Dr. Amazon Will See You Now

Jack Plotkin
Oct 8 · 7 min read
Photo by Andres Urena on Unsplash

Have you ever gone to the bookstore for some light reading, a cappuccino, and an antibiotics prescription? If not, that’s okay because the bookstore is coming to you, and it’s bringing antibiotics. If that seems surprising, you’re not alone. When Amazon was a nascent online bookseller in the 1990s, the only cappuccinos and antibiotics that appeared in its offices were the ones being downed by its overworked and overstressed engineers. So how does a company go from selling books to providing healthcare?

The story of Amazon and healthcare is really the story of technology and life in the twenty-first century. Over the last two decades, we have gone from a physical to a virtual society. We used to go to stores, visit libraries, speak over corded phones, and conduct personal and professional affairs face-to-face. The advent of technology has given us unprecedented convenience and comfort, allowing us to shop, learn, interact, and work remotely. It feels like we can do everything from our computers and smartphones: feed and clothe ourselves, see the news and the weather, control schedules and instantly interact with anyone, learn about the world and book travel, and even buy cars, boats, and real estate. In fact, it seems like everything is connected and instantly available except for possibly one thing: healthcare.

When it comes to healthcare, it feels like the information superhighway has hit a pit of quicksand. We find ourselves in waiting rooms, filling out pages and pages of paper forms. We find ourselves going through a long and laborious process of having different instruments applied to different body parts to take single measurements. We find ourselves staring dolefully at anatomy posters and wooden models that look like they were stolen from a high school biology class circa 1980. And when we leave, we often find ourselves trudging to the pharmacy and waiting to have our prescriptions filled.

To be fair, many things have improved dramatically in healthcare and for things that seem outdated, there are compelling reasons for why change has been slower. However, from the perspective of a consumer, many things simply don’t make sense. For example, it doesn’t make sense that I can get customer support with the push of a button but must wait weeks to see a doctor. It doesn’t make sense that I can see every online order I ever placed but can’t easily see my entire medical history. It doesn’t make sense that I can stream every movie ever made but can’t instantly measure my vital signs. It doesn’t make sense that I can be automatically reminded that I’m running low on paper towels but not that I’m badly overdue for a kidney test.

As a consumer-centered company, Amazon has proven its ability to transform industries through technical innovation. First, it changed the way we buy books. Then, it went on to change the way we shop, the way we read, the way we manage data, the way we build software, the way we interact with technology, and, ultimately, the way we live. For many of us, a world without Amazon would be not only hard to imagine but uncomfortable to contemplate. Thus, it is not surprising that Amazon would set its sights on the one area of consumer life where technological transformation has lagged: healthcare.

This is not the first time that a technology giant has cast its gaze over the $3.6 trillion a year healthcare industry. Microsoft, Google, IBM, Oracle, and others have built out significant healthcare business units and, with varying degrees of success, pursued healthcare-related products and services. However, many such efforts have been challenged by the nature of the healthcare industry. Given its complex regulatory environment, its disintermediation between payers and consumers, and its fragmented provider systems, healthcare can only be transformed from the inside out. Companies with a traditional B2C mindset risk failure because they do not sufficiently consider the complexities of healthcare and the differences in their market mechanisms from every other industry.

A key make-or-break decision for B2C companies entering healthcare is selecting the right entry point. Going after consumers might not work if health insurers are the ones making the purchasing decision. Going after health insurers might not work if providers are the ones making the prescribing decision. Going after providers might not work if the health insurers are unwilling to cover the costs. And going after all three may be prohibitively expensive and counterproductive. Even once the target market has been identified, there are many subtypes. What’s the right patient population — younger or older? What’s the right provider type — small practices or large health systems? What’s the right health insurer — commercial or government program?

In this context, Amazon made an astute decision by using the prescription business as its launch point into healthcare. Its purchase of PillPack provided an on-ramp into an arena it understands well — the direct sale of shippable products to consumers. Delivering millions of prescriptions across the country is ultimately a distribution and fulfillment problem, and this is a problem that Amazon has successfully solved for everything from groceries to toys to shoes to lawnmowers.

