Nov 18, 2022
The Rise of Embedded Healthcare Services
The launch of Amazon Clinics, its value propositions, and the future of accessible healthcare services
As we close out a year of hope and uncertainty, several emerging trends in the healthcare space are ushering in new consumer expectations and a shifting competitive landscape. The impact of the Covid-19 pandemic still looms large, and while accelerated growth of telehealth services during the lockdown era has slowed down significantly, consumer expectations have been permanently changed. Instant access to medical services, subscription refills, and post-appointment follow-ups are now table stakes for medical service providers.
Besides the pandemic, the economic downturn of 2022 also saw health insurance premiums rising faster than wages and inflation, as well as widespread concern over medical debt — 76% of U.S. consumers surveyed reported they are concerned about taking on medical debt. A recent NPR report found that over 100 million Americans, including 41% of all U.S. adults, have taken on medical debt.
In response, the healthcare industry is going through a gradual transformation to ensure the accessibility of their services. Increasingly, it seems that healthcare services, whether it’s primary care or emergency care, are being diverted from conventional practitioners and embedded into larger bundles of services.
Take Amazon for example. After shutting down its own telehealth service Amazon Care and acquiring membership-based healthcare provider One Medical for $3.9 billion (for which it is still waiting for federal approval), the ecommerce giant officially launched Amazon Clinic this week, which it describes as a virtual health storefront where users can search for, connect with and pay for telehealth care, with a focus on offering affordable care for common conditions, such as allergies, acne, and hair loss.
Instead of providing the healthcare services itself, as it was trying to do with Amazon Care, Amazon is now leaning into its strength as an aggregator platform. Amazon Clinics is billed as a marketplace where third parties can leverage Amazon’s platform and reach to find customers, and Amazon can leverage third parties to quickly scale what offers to its consumers. The service is initially launching in 32 states, and It does not work with health insurance at launch, and overall pricing will vary depending on providers and location, with most conditions having quoted prices around $40.
Of course, Amazon already has its own online pharmacy, Amazon Pharmacy, which fulfills subscriptions and lets users additionally buy over-the-counter drugs via Prime memberships that ship the items within two days. If Amazon Clinics can funnel a significant portion of the prescriptions it generates to Amazon Pharmacy, it would help Amazon establish a strong foothold in the U.S. digital health market. Given the wide-ranging benefits of Amazon Prime, it wouldn’t be that much of a reach to bundle in some sort of discount for virtual visits to Amazon Clinics as well.
There is a clear problem in the healthcare consumer journey that Amazon Clinic is aiming to tackle: bridging the gap between people needing medical advice for ailments that requires more than a simple trip to the drugstore, but might not justify expensive and time-consuming visits to the doctor. There’s significant value to be provided by solving this pain point.
Pharmacy chains are also trying to tackle this issue through vertical integrations. CVS recently agreed to acquire at-home healthcare company Signify for $8 Billion, which would help the pharmacy chain significantly expand its reach in medical care, both at-home and in-store.
Meanwhile, VillageMD, a primary-care provider Walgreens has a majority stake in, has announced it is acquiring Summit Health-CityMD, an urgent care provider. The Summit Health acquisition adds to a recent spending spree of Walgreens to expand its business to become an end-to-end healthcare service provider.
A recent survey from CVS found that U.S. consumers’ trust in pharmacists as providers grows along with omnichannel health care. With 3 in 5 people visiting a pharmacy at least once a month, 74% said they trust their local pharmacist or pharmacy team. An integrated approach to pharmacy will also help to create more choice and convenience for the patient, while ensuring more time and capacity for meaningful interactions with patients in person.
Besides the pharmacy stores, newcomers in the space are also catching up. Hims & Hers Health, a direct-to-consumer prescription brand, is also taking a similar approach through a partnership with ChristianaCare. Through this partnership, licensed medical professionals on the Hims & Hers platform can, when necessary, connect patients with ChristianaCare’s care provider network and its industry-leading Center for Virtual Health.
Similarly, D2C dental care company Quip is buying dental telehealth company Toothpic, as it aims to bundle together access to a full suite of connected oral care products and dental services. Previously, Quip had launched its own dental care plan, and is also partnering with United Healthcare to provide dental plans to subscribers.
Looking ahead, perhaps the healthcare industry could learn a thing or two from the ascendant wellness industry, which has extended its tentacles into many non-endemic industry verticals in recent years, as the need for self-care and preventive wellness continues to surge.
Wellness-as-a-service is bundled into various aspects of life: Wellness rooms and nature trails are being considered part of a new design for schools; Calm app available in American Airline flights alongside in-flight movies; Then there’s the Self Care Sundays at the Cinépolis in Coconut Grove, where ticket comes with cooling eye masks and a four-minute meditation session before the movie starts. Even Amazon is expanding its wellness footprint with a Planet Fitness tie-up.
While consumers’ satisfaction with inpatient care experiences improved a bit over the past year, health insurance and hospitals still fall in the bottom-third of all industries with which people interact, according to a recent survey by the American Customer Satisfaction Index (ACSI). That could hopefully be further improved through more integrated healthcare services embedded throughout, and perhaps even beyond, the patient journey.
