Amazon healthcare push shifts with closure of telehealth service

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Amazon's ambitious plan to disrupt the healthcare category seems to have had a course correction after the online retail giant announced it plans to shut down its telehealth service Amazon Care.

It's a dramatic change in direction, coming just a few months after Amazon was trumpeting its intention to make the three-year-old telehealth service available to employers nationwide in the US.

A report in the Financial Times now says that the head of Amazon Health Services, Neil Lindsay, sent a memo to staff yesterday said its plan to provide on-demand access to healthcare professionals was not the right "long-term solution" for the companies it was targeting with Amazon Care.

"Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn't going to work long-term," according to the memo.

Amazon Care provides members with primary and preventive care, ongoing support for chronic conditions, and referrals to secondary and tertiary care, as well as prescription medicine services – the latter a result of the company's 2018 acquisition of PillPack.

The word on Wall Street is that this is a change of direction for Amazon rather than a retreat, signalling its intention to develop in healthcare delivery by tapping into existing networks, rather than building its own from scratch.

The move comes just weeks after it announced the takeover of virtual and in-person primary care services provider One Medical for $3.9 billion, which still has to be cleared by financial regulators, with analysts suggesting that is a quicker way to fulfil its strategic objectives in health.

It is also possible that dismantling Amazon Care could stave off any resistance to the merger on antitrust grounds, given the overlap between the two companies in telehealth. Activist groups have criticised the merger and called for it to be challenged by the Federal Trade Commission.

It's worth noting that an earlier foray by the company into the health arena – the Haven joint venture with Berkshire Hathaway and JPMorgan Chase set up in 2018 to provide healthcare coverage for the three companies' 1.2 million employees – was also shut down last year.

The FT notes that Amazon is showing no signs of lessening its ambitions in health, and is among the bidders for Signify Health, a provider of home-based care services.

25 August, 2022

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