Amazon’s Quiet, Selective Forays into Healthcare

PillPack, Amazon Care, Haven, Amazon Comprehend Medical, and yes, Alexa.

This is not an exhaustive list, but these are some of Amazon’s forays into healthcare and its one-fifth share of American gross domestic product. The Seattle-based online retailer has also become an infrastructure company with major market positions in logistics and cloud storage. Predictions that Amazon would be transforming American healthcare perhaps shot too high, but healthcare is very much on its agenda.

Although it’s impossible for Amazon to operate in total stealth mode, the company hasn’t shared a sweeping vision of its healthcare strategy publicly, although analysts and reporters do pick up nuggets here and there from earning reports and company press releases. When Bryan Niehaus, vice president of Advis, a healthcare consulting firm in Mokena, Illinois, looks at Amazon’s various entry points into the industry, it shows him that the company is perusing and being selective. “They’re learning about the healthcare industry and picking their spots on where to get involved. Some areas might be disruptive, some are extensions of their current business,” Niehaus says.

The potential disruption may result from attempts by Amazon Care and Haven (although Haven has struggled to find its footing) to provide direct patient care and influence quality and cost. Extensions of their current business includes PillPack, a consumer prescription delivery model, and the various data storage and analytics efforts.

PillPack

Amazon bought PillPack in 2018, when it was already a full-fledged mail-order pharmacy able to dispense in 50 states, with local brick-and-mortar pharmacy relationships. Amazon has a Midas-touch image, but that talent isn’t always so homegrown. “Not everyone thinks of Amazon being innovative in mergers and acquisitions,” says Nathan Ray, director of healthcare mergers and acquisitions at West Monroe, a business and technology consultancy headquartered in Chicago.

PillPack had not only a growing business model, but also the regulatory expertise Amazon needed to get into the pharmacy business. They had the licensing and the infrastructure to supply retail pharmacies and mail-order services. “Clearly they saw the opportunity to break into this large market and connect to their existing consumer base,” says Niehaus. PillPack has the potential to be a digital front door for customers to add to the goods and services Amazon offers. “Maybe they can partner with a large electronic health record (EHR) system and have a sign-on space,” he says. This could allow them to consolidate across prescriptions, medical devices or other medical supplies.

Blue Cross Blue Shield of Massachusetts announced a deal with PillPack in December to offer the pharmacy services to plan members, including free delivery of multiple medications. In its press release, the Massachusetts Blue plan said it was the first health plan to offer “direct integration” with the PillPack’s services.

Another possible fit with PillPack, say Niehaus and Ray, is telehealth services. “The possibilities are wide in how they can approach and streamline disparate parts of the health system,” Niehaus says.

Aside from Amazon Care, which currently serves some Amazon employees and their dependents in Seattle, the company doesn’t offer its own telehealth services. But that doesn’t mean Amazon is a total bystander. A large fraction of the telehealth services launched amid the COVID-19 pandemic use Amazon Web Services (AWS) data centers, notes Ray.The connection between telehealth and AWS is a reminder that almost anything having to do with the internet is a business opportunity for Amazon. Combine telehealth with the data collection and analysis from wearables and remote monitoring, and this could be the biggest healthcare change of our lifetime, says Ray. Amazon has made advances in technology-enabled care, but “I would have expected them to move faster,” in terms of telehealth, he adds.

Amazon Care

In September 2019, months before the COVID-19 pandemic whetted appetites for virtual healthcare, Amazon took the prescient step of launching Amazon Care, a virtual health program offering telehealth visits and in-person follow-up care to a subset of Seattle headquarter employees. Among the eligible employees are those living in 105-designated ZIP codes with Amazon-sponsored health plans (as opposed to those with Kaiser Permanente plans). Vin Gupta, M.D., a pulmonologist and high-profile public health expert, was hired in January as principal scientist. In February, the endeavor was expanded to include dependents of those employees. Amazon Care is very interesting, says Ray, because Amazon, in a sense, is experimenting on itself and its staff with a new care model.

As a large employer with some of the deepest pockets around, Amazon has the scale to save money and innovate simultaneously. Large companies are often centers of healthcare innovation, Ray says, sometimes helping payers with utilization management for specific populations. Amazon Care has the opportunity to remove access barriers with convenient hours and proximity of care. “All that sounds small, but it’s enormously instrumental in conceiving ... different ways to receive and manage care,” he says.

Ray says he wonders what success will look like for Amazon Care if it were expanded to include employees at its warehouses and subsidiaries across the country. Large, self-insured employers actively participating in employee health management can get better valueand offer more services than companies with commercially insured plans. The Amazon Care model could be extended to other sites across the country or even to other companies.

Haven

Amazon Care’s primary care clinics could become a great proving ground for healthcare innovation.

