Amazon publicized the acquisition of One Medical, a major care group, for $3.9 billion. Amazon’s curiosity within the large US well being care business has been no secret in recent times, however that is undoubtedly their greatest wager so far. One Medical’s core enterprise is a subscription primarily based digital platform providing telehealth companies, but it surely has additionally made inroads in growing in-person brick and mortar clinics as properly. One Medical additionally provides its personal proprietary EMR system as employer-oriented choices (with Google identified to be a significant shopper).

Given Amazon’s large scale and ambition, contributors within the area will little doubt be watching this transaction carefully and listed below are 5 areas we can be listening to:

1. Major care is a pretty goal.

As many commentators have famous, as a way to convey down prices and improve the standard of affected person care, innovators want a big inhabitants to gather information and unfold threat. Amazon tried this as soon as already with its notorious three way partnership, Haven. Between Amazon, Berkshire Hathaway and JPMorgan Chase, Haven had 1.2 million U.S. staff in its system, however as a result of these staff had been in broadly dispersed geographies, it lacked enough market energy to convey down the prices of well being care companies for its staff. Equally, well being care suppliers had little incentive to retrain their focus from offering (costly) episodic care to specializing in general well being care outcomes primarily based upon worth.

In contrast to the Haven three way partnership, the One Medical acquisition represents an funding in value-based major care which provides some distinct advantages. Whereas many personal fairness investments give attention to fee-for service and outpatient specialties, garnering a return on such an funding typically includes growing extra income streams by including ancillary services and products. Then again, major care suppliers are typically well-positioned to direct and handle the care of their sufferers as a result of length and frequency of contact with them. Coupled with superior information analytics to enhance care administration and ship evidence-based care, many within the well being care business imagine that major care has the potential to revolutionize care supply in the US, shifting away from costly, procedure-based care to patient-centered care led by physicians. Lastly and maybe most critically, One Medical’s present attributable Medicare lives supply a possibility for Amazon to interrupt into the value-based Medicare mannequin at a scale that will be inconceivable with its personal staff.

2.  Well being programs – be cautious.

The One Medical acquisition has repercussions past the contributors to the transaction. Direct Major Care has seen an explosion of curiosity in recent times, and One Medical doesn’t place itself as a competitor to well being programs. Nevertheless, if One Medical is ready to enhance the standard and entry to care and higher handle high quality of care, it’s prone to cut back the necessity for the episodic care supplied by hospitals and different costlier actors.  

3. Improvements in employer choices.

Whereas this acquisition might be seen in some ways as a departure from Amazon’s earlier forays into well being care, it’s vital to notice probably the most invaluable factor Amazon brings to this transaction continues to be its large worker base. If Amazon began with their worker base within the Haven three way partnership, right here they’re beginning with a confirmed major care mannequin and plugging their worker base into that.  

Even past that, nevertheless, Amazon now has an incredible alternative to innovate with respect to the employer’s position within the supply of well being care companies with out the strain of that being the core of the enterprise. New alternatives on this area embody the addition of localized clinics being positioned subsequent to main workplaces (assume Amazon warehouses).  If Amazon can create its personal market strategically, they may drastically make inroads in one of many greatest alternatives within the well being care area – the roughly one quarter of American who don’t have a major care physician.

4. Improvements in information and supply.

Many doctor practices, both as stand alone entities or when operated by hospitals or well being care programs, undergo from lack of assets to develop and innovate in info programs, information administration, and growth of scientific protocols, notably as a result of, as famous above, there’s often a powerful give attention to offering extra profitable episodic care to the detriment of preventive drugs. We’ve got no doubts that Amazon will additional One Medical’s information analytics capabilities in a means that can allow it to handle well being care and price information throughout the heath care continuum. Equally, we anticipate that One Medical will proceed to offer (and even broaden) its choices of telehealth and different companies which can be value efficient, handy, and allow the immediate administration of affected person well being to reduce subsequent, pricey interventions.

5. Enticing to physicians.

The One Medical follow mannequin is prone to seem enticing to many major care physicians as a result of it locations them on the middle of well being care decision-making for his or her sufferers. It’s broadly documented that the variety of physicians in impartial follow is lowering. On the similar time, many major care physicians are leery of turning into employed by well being programs as a result of a lot well being system income depends on hospital companies – that means that the physicians are in a secondary place with respect to their capacity to command monetary and administration assets. Amazon and One Medical are positioned to make the most of these dynamics. With One Medical’s present infrastructure and Amazon’s market penetration and presence throughout the US, they need to be enabled to draw sufferers whereas on the similar time relieving physicians of administrative burdens that overwhelm many well being care suppliers.

Eric Tower and Nathan Viehl are members of Thompson Coburn’s well being care follow.

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