What Amazon Entering the Healthcare Space Means for the Industry by Nafisa Saha C'22

Since Amazon’s announcement in 2018 of entering the Health space, concerns have been raised on how this tech titan will disrupt the industry. Partnering with JPMorgan and Berkshire Hathaway, the company is forming a joint venture known as Haven. In its initial pilot of the program, Amazon aims to develop technology and provide their 1.2 million employees with a more simplified and transparent healthcare system that ensures high quality care at lower costs. However, it is clear that Amazon has bigger goals of innovating the healthcare industry.

Amazon’s presence in the industry will likely impact access and pricing of healthcare provisions, such as drugs and medicine. Currently, healthcare providers and patients are concerned about the rapid inflation of prices for drugs and vital medicine. The delivery of drugs through “Prime Health” will most likely cause more competitive drug pricing within the industry. Edit Kovalcsik, a healthcare analyst at GlobalData, affirms that, “the increasing transparency is likely to bring about more price competition, lowering costs and forcing Pharma to change their business model.” Amazon has already bought the start-up PillPack, an online virtual pharmacy, which has caused shares of drug store companies, like Rite Aid and CVS, to drop to a loss of $12.8 billion in market value.

Amazon may also transform telemedicine and in-home healthcare. Its digital home assistant, Alexa, could be utilized for a variety of health services, from scheduling doctor’s visits to diabetes management. By taking care of scheduling appointments and other tedious logistical tasks, Alexa is making the process of receiving healthcare easier. Arielle Trzcinski, the senior Forrester analyst states that Alexa would automate the process of reminding patients to take their medications and refilling them when necessary. Alexa could assist physicians in diagnosing conditions and gathering data from patients to be stored in electronic medical records (EMRs).

Amazon’s other business acquisitions will also make an impact in the healthcare industry. Its acquisition of Whole Foods could allow the company to develop pharmacies within these locations, which would also drive down drug prices. Amazon could also collect shopping data in order to identify causes of unhealthy eating behaviors and incentivize consumers to pick nutritional food.

Indeed, many Americans approve of Amazon’s presence in the healthcare industry and its capability of lowering drug prices. According research conducted by GlobalData, a majority of Americans would use Alexa to reorder drugs. By having Amazon handle all the mundane parts of navigating the healthcare system, with their well-regarded and streamlined approach to fulfilling customer’s desires, many would enjoy having them be a part of the healthcare space too.  As Paul Keckley, president of healthcare advisory firm Keckley Group, stresses, “Hospitals and healthcare systems need to be prepared to compete in this kind of environment. They need to develop the skills today or they won’t be as relevant as they need to be tomorrow.”