Amazon has sent not just a signal flare but a full broadside warning into the virtual care industry, announcing that their internal pilot of Amazon Care will be neither internal nor a pilot for much longer. They’ll expand to their employees across the US, then start to offer a proven value package to other employers looking for remote care offerings. They could sell to providers, or even direct to consumers. Some key elements are still missing, which raises the question: Are we looking at the next AWS, or the next Fire Phone?
Today, Amazon Care is surprisingly limited. Initial deployments look to be remote visits and virtual primary care. Those are some of the easiest pieces to scale but offer the least value and potential impact. To really dominate the space, Amazon needs to take a cue from Teladoc and other virtual care platforms offering comprehensive remote monitoring and health coaching.
Amazon is betting consumer experience will be enough to bring in users. Whatever else you think of them, the Amazon experience is refined, simple, and popular. If they bring the same ease to healthcare, they might win just through that.
The telehealth bubble is popping, and that’s good. The investments and valuations driven by COVID and 2020 telehealth volume were overheated, but it was never certain when the telehealth bubble would burst. If visit volumes really did peak last summer and continue to decline closer to our predicted baseline of ~20 percent of all visits, telehealth is going to be a tough, crowded market by this summer. Vendors offering more than just remote appointments are going to be the only ones able to compete with the Amazon behemoth.
Amazon is Coming
Amazon can bring a level of convenience, simplicity, and integration that almost no one will be able to match right now…Will [this be enough to] win out over potentially more complete or clinically valuable competition?
Since the announcement of the Haven partnership, or even the PillPack acquisition before it, the healthcare sector has been wondering what Amazon will do, at what scale and when. Now we don’t need to wonder. As we predicted in 2019, Amazon is happy with the results of their Washington-based employee clinic and is looking to roll it out nationwide later this year. Their announcement focused on telehealth services, PillPack, and Health Navigator, the virtual triage and patient steering platform they acquired in 2019.
As a remote health offering, this is relatively decent. The real benefit to Amazon and their employees, however, has been the combination of virtual, remote, and in-person services they can offer through their partnership with Care Medical, an essentially captive practice in Washington. Care Medical has filed to expand practice into seventeen states, and not all of them are states where Amazon has a major employee presence. Much as they did with AWS, Amazon plans to roll out a proven internal service to other businesses. The sooner they move beyond just telehealth and remote appointments to offer genuinely combined in-person, remote, and home monitoring care, the more they have to offer that other virtual care vendors just do not match currently.
The hardest place to compete with Amazon will be in consumer experience. Amazon can bring a level of convenience, simplicity, and integration that almost no one will be able to match right now. Most importantly, most consumers are already tied into the Amazon ecosystem in some fashion. Will convenience and ease-of-use win out over potentially more complete or clinically valuable competition?
A Different Direction
Other virtual care players making news are approaching the market from a more conventional direction. With a $50M cash injection from Centene, Babylon Healthcare wants to continue to expand their US offerings. Doctor on Demand has announced a merger with Grand Rounds, augmenting their offering to include the Grand Rounds navigation and guidance tools.
Data from Rock Health’s 2020 Market Insights Report.Teladoc and Livongo, Zipnosis and GYANT, Amwell and Tytocare are all focused on virtual appointments and support tools to assist patients in self-care/chronic care management beyond the virtual visit. Babylon, Doctor on Demand, Teladoc, and Zipnosis have captive provider networks, but do not offer the in-person components that Amazon Care does via Care Medical. It’ll be interesting to find out if the clinical and engagement benefits of an in-person provider will win out over the scalability of purely remote, virtual providers.
Almost all virtual-first offerings today include some form of remote monitoring, which Amazon Care does not currently have. Losing that granularity and insight is likely to cost Amazon, especially when it comes to chronic care. And solutions that effectively address chronic care needs are what self-insured employers and payers are looking for. If Amazon thinks the Halo wearable will be enough, they’re in for an unpleasant surprise.
Popping in Slow Motion?
It might just be that Amazon has gotten into the telehealth market too late. Earnings reports from Amwell came with distressing numbers if you’re a vendor, shareholder, or investor banking on telehealth remaining the dominant appointment model for the foreseeable future. Despite massive growth in active providers and use, subscription revenue growth was tepid.
We have been predicting 15-25% remote appointment volume as the new standard since last year, and that looks pretty accurate. However, it might not be enough for the companies and investors who have been pouring money into the telehealth sector based on the 40-60% volumes we saw in 2020. Long term this isn’t as bad for provider-focused vendors like Amwell as it could be for vendors relying on increasing payer and employer subscriptions. If Amazon starts devouring market share, those are the companies that are going to need to compete with the beast head-on.
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