One Medical & Amazon’s Deal
So many experts and creators have cued in to writing something about this deal. In fact, Nikhil Krishnan’s — a funny healthcare creator — headline was, “I guess I should say something,” in response to how many people were talking about it.
I am very new to this healthcare/digital health thing, but I have to get into it — everyone’s talking about this hot field! This is a ‘fresher to healthcare’ perspective, that tries to understand the ins and outs of this deal.
Nikhil Krishnan’s Post
Nikhil starts with, “I don’t have a lot of hot takes here,” but for me, that’s a lot of hot takes.
This image from Nikhil’s blog already says a lot. Amazon is trying to get into healthcare, but One Medical just seems like another attempt to get in the door.
Now, I need to understand what happened to these other companies. The post points out that it’s confusing whether Amazon is going for employer-based healthcare or consumer healthcare.
Why Amazon bought PillPack:
PillPack is an online pharmacy — fits for Amazon’s interests & delivery capabilities.
The article points out that Amazon could pressure the drug market down to lower prices — making everything cheaper and more convenient. It also adds that Amazon might not be able to do much under the siloed system of how pharmacy works: “physicians, insurance companies, and medical service providers.”
Also important to introduce is in the middle of prescriptions going from manufacturers to consumer. PBMs.
PBMs are pharmacy benefit managers. This means they do three things
determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid
I’m hearing costs, costs, and costs. And guess what the leading PBM is: CVS Caremark! Don’t you think CVS will frown partnering with it’s competitor: PillPack.
Many PBMs also, “offer their own lucrative mail-order services,” and aren’t going to be very kind to an online pharmacy like PillPack.
In fact,
In 2016, Express Scripts, the largest PBM, threatened to remove PillPack from its network, claiming the company was misrepresenting itself as a retail pharmacy instead of a mail-delivery pharmacy
PillPack is just winning. And PillPack is not only in it for its own company — in 2017 it created PharmacyOS to try to get — into other people’s hands — “the first platform that would help people manage multiple medications.”
Automatic redelivery. Tracking pills left. When something is or is not working.
What does One Medical Do
One Medical is trying to fix primary care in America. Virtual care. Longer appointments. Messaging with your provider. In-app prescription requests and renewals.
It’s a really big company and has major contracts with Google to Airbnb, as an employer benefit program. But Nikhil raises the point, that they’re probably going to go towards consumer healthcare.
It’s just easier to do that — given it’s convenient for consumers and now it’s part of big Amazon itself. There’s not really any integration between One Medical and PillPack — they’re still siloed. It’s more — trying to get into primary care versus pharmacy.
Whatever is Left to Spit Out
Nikhil questions whether Amazon will still keep Iora Health (the company that One Medical bought a year ago). Resolution is probably not because of scrutiny.
Amazon delivery to home, and home care — would be perfect for the financially disproportionate and the elderly (which are the Medicare-Advantage patients). But Amazon is already under scrutiny on people dying under Amazon’s watch. And that’s probably not enough to stop them. But the economics have to work — and he points out OneMedical + Iora has not figured this out.
Risk Adjustment
The economics are all about — for the more sick and old patients, Amazon won’t make that much money (risk). But for the people don’t need as much care or young — they can make enough money to balance it out.
Will a big company do this? I don’t know. I’ll leave it up to you.
Last Words
I know, this is a very disjointed article. Probably like Amazon in the healthcare space. As a fresher, I was trying to think about this hot deal everyone is talking about — definitely need to think more about it and this really just a regurgitation of research.
I might write a polished version of this deal again — or forget about it(Oops.) Anyways see you next time.
