In Another Blow To A Healthcare Delivery Industry In Cardiac Arrest, Amazon Just Closed A Blockbuster Deal With One Medical

In Another Blow To A Healthcare Delivery Industry In Cardiac Arrest, Amazon Just Closed A Blockbuster Deal With One Medical Rita Numerof, Contributor

A One Medical primary care office on the Upper West Side of Manhattan in New York City on Wednesday, ... [+] March 1, 2023. (AP Photo/Ted Shaffrey)Copyright 2023 The Associated Press. All rights reserved.

Amazon has just officially closed on its highly-anticipated $3.9 billion acquisition of primary care provider One Medical. While companies including Amazon, Walmart and CVS have been slowly moving into the healthcare market for years, this latest blockbuster deal is a potential game-changer. It now gives Amazon the last piece of the puzzle they need to build a solid foundation to deliver fully integrated primary care: a nationwide brick-and-mortar presence. This latest incursion from retail disruptors is continued bad news for a broken U.S. healthcare delivery system that not only continues to fail in a big way, and on every level, but has historically been loath to pivot to a new delivery model defined by better patient outcomes and at lower cost.

Together, Amazon and One Medical hope to bring a more patient-centric approach to healthcare delivery in the comfort of people’s homes. With annual memberships starting at under $200, patients are promised access to on-demand virtual care via video chat and in-app messaging, same and next-day in-office and remote medical appointments, walk-in laboratory services, prompt prescription request and renewals and more. And with access to One Medical’s network of more than 180 offices across the country, consumers will also have increased options for community-based retail care. By adding retail to its portfolio, the company can fully integrate its three pillars, pharmacy, telehealth, and now primary care, into a comprehensive and attractive model.

Amazon CEO Andy Jassy said of the deal’s closing that “customers want and deserve better,” adding that “together, we believe we can make the health care experience easier, faster, more personal, and more convenient for everyone.” It is being coined “the doctor’s office reimagined” – and for good reason.

I have been writing about disruptors like Amazon for years, and as I previously explained when the Amazon-One Medical acquisition was announced last July, it was the first time a very powerful private company would acquire a sizable footprint with a corresponding influence in the U.S. primary healthcare market. The move was not only predictable, but revolutionary, and at a time where it was urgently needed.

For decades, a fee-for-service (FFS) model, which prioritizes healthcare delivery organization profits over patient outcomes, has left nothing but disastrous results in its wake. While a “test more, treat more, consume more health services” certainly pays for beautiful new hospital facilities and generous CEO salaries, it does so at the expense of patients who are pushed through the labyrinth that defines our current system, for more care – whether or not it’s necessary. And, as Covid tragically revealed, those with serious underlying health conditions fell helplessly through the system’s cracks. Millions tragically paid the ultimate price. Additionally, closing hospital doors to lucrative, elective surgeries in the wake of the pandemic left many systems hemorrhaging financially.

Healthcare delivery is going to pay dearly for these self-inflicted missteps for years to come. And, they will continue to struggle to come to terms with severe operational challenges, including the impact of higher staff wages and benefits, staff burnout and a mass exodus of healthcare workers from the profession. Even more troubling signs lie on the horizon, as primary care physicians (PCPs) are slowly being marginalized.

One of the major reasons for the decline in primary care has been downward reimbursement pressure, which penalizes PCPs from doing their jobs properly – which includes taking the time to understand each patient’s needs and to administer the proper treatment at the right time and in the right way. And, as I explain in my last column, this is not only forcing these medical “gatekeepers” to exit a once noble profession, but also disincentivizing future doctors from entering the primary care field.

