The “Wellcare” new trail: a look into Amazon digital strategy to disrupt, seduce and conquer Healthcare and Insurance organizations.
A revolution is coming in way we will perceive heath and wealth. A disruptive healthcare offer with a patient-centric focus, as the underlying driving force, will pivot this revolution that will give birth to a new ecosystem: the “Wellcare”.
At this stage, no individual company has the resources and competencies to handle what will be the whole wellcare offer: product selection, R&D, clinical trials, health devices, scale-up, manufacturing, downstream processing, packaging, branding and marketing, payment methods,private wealth management, income services digital infrastructure (AI, ML, Cloud compliant services), physical infrastructure (hospitals, clinics, labs), staff (doctors, scientist, clinicians) and last but not least a patient-centric paradigm.
Building this offer is going to be tricky for traditional insurance and healthcare providers who will need to find their evolution pattern, changing their mindset around the new digital opportunities, federating and remolding their services.
In the meanwhile, the patient-centric paradigm is a great entry point to Tech Giants who have cash on hand, customer proximity and a “pioneer” mindset and that can take the opportunity to break into a sector worth globally $7 trillion each year, growing 5.5% per year and will reach only in US by 2027 almost $6 trillion.
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This is the case of Google, that in September ’19 signed a partnership with Mayo Clinic , one of medicine’s most prestigious brand, to store patient data in the cloud and build products using artificial intelligence and other technologies to improve care. On the same note, Apple create on IOS ResearchKit , an open source framework to make it easier for researchers to enroll participants, capture informed consent, and gather medical information more frequently, rather than only during periodic visits. Also Facebook made a move presenting in October ’19 “Preventive Health”, a new tool on the social media platform that connects people to health resources and checkup recommendations from leading health organizations.
Although all very promising, these are “baby steps” compared to what Amazon is doing: after AWS re: invent 2019  the there is little room for doubts on the leading role that Amazon aims to play in this direction to transform Healthcare.
During the 5 days ended Dec 4th, Amazon presented 75 launches and announcements of new services, several strongly focused on the life-science and well fitting into the M&A strategy deployed in the last 18 months to create a strong healthcare offer for their customers under a truly patient centric paradigm.
In this short article, we will list the key elements of Amazon M&A strategy highlighting how the new wellcare offer is shaping.
Strategic context: Amazon’s ambition for wellcare.
Amazon is one of the largest technology organizations in the world, with $232.9 billion net sales, a net income of $10.1 billion generated in 2017 by 613,300 employees. Infrastructure dominance in the Cloud, powerful logistics services, high performance computing, very disruptive innovation cycle and established proximity to customer are key levies to break into new markets.
In the last 18 months, Amazon has entered consistently into the healthcare system by leveraging its competitive advantage in infrastructure, logistics, computing and patient’s proximity:
M&A Amazon strategy in the last 18 months has been clearly set around three directions:
- Acquisitions of healthcare organizations;
- Increasing compliance of services to get traction in high regulated markets;
- Piloting captive initiatives.
Quick proving Facts
1. Acquisitions of healthcare organizations
On-line Pharmacy: Sep ’18 — Amazon purchased online pharmacy PillPack  for $753 million offering an end to end service to manage with hospital best practice patients’ drugs assumption directly at home. PillPack service includes (at no additional cost) pharmacy support (day or night), automatic refills (before the patient needs them) and free delivery (right at the door). The patient only pays standard 30-day copays or out-of-pocket expenses (as per insurance plan). Pillpack works already with most insurance plans in US.
Online Diagnoses: Oct ’19 — Amazon acquired HealthNavigator , which provides online symptom checking. the aim is to “ eliminate travel and wait time , connecting employees and their family members to a physician or nurse practitioner through live chat or video, with the option for in-person follow up services from a registered nurse ranging from immunizations to instant strep throat detection”.
Payer’s App integration: Dec ’19 — PillPack (Amazon pharmacy on line) unveiled its first direct integration with a payer’s app, MyBlue , and insurers’ beneficiaries can order, pay for and receive medications to their home for no extra fee. This will allow members to switch their prescriptions to PillPack without having to reenter their insurance details or medication list.
