Amazon’s disruption could reshape primary care

The retail giant has a proven track record of using business intelligence more effectively than just about anyone else to cut costs and improve consumer satisfaction.
By Beth Jones Sanborn
09:36 AM
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Amazon sign inside Whole Foods store

The latest twist in Amazon’s road into healthcare emerged with reports speculating that the company is building primary care clinics for its employees. And while Seattle-area medical groups and hospitals are likely wondering what that might mean for their patient populations the initiative, should it happen, could have implications beyond the Pacific Northwest in short order.

As costs continue to rise and quality stagnates, employers footing the hefty bill for their employees health benefits are looking for ways to make sure managing employee health doesn’t kill their business.

That is exactly where Amazon has an edge: Using big data, analytics and business intelligence to drive down costs while also ramping up consumer convenience and satisfaction.

Amazon not first with on-site clinics

Amazon is looking to put its stamp on healthcare in a number of ways. For instance, renowned cardiologist Maulik Majmudar revealed that he is leaving the Healthcare Transformation Lab to join Amazon, though in exactly what capacity is not yet known. In mid-August, the company joined forces with Google, IBM, Microsoft, Salesforce and Oracle in taking an interoperability pledge involving FHIR, HL7’s Argonaut and cloud computing.  

In late June, meanwhile, Amazon bought PillPack for its online virtual pharmacy. And in that same month the company, along with partners Berkshire Hathaway and JPMorgan Chase named Atul Gawande to head the startup they are building that remains something of a mystery in terms of its intentions other than to reduce costs and create better models of care.

Amazon would not be the sole intrepid company establishing its clinics for its employees. Boeing and Disney do it. John Deere, too. Most recently, Henry Ford Health System and automotive giant GM announced plans for direct employer-contracted healthcare.

Should the company create clinics, however, many people will be watching closely because of its unique potential to shake things up.

“Amazon has established itself right now as disruptor 2.0,” said Paul Keckley, president of the Keckley Group, a healthcare advisory firm. “It has a take-no-prisoners approach to taking costs out of the systems. In 1.0, there were a lot of innovators doing different things. What Amazon does is say ‘we’re going to take this to scale.’”

Keckley said depending on what survey you read, an employee clinic can save $2,000 a year per employee if it is well-utilized. Employers are already paying skyrocketing healthcare costs for other providers in their respective markets, so why not do something semi-radical and try and head some of that off at the pass by providing a healthcare solution in-house, increasing access to care and the likelihood an employee will use it to reduce more costly episodes of care.

Although Amazon’s plans are little more than speculation at this point, on-site clinics and arrangements like the one GM and Henry Ford Health just struck set the stage for employers to make more demands of healthcare delivery organizations for market-based solutions, according to Rita Numerof, healthcare industry expert and founder of Numerof and Associates.

Amazon should concern health systems

The entire industry needs to pay attention. For one thing, manufacturers of healthcare products and services should note that Amazon, or any company, bringing healthcare delivery in-house allows them to have more direct control providing that service and that’s an important factor across the board. It’s more than healthcare manufacturers selling to these retailers, it’s about how to deliver services differently and make sure services and products have demonstrated value.

“Business is not going to be as usual and that’s a good thing. There is no question that this is disruptive and Amazon is in position to leverage its size and capabilities in data in delivering services to consumers that matter,” Numerof said. “That is a statement about a nontraditional player that has been extraordinarily successful moving into healthcare. They wouldn’t be doing this if they didn’t think there was a business opportunity.”

Numerof also said health systems should be very concerned about this, and would do well to step back and really look at the hard question of ‘how well-prepared are we to demonstrate the value of the services we bring to employee groups,’ whether it’s primary care or managing care in different settings. She said if a CEO or board is honest, most will have to say they are not ready. That’s because 30 years of building and perfecting models that are site-based, highly transactional and focused on getting paid for a service, but not necessarily connecting that service to the outcomes that are important across that population, has not prepared them to compete in the market of tomorrow.

“The other side of that, though, is they don’t want to flip their own model without making sure the payment is going to follow a different delivery basis. Nobody ever got points for driving a business into a ditch,” Numerof added.

Still, it’s all about choice and providers should ask themselves why an Amazon employee would still go to their hospital-based provider for primary care when they charge more than the employee clinic and are less convenient. Numerof also said the fact that Amazon is keeping the whole enterprise in-house, doing its own hiring and not contracting the operation out to another healthcare organization, is telling.

Don’t be surprised if in a year Amazon has solidified its own operation such that it branches out and sets up shop for other employers.

The implementation of work-site clinics, by Amazon and the others, is a not a passing event. It’s another step in the direction of a move to market-based model. And one that makes great sense. Employers have not taken as important a role in demanding better outcomes and greater accountability, but they need to because they have a vested interest in it.

“People make choices based on performance in every other walk of life. Why not in healthcare? We are going to see more of these market based solutions begin to unfold. Hospitals and healthcare systems need to be prepared to compete in this kind of environment. They need to develop the skills today or they won’t be as relevant as they need to be tomorrow.”

“I think this train’s left the station,” Keckley added. “It’s going to be a strong sector.”

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Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com