The prospects for Haven are perhaps cloudier, especially considering the once sky-high expectations that surrounded the enterprise. Launched in January 2018, Haven is a joint effort of Amazon, Warren Buffett’s Berkshire Hathaway and JPMorgan Chase. Healthcare’s chattering class was talking about the “Amazonification” during its perinatal period. The naming of Atul Gawande, M.D., as CEO of Haven added cachet.

But Gawande announced in May that he was stepping down as CEO. The Haven website says its goal is to pursue “a number of commonsense fixes, as well as innovative approaches, to address issues like making primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable. We are looking at new ways to use data and technology to make the overall healthcare system better.” Those are admirable but middle-of-the-road objectives. “They’re encountering some existential questions about how they go about effecting change,” says Niehaus. “What is Haven’s true goal? Cutting costs in healthcare is a wide one. How they’ll go about doing so hasn’t become clear at this point.”

So far, Haven has only one concrete achievement: Working with Cigna and Aetna, employees at JP Morgan were offered plans with more price transparency.

Amazon Comprehend Medical

Comprehend Medical, an outgrowth of AWS, is a natural language processing and artificial intelligence (AI) service. It’s complicated to pull data out of medical records because EHR systems were developed more for billing than data capture and clinical analysis. Amazon is offering not only transcription services that put the data into the appropriate fields but also data standardizing to healthcare clients so they can better access and use their data. AI is also used in imaging studies to identify potential abnormalities, but algorithms are developed for specific-use cases, making it a slow process to develop new functionality. “These concepts are valuable but incrementally being brought into how things work,” Ray says.

Alexa

Anthem Blue Cross and Blue Shield has a program in 12 states that lets members use Alexa, Amazon’s smart speaker, to refill prescriptions, schedule appointments and answer insurance-related questions about claims and deductibles. “The larger trend here is, how do we simplify the experience for our members?” says Rajeev Ronanki, Anthem’s chief digital officer. Anthem offered the service for informational questions starting in 2018, providing the nearest doctor or pharmacy information without Alexa identifying the user. “Once the technology partners like Amazon got HIPAA certified in 2019, we started looking into more specialized services,” he says.

National Health Service in Great Britain partnered with Amazon for Alexa to provide general health guidance in 2019. Niehaus wonders out loud whether the Alexa of the future would prompt users on what purchase to make based on the questions she is asked.

Data and security

With so many points of entry into Amazon’s data reach, the natural question is how are they using the collected data? In the context of the deal with National Health Service, Amazon told The New York Times that the company was not building health profiles or using health information to recommend or sell products. The devices record what is said, however, and there have been cases of the smart speakers sending recordings without user consent. Amazon also retains recordings to help train its AI algorithm.

Ronanki says that Alexa is not storing any member information. “We’ve verified that through our contract,” he says. Alexa authenticates the member’s voice to ensure it’s the right person, and Amazon sends a passkey to the user’s phone for each unique conversation. The resulting action is confirmed, like a scheduled appointment or prescription refill, based on the member’s stored preferences.

However, even without retaining health data, Amazon can use the lessons learned from the experience to develop systems for other organizations, Niehaus says. Amazon will have, for example, access to all the information gleaned from the entire British population that can be applied elsewhere. But there are clear restrictions about which data Amazon can access from healthcare organizations using AWS, precluding Amazon from mining that data. “It’s fairly common for cloud services to host data in accordance with HIPAA. There’s no evidence they’re inappropriately accessing the data,” says Niehaus.

The bigger concern for Ray is the potential consumerization of the healthcare data for marketing purposes. “One of the largest areas of healthcare is marketing, especially around Medicare Advantage. Do I worry about what data they’re mining about my parents,” resulting in targeted ads? Yes, he says.

Where does Amazon go from here?

Amazon’s future in healthcare may partly depend on how the entrenched players respond, says Niehaus. With continued industry consolidation, other players are building market share. With COVID-19, there’s been an accelerated focus on catering to patient convenience, and the relaxation of regulations has helped telehealth take off. Amazon may be on the sidelines now, and telehealth company valuations are high so there’s no bargain to be had. But Amazon bought its way into mail-order pharmacy when it bought PillPack. It could do the same with the purchase of a telehealth company.

Amazon’s overall healthcare strategy still hasn’t come into focus. “It’s unclear if there’s one person directing all the efforts,” says Niehaus, adding that he isn’t sure if Amazon will try to serve as a connection point or focus on specific healthcare services.From a mergers and acquisition perspective, says Ray, the challenge for Amazon is integration: how to fit together the various technologies.

Amazon has an opportunity now to acquire other companies that are short on capital because of the pandemic. That could be a company complementing PillPack — a competing supplier, for example. With more healthcare migrating to the home due to the COVID-19 pandemic, wearable devices and remote monitoring are likely to become more important. “The hub around your health,” says Ray, “will probably answer to the name Alexa in the not-so-distant future.”

Deborah Abrams Kaplan is a regular contributor to Managed Healthcare Executive.®