As its healthcare services expand, Amazon poses an increasing danger to drugmakers, hospitals, doctors, and insurance. This is Amazon’s plan to rewrite the rules of healthcare.
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Remarkably, Big Tech has not made much of an impact on American healthcare yet.
Although artificial intelligence surpasses doctors in several complex activities (such as interpreting mammograms and analyzing chest X-rays), it is chronically underutilized. Meanwhile, many have attempted to increase operational efficiency through big-data analytics, but care delivery is as erratic and ineffectual as it has always been. Perhaps the most telling indication of Big Tech’s challenges in medicine is that 9 out of 10 healthcare firms still use fax machines to exchange critical patient information.
Two tech titans are attempting to change all of that by capturing a significant portion of the $4.1 trillion expended on healthcare in the United States each year.
Their approaches could not be more dissimilar. One company is following a long-forgotten, unwritten rule of health technology. The other is preparing to completely rewrite the healthcare rulebook.
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First, the rule: It’s better to collaborate (than compete) with healthcare’s power players
Technology has been utilized to disrupt or replace the incumbents in the majority of sectors. That is how internet booking services altered travel, how streaming platforms defeated cable corporations, and how ride-sharing apps upended the taxi sector.
However, the most secure and effective route to success in healthcare is a different one. Tech companies make money by (a) taking the safe route and (b) getting along with hospitals, physicians, insurers, and pharmaceutical firms.
Apple: Playing it safe, playing nice and profiting handsomely
Apple published a 59-page report around the end of last month that it referred to as “a snapshot of our work to advance health.” It was planned as a dramatic, audacious announcement that would establish Apple as a key player in the healthcare industry.
Instead, detractors described it as a last-ditch effort to persuade shareholders that the business is keeping up with its competitors.
The media criticism was fast and powerful, and it was clearly not what Apple CEO Tim Cook had in mind three years ago when he declared that Apple’s “greatest contribution to mankind” would be health-related (a remark that was glaringly absent from the company’s nearly 60-page report).
Despite the report’s lofty rhetoric, it contained little proof that Apple was on track to significantly advance American health.
For instance, the “Apple Heart Study” sought to demonstrate that the Apple Watch is capable of reliably detecting atrial fibrillation (AFib). The endeavor was a textbook example of rule-following: Apple collaborated with a renowned academic research partner (Stanford), provided funding for the extensive study, and then engaged in a protracted PR victory lap once the findings were out.
The results, which several independent researchers deemed “useless” because of the study’s poor demographics, high dropout rate, and lack of follow-up, were not as well received. Additionally, critics noted that widespread AFib screening could “do more harm than good.” A different research on the watch itself discovered that “only 13% of people who were later diagnosed with atrial fibrillation had gotten an irregular heart rhythm notice previously.”
To be precise, the watch may eventually add to the expanding collection of technological instruments used to identify AFib and other medical conditions. However, that is not the type of contribution Tim Cook has previously promised.
What is most disheartening about Apple’s modest ventures into healthcare thus far is realizing how adept the firm is of accomplishing so much more. It has the people, power, and tools to transform health monitoring, particularly for the 30% of U.S. individuals who have two or more chronic conditions (e.g., diabetes, heart failure, hypertension).
That population does not require another medical device capable of producing terabytes of health information (EKG tracings, blood-pressure readings, etc.). And those folk’s already overwhelmed doctors do not want all that data cluttering up their health records.
What chronically ill individuals desperately need is a technology that can tell them one of two things:
- You are all right. That is, your readings (heart rate, blood glucose, and so on) are within an appropriate range set by your doctor.
- You are not okay. Something is wrong, and you should contact your doctor right away.
This type of technology, which is propelled by a fusion of AI and algorithmic tools, has the potential to save thousands, if not millions, of lives without overloading physicians. Apple has not constructed it yet since doing so would turn the corporation into a medical care provider. In such circumstances, any measurement or analytical error would expose Apple to considerable medical-legal liability.
Tim Cook is aware that taking the safe route and getting along with the biggest names in healthcare practically ensures future financial success. However, Apple will not likely have a significant impact on the health of our country until it is prepared to take chances and challenge the status quo.
Amazon: Poised to rewrite the rules of U.S. healthcare
The same week Apple delivered its dismal report, Amazon declared the $3.9 billion takeover of One Medical, a membership-based primary care practice with locations in San Francisco, New York, and 23 other metro areas.
It was the latest in a string of massive moves by Amazon that were anything from “playing nice” with healthcare’s current authorities. In recent years, the world’s largest online retailer has introduced its own pharmacy, telehealth and urgent-care services, health-tracking device, health-data arm, cloud-based medical records service, and a network of neighborhood health centers located near employee hubs.
As its healthcare services expand, Amazon poses an increasing danger to drugmakers, hospitals, doctors, and insurance.
The firm now appears to be seeking to do to healthcare what it accomplished to retail: take it over.
Naturally, detractors are eager to emphasize that medicine is not a retail industry. Amazon has already had to adjust its course twice because healthcare is complex. First, there was Haven, a nonprofit organization founded for workers at Amazon, Berkshire Hathaway, and JPMorgan Chase that was abandoned after only three years. The American healthcare system, according to experts at the time, was simply “too complex to be disrupted” by Jeff Bezos and his billionaire friends.
We strongly disagree. Bezos’ vision for Haven (and for healthcare) was, in our opinion, substantially greater and bolder than that of his executive peers. In fact, we have already stated that anyone who believes Bezos’ ultimate purpose with Haven was to build a non-profit healthcare service only for employees also believes Amazon only sells books.
Amazon’s other healthcare withdrawal occurred last week, when it announced that it will discontinue its virtual care business later this year, presumably to be replaced with an enhanced telemedicine service through One Medical.
The most difficult component for any “new” healthcare entrant, including Amazon, is establishing scale. Attracting new patients, hiring physicians, and constructing medical offices are all expensive, complex, and time-consuming endeavors.
Amazon acquired 188 clinics and 700,000 patients, as well as sufficient doctors and support personnel to care for them, with the One Medical deal. And, with $60 billion in cash on hand, the corporation can continue to build up swiftly in the coming years.
Bezos and his successor Andy Jassy are aware that healthcare upheaval and dominance are possible if Amazon can satisfy patients as much as it pleases its present retail customers. Furthermore, if Amazon does indeed approach healthcare with a customer-service mindset, we could assume that it will bargain for the lowest costs on everything from prescription drugs to doctor appointments. It will place a strong emphasis on affordability and information clarity, two things that are sorely lacking in today’s healthcare. Additionally, it might even add facilities for user input (like its 1 to 5-star product reviews).
Expect Amazon to develop corporate partnerships as well, either combining Prime membership with One Medical registration or using Amazon Web Services to modernize telehealth and patient data.
However, Amazon must continue to invest in scale and expansion if it is to prosper.
It will not do to have one or two million Amazon patients. After all, the largest of the “Big 5” insurers, UnitedHealthcare Group, has 70 million members while Humana just has 16 million.
Amazon could transform One Medical from a loss leader (now losing $240 million per year) to a profit center with 5 million members. With 10 million members, Amazon could supplement One Medical’s existing primary-care-only approach with experts to improve both care coordination and operational efficiency. With 50 million members, Amazon could become the country’s largest insurer and healthcare system, capable of negotiating reduced prices from all players, including doctors, hospitals, and medication manufacturers.
In the end, Amazon will overtake every other participant in the market if it can scale up and make healthcare as simple as its cherished one-click “buy now” function. It will also leave its Big Tech competitors, like Apple, in the dust.