Friday, August 5, 2022
HomeHealth Law5 takeaways from the Amazon/One Medical transaction

5 takeaways from the Amazon/One Medical transaction


On July 21, 2022, essentially the most high-profile acquisition within the well being care house in current reminiscence was introduced, when Amazon publicized the acquisition of One Medical, a major care group, for $3.9 billion. Amazon’s curiosity within the huge US well being care trade has been no secret in recent times, however that is undoubtedly their largest wager so far. One Medical’s core enterprise is a subscription based mostly digital platform providing telehealth companies, nevertheless it has additionally made inroads in growing in-person brick and mortar clinics as nicely. One Medical additionally affords its personal proprietary EMR system as employer-oriented choices (with Google recognized to be a serious shopper).

Given Amazon’s huge scale and ambition, individuals within the house will little question be watching this transaction intently and listed here are 5 areas we will probably be being attentive to:

1. Main care is a gorgeous goal.

As many commentators have famous, so as to carry 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. workers in its system, however as a result of these workers have been in extensively dispersed geographies, it lacked ample market energy to carry down the prices of well being care companies for its workers. Equally, well being care suppliers had little incentive to retrain their focus from offering (costly) episodic care to specializing in total well being care outcomes based mostly upon worth.

In contrast to the Haven three way partnership, the One Medical acquisition represents an funding in value-based major care which affords some distinct advantages. Whereas many personal fairness investments give attention to fee-for service and outpatient specialties, garnering a return on such an funding usually includes growing further income streams by including ancillary services and products. Alternatively, major care suppliers are typically well-positioned to direct and handle the care of their sufferers because of the 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 trade consider that major care has the potential to revolutionize care supply in the USA, 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 chance for Amazon to interrupt into the value-based Medicare mannequin at a scale that will be inconceivable with its personal workers.

2.  Well being techniques – be cautious.

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

3. Improvements in employer choices.

Whereas this acquisition will be seen in some ways as a departure from Amazon’s earlier forays into well being care, it’s vital to notice essentially the most precious factor Amazon brings to this transaction continues to be its huge 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 amazing alternative to innovate with respect to the employer’s function within the supply of well being care companies with out the stress of that being the core of the enterprise. New alternatives on this house 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 largest alternatives within the well being care house – 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 techniques, undergo from lack of assets to develop and innovate in info techniques, information administration, and growth of medical protocols, notably as a result of, as famous above, there may be often a powerful give attention to offering extra profitable episodic care to the detriment of preventive drugs. We have now no doubts that Amazon will additional One Medical’s information analytics capabilities in a means that may allow it to handle well being care and value information throughout the heath care continuum. Equally, we anticipate that One Medical will proceed to supply (and even increase) its choices of telehealth and different companies which might be price efficient, handy, and allow the immediate administration of affected person well being to reduce subsequent, expensive interventions.

5. Enticing to physicians.

The One Medical observe mannequin is more likely to seem engaging to many major care physicians as a result of it locations them on the heart of well being care decision-making for his or her sufferers. It’s extensively documented that the variety of physicians in unbiased observe is reducing. On the similar time, many major care physicians are leery of turning into employed by well being techniques 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 benefit from these dynamics. With One Medical’s present infrastructure and Amazon’s market penetration and presence throughout the USA, 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 observe.

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