Amazon has driven consumer behavior change by offering convenience. We were willing to trade the trip to the bookstore for a better selection of titles. It took a bit longer, but we became willing to try on clothes and shoes at home rather than at the retail store. It took longer still, but we became willing to trust Amazon to deliver fresh eggs and unspoiled milk. Now, Amazon is betting that we will trust them to get us the right meds. Directionally, the bet makes sense. However, succeeding will require a level of operational sophistication and business development that goes beyond simply picking, packing, and shipping.

There is a reason our doctors and pharmacists wear white lab coats. These are symbols of an unparalleled level of trust. We are literally placing our lives in the hands of these professionals. It is through decades of building and acquiring these very human relationships of trust that companies like CVS, Walgreens, and Rite-Aid have erected national chains that control the lion’s share of the retail pharmacy business. At the same time, these chains have built electronic links to virtually every hospital, clinic, and medical office in the country, supporting the instant transmission of prescriptions from the doctor to the pharmacist. As a result, the chains have become ingrained in the patient’s care journey. Prescriptions automatically flow from the provider’s electronic medical record (EMR) system to the pharmacy and switching from your local CVS to Amazon’s PillPack is a more involved process than simply clicking an online image and pushing “Buy Now”.

Yet, Amazon holds two key advantages that have won out in every other industry it has entered. First, it eliminates the overhead of retail locations. As a result, it can offer uniquely competitive pricing and even sell below cost for sustained periods in order to win market share. Second, it has proven itself to be second to none in the areas of fulfillment and delivery. The only plausible way for the chains to counter these advantages would be to transform their retail locations into pharmacy distribution centers while providing consumer-friendly multichannel servicing on web and mobile. Whichever way this battle tilts, we can unequivocally declare one winner: the consumer.

While the prescription business is an incredibly important part of healthcare, there is an opportunity for Amazon to go well beyond pill delivery. With a plethora of lifestyle data based on purchasing behavior and natural language processing embedded in the consumer’s home, Amazon has the potential to engage with the consumer’s entire care continuum. Alexa can collect data from sensors, speak with the consumer about health issues, schedule medical appointments, and drive care planning. Much of the technology exists, and it becomes more about connecting the dots and breaking down healthcare silos than about inventing new paradigms.

Doubtless that is why Amazon, together with JPMorgan Chase and Berkshire Hathaway, has set up Haven: a collaborative effort to reimagine a technology-enabled healthcare journey for the consumer. I expect Amazon will use and apply the lessons learned from its PillPack venture to refine the Haven proofs-of-concept while finding ways to leverage its key advantages around consumer engagement.

Just as books proved to be a Trojan Horse for online shopping, prescriptions may well become the Trojan Horse for online healthcare services. Prescription data can yield tremendous insights into a consumer’s health journey. AI-based algorithms can determine diagnoses, severity, risk, progression, and likely outcomes based on nothing more than the medications that a patient is prescribed over time. In turn, this information can be transformed into actionable insights and used to drive consumer health education and compliance with treatment plans.

Once consumers become used to Alexa notifying them that their medications are on the way and reminding them to take their prescriptions, the step to asking Alexa about more general health information is a short one. Many symptoms and self-limiting ailments do not require a trip to the doctor’s office and may instead be handled by a virtual doctor, providing a technology-based augmentation opportunity that combines natural language processing with clinical decision support. So, it may not be too much of a stretch or too far in the future that we are turning to Alexa and asking for Dr. Amazon.

Jack Plotkin is the CEO of Cardinal Solutions, a boutique advisory and investment firm based in New York City. He has more than two decades of experience at the crossroads of business and technology and has advised more than a hundred Fortune 500 firms across all major industries, including healthcare and life sciences.

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Jack Plotkin

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I have devoted much of my career to solving complex business challenges through the application of technology across multiple industries, including healthcare.

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