2. Increase compliance of services to get traction in high regulated markets
Alexa for healthcare: Oct ’18 -Amazon patented a new version of its virtual assistant Alexa which can automatically analyse speech and identify signs of illness or emotion. According to Amazon, with this feature, Alexa would be able to track also emotions, suggesting “activities” for those moods .
In April ’19, six new Alexa healthcare skills  from industry-leading healthcare providers, payors, pharmacy benefit managers, and digital health coaching companies have been added to the HIPAA-eligible environment service offer.
Machine Learning and AI for healthcare: Dec ’19 — Cerner’s  ongoing work with AWS, and use of Amazon SageMaker , has allowed researchers to query anonymized patient data to build complex models and algorithms that led to earlier detection of congestive heart failure . They lately announced a plan to reduce patient re-admissions and time spent documenting patient visits .
ML compliance: Oct ’19 — Amazon Web Services reaches 7 machine learning HIPAA compliance eligible services for healthcare and life-science. With these services, Healthcare providers can process Protected Health Information documents with AI tools in compliance to the process. Aculab and Zocdoc are two companies already using these services.
With AWS it is possible to build applications that store, process, and transmit sensitive health-related information in compliance also with the Federal Risk and Authorization Management Program (FedRAMP)
3. Piloting of captive initiatives
Employee Healthcare plan: Sep ’19 — Amazon Care  is a benefit being piloted for Amazon employees and their families in the Seattle area offering advice, answers, diagnoses, treatment, or referrals from nurses and doctors for Amazon employees and their families in the Seattle area. Currently the service is focusing around urgent issues, preventive health consults, sexual health services like contraception and sexually transmitted infection (STI) testing an general health questions.
Heaven Healthcare: Jan ’18 — The Amazon, J.P. Morgan and Berkshire Hathaway nonprofit venture aimed at lowering healthcare costs for 1.2M employees and keeping them more healthy. J.P.Morgan started testing in Oct ’19. Heaven Healthcare aims to leverage “ the power of data and technology to drive better incentives, a better patient experience, and a better system”.
What’s going to happen next?
If our assumption is correct, Amazon is going in the next 24 months to:
- Acquire companies and internally develop services to create an offer around insurance services, specifically targeting financial stability;
- Leverage customer data to increase the penetration into the R&D by creating service offers into the clinical trials;
- Promote and expand the piloted captive initiatives to alliances in other sectors/countries
Predicting what is going to happen in 2 to 5 years is very challenging and strongly depending from the way the wellcare ecosystem is going to grow. The odds are high that Amazon will put continuous effort in creating new standards around Healthcare R&D (drugs discovery, health devices, prevention and prediction), simplify payments and creating royalties and other income mechanism to financially attract customers.
Wellcare might come earlier than expected.
Above all the others, in the last 18 months Amazon has deployed an M&A strategy to clearly enter the healthcare sector and to reshape the offering around a new patient-centric paradigm. Also other tech giants like Google, Apple and Facebook have started seeking opportunities in the healthcare, making their move by leveraging their “customer base” and digital offer.
Amazon trail: a M&A roadway from healthcare to wellcare
To join this global healthcare restructuring driven by digital forces, life-science and insurance companies can template the Amazon M&A approach, but they will need to quickly change gyros if they don’t want to be caught out by the direction of disruption in their own world.
The wellcare ecosystem will be greater than the sum of its parts and will need new ways of interacting between individuals and communities, therefore while continuing shopping for patents, traditional players should also start quickly to overcome internal barriers in terms of mindset, business model and technology, capitalizing on the digitization wave and getting closer to customer/patients.
Disclaimer: Views or opinions represented in this article are personal and belong solely to the article writer and do not represent those of people, institutions or organizations that the writer may or may not be associated with in professional or personal capacity, unless explicitly stated.
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Originally published at https://www.linkedin.com.