Report details just how Amazon could disrupt healthcare
Amazon is entering healthcare — and healthcare may never be the same.
That’s the takeaway from a new report by global management consulting firm L.E.K Consulting, which said the online giant has the right skills and capabilities to follow through on its big healthcare-industry ambitions and will launch offerings that range from mail-order pharmacy to AI-based diagnostics. (Amazon in late January announced its entry into the healthcare field through an alliance with JP Morgan Chase and Berkshire Hathaway.)
“They (Amazon) have repeatedly shown that they have the capabilities, the patience, and the deep pockets to disrupt industry after industry,” said Rob Haslehurst, managing director at L.E.K. “Healthcare is no exception.”
Amazon already has many of the core competencies needed to compete in healthcare. These include ready access to capital, a massive distribution infrastructure, a strong technology base, a robust data analytics capability, and a deep, talented executive bench that, “like Bezos himself, is relentless, resourceful, fast, inventive and customer-obsessed,” said Haslehurst.
The report outlined five scenarios as to how Amazon is likely to enter and dominate health care.
“They’re not mutually exclusive — in fact, they represent a roadmap that Amazon can follow to move continually deeper into the healthcare industry,” said L.E.K. managing director and report co-author Joseph Johnson. “All of them illustrate Amazon’s ability to drive down prices and margins while fundamentally transforming customer behavior.”
Amazon’s possible points of entry are:
• Durable medical equipment and medical supplies. “This is a no-brainer because Amazon is already there,” said Johnson. “It currently sells a broad array of general medical supplies and durable medical equipment (DME) to consumers.”
Amazon’s core competencies in logistics and distribution, and its existing B2B e-commerce platform will allow it to easily expand into hospital and provider supply, disrupting the traditional group purchasing organization (GPO) contract model. Amazon has already obtained licenses to distribute medical supplies to providers in 43 states.
• Mail order and retail pharmacy. Amazon has secured approval as a wholesale distributor from 12 state pharmaceutical boards. Drug storage is a hurdle, and there are regulatory challenges. But Amazon can work through them. It can also build pharmacies into its recently-acquired Whole Foods stores.
The company can also take advantage of its predictive analytics and customer data capabilities to build digital health tools that track and influence patient behavior — giving it a leg up over traditional pharmacy in working with the most challenging areas of healthcare delivery.
• Pharmacy benefit manager. Amazon’s most likely move into the field will be by partnering with a large PBM such as Express Scripts or by buying a smaller player like Prime Therapeutics. Amazon would gain a pharmacy network and a claims adjudication capability, and its partner would gain access to millions of Amazon Prime members.
• Telemedicine or in-home health care. Amazon’s Echo smart speaker (with 20 million units sold to date) and Alexa, its voice-controlled personal assistant service, give it an enormous platform for new voice-activated services. Healthcare could easily be among them. Bezos has talked publicly about the role for Alexa in the future of healthcare delivery. Alexa’s first step would be to help book physician visits. But thanks to Echo Show’s video capabilities, the next move might be in-home virtual house calls.
• AI-powered diagnostics and continuous care. Amazon’s “final frontier” in healthcare could be fully automated, AI-driven, in-home healthcare and diagnostics.
“Amazon has deep AI capabilities — machine-learning already drives many of its offerings, from its customer recommendation engine to its service centers,” said Johnson. “It would be only logical to harness that capability to diagnostics. And in fact, this has already started — Alexa now delivers first-aid information and voice-driven self-care instructions in an offering introduced by the Mayo Clinic. It wouldn’t be a stretch to add first-line diagnostic information, provide medication reminders, and auto-refill prescriptions.”
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That’s the takeaway from a new report by global management consulting firm L.E.K Consulting, which said the online giant has the right skills and capabilities to follow through on its big healthcare-industry ambitions and will launch offerings that range from mail-order pharmacy to AI-based diagnostics. (Amazon in late January announced its entry into the healthcare field through an alliance with JP Morgan Chase and Berkshire Hathaway.)
“They (Amazon) have repeatedly shown that they have the capabilities, the patience, and the deep pockets to disrupt industry after industry,” said Rob Haslehurst, managing director at L.E.K. “Healthcare is no exception.”
Amazon already has many of the core competencies needed to compete in healthcare. These include ready access to capital, a massive distribution infrastructure, a strong technology base, a robust data analytics capability, and a deep, talented executive bench that, “like Bezos himself, is relentless, resourceful, fast, inventive and customer-obsessed,” said Haslehurst.
The report outlined five scenarios as to how Amazon is likely to enter and dominate health care.
“They’re not mutually exclusive — in fact, they represent a roadmap that Amazon can follow to move continually deeper into the healthcare industry,” said L.E.K. managing director and report co-author Joseph Johnson. “All of them illustrate Amazon’s ability to drive down prices and margins while fundamentally transforming customer behavior.”
Amazon’s possible points of entry are:
• Durable medical equipment and medical supplies. “This is a no-brainer because Amazon is already there,” said Johnson. “It currently sells a broad array of general medical supplies and durable medical equipment (DME) to consumers.”
Amazon’s core competencies in logistics and distribution, and its existing B2B e-commerce platform will allow it to easily expand into hospital and provider supply, disrupting the traditional group purchasing organization (GPO) contract model. Amazon has already obtained licenses to distribute medical supplies to providers in 43 states.
• Mail order and retail pharmacy. Amazon has secured approval as a wholesale distributor from 12 state pharmaceutical boards. Drug storage is a hurdle, and there are regulatory challenges. But Amazon can work through them. It can also build pharmacies into its recently-acquired Whole Foods stores.
The company can also take advantage of its predictive analytics and customer data capabilities to build digital health tools that track and influence patient behavior — giving it a leg up over traditional pharmacy in working with the most challenging areas of healthcare delivery.
• Pharmacy benefit manager. Amazon’s most likely move into the field will be by partnering with a large PBM such as Express Scripts or by buying a smaller player like Prime Therapeutics. Amazon would gain a pharmacy network and a claims adjudication capability, and its partner would gain access to millions of Amazon Prime members.
• Telemedicine or in-home health care. Amazon’s Echo smart speaker (with 20 million units sold to date) and Alexa, its voice-controlled personal assistant service, give it an enormous platform for new voice-activated services. Healthcare could easily be among them. Bezos has talked publicly about the role for Alexa in the future of healthcare delivery. Alexa’s first step would be to help book physician visits. But thanks to Echo Show’s video capabilities, the next move might be in-home virtual house calls.
• AI-powered diagnostics and continuous care. Amazon’s “final frontier” in healthcare could be fully automated, AI-driven, in-home healthcare and diagnostics.
“Amazon has deep AI capabilities — machine-learning already drives many of its offerings, from its customer recommendation engine to its service centers,” said Johnson. “It would be only logical to harness that capability to diagnostics. And in fact, this has already started — Alexa now delivers first-aid information and voice-driven self-care instructions in an offering introduced by the Mayo Clinic. It wouldn’t be a stretch to add first-line diagnostic information, provide medication reminders, and auto-refill prescriptions.”
Click here for more.