Retailers like Amazon are responding to the dysfunction by increasingly turning up the competition volume another notch. Just this year alone, we have seen a flurry of activity from players who continue their foray to disrupt traditional healthcare. Also looking to expand its primary care footprint, CVS Health just announced plans to buy Oak Street Health. Walmart, which currently operates 32 health centers that deliver both primary and urgent care at an affordable price, plans to nearly double that number by 2024. In addition, Best Buy just struck a deal with Atrium Health to bring certain aspects of hospital care to people’s homes with wearable devices that enable care teams to monitor patient vital signs remotely. Their goal is to ensure seamless coordination of care, something that is sorely lacking in today’s fragmented system. As Dr. Rasu Shrestha of Atrium’s parent company, Advocate Health, rightly said: “this transition that happens from discharging a patient from a hospital to the void of their home is the dark side of the moon: It's disconnected, confusing, expensive.”

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It remains to be seen where all this disruption ultimately leads us, but one thing is certain. The winds of change that started long ago are here to stay. One survey found that more than 60% of Americans “envision most primary care services being provided at pharmacies, retail clinics and/or pharmacy clinics instead of going to a Primary Care Provider (PCP),” with 70% of Millennials believing that will be the case. The survey also found that “at least half of Americans see potential savings on medical expenses as an incentive to look beyond solely physician-credentialed providers.” And, all of this has plenty of people in the industry worried – as a survey of health tech experts found that more than half of respondents said Amazon would be “the biggest threat to health systems’ core business” by the end of this year.

In healthcare, like any industry in transition, you are either a disruptor or you are disrupted. And, if it’s the latter, the companies with foresight and discipline pivot to ensure they are an essential part of a new tomorrow. Unfortunately, that has not happened to a U.S. healthcare delivery system resistant to change, actively fighting change at almost every turn.

Back in 2007, a group of American Medical Association (AMA) doctors went so far as to urge the group to ban retail health clinics, with one physician saying "there is no more urgent issue than this for the AMA." He added that if the Association fails to act, "in five years, the chairs [at the AMA] meeting will be filled with representatives from Walgreens, Wal-Mart and other retail outlets.” They later backed off that position, urging instead for federal investigations. And, as I wrote about, the AMA, along with the American Hospital Association (AHA), are the same groups that fought the Centers for Medicare and Medicaid Services’ (CMS) attempts at reforms to bring more transparency and accountability to a failing system. The resistance is stunning given where we are today.

Change is difficult, and in healthcare delivery, the reason is simple: it’s hard to let go of a FFS system that pays the bills, even if it’s not working. To drive this point home, our latest Population Health Survey Report found that while an overwhelming majority (81%) of healthcare executives continue to say population health will be “critically” or “very important” to their organization’s future success, the potential threat of financial losses by moving to a new model remains the primary barrier (21%) to pursuing population health, followed by uncertainty of when to make the transition from the current model (14%). These sentiments have changed little over the last several years.

Traditional healthcare delivery providers often bemoan retail health, largely over concerns about quality of care being administered in these emerging settings, But, as I said in my book, Bringing Value to Healthcare, the truth is if a physician is concerned that his or her patients won’t get good medical care if they get their lab tests done at LabCorp and their antibiotics at Walgreens, then the physician might consider changing the way the practice is operated so that those options don’t look so attractive.

At the closing of the Amazon-One Medical deal, CEO Andy Jassy also remarked: “if you fast forward 10 years from now, people are not going to believe how primary care was administered. For decades, you called your doctor, made an appointment three or four weeks out, drove 15-20 minutes to the doctor, parked your car, signed in and waited several minutes in reception, eventually were placed in an exam room, where you waited another 10-15 minutes before the doctor came in, saw you for five to ten minutes and prescribed medicine, and then you drove 20 minutes to the pharmacy to pick it up—and that’s if you didn’t have to then go see a specialist for additional evaluation, where the process repeated and could take even longer for an appointment.”

This is the grim picture of a healthcare delivery system in distress today, but it also demonstrates what can be realized when innovation is put to work to achieve better health outcomes at lower cost. The captains of the healthcare delivery system titanic are well aware of what’s at stake, and what needs to be done to avert total disaster. They cannot afford to fail but so far calls to the bridge have largely gone unheeded. And, in a brave new world of disruptors and the disrupted, the disruptors are winning.