Amazon Ending Virtual Health Service Amazon Care

  • Amazon is shutting down its telehealth venture Amazon Care just 6 months after launching it.
  • Experts say it appears Amazon wants to go in a different direction in the healthcare industry, noting the company’s recent acquisition of One Medical and its attempt to buy Signify Health.
  • They say the moves are all part of the changing landscape in the telehealth field.

Just 6 months after announcing a nationwide expansion of its virtual health service, Amazon now says it is shuttering Amazon Care by year’s end.

In an email to employees, the company’s vice president said Amazon had worked with employers to improve Amazon Care, but those efforts weren’t going to work over the long haul.

The company launched the telehealth service for its own workers in 2019 before a handful of other companies came on board. The hybrid service connects a person with a health professional via a video visit. In some cities, the service included a home visit, if warranted.

So why is Amazon pulling the plug? We put that question to multiple analysts.

“It’s surprising because they had made promises to their employees, to the public at large, and to shareholders that they could figure out how to make this work,” said Michael Abrams, MPH, Ph.D., a senior health researcher for the nonprofit consumer advocacy group Public Citizen.

Abrams said Amazon’s decision highlights some of the challenges the company will face as it moves into the healthcare arena.

“It’s not a good look right now for Amazon to say they have basically failed on this venture,” he told Healthline. “It makes you wonder about Amazon’s competence to enter and compete in this space.”

Abrams says it’s understandable Amazon wants to tap into the lucrative healthcare market, but he says the company may have underestimated the cost of the home care component.

“I haven’t studied it myself, but I suspect one key reason it failed is because of the home health piece that they weren’t able to cover with the fees from subscriber premiums,” he added.

Kirthi Kalyanam, Ph.D. a professor and the executive director of the Retail Management Institute at Santa Clara University in California, thinks Amazon will get back into this field.

“I think this is a one-time failure. The healthcare industry is too big for Amazon to not take a couple of swings at it,” he told Healthline.

“I think this is a strategic move of not putting money into an effort that is not promising,” Kalyanam added. “It is also a mark of the new CEO Andy Jassy, who is winding down several unsuccessful previous investments, including some of the retail stores.”

Natalie Schibell, MPH, a vice president and research director at Forrester Research, sees it differently. She is a former public health analyst for the Centers for Disease Control and Prevention.

“My take is this is not a failure by any means. It’s specifically a strategic move,” she told Healthline. “It’s a move to expand their footprint and to reinvent the patient experience. They’re going to do that by partnering.”

Schibell says instead of going through employers to provide their telehealth services, the company is restructuring to take out the middle manager.

“They want to have a bigger footprint by going directly to the consumer,” she explained. “That’s really where the most potential lies right now in healthcare.”

Schibell says one reason Amazon Care is shutting down is because Amazon couldn’t do it alone. They needed experts in primary care.

Last week, Amazon lost its bid to acquire Signify Health, a home healthcare provider.

CVS Health beat out other suitors with an $8 billion bid. CVS already has clinics, so this acquisition will add in-home medical services to its healthcare portfolio.

Last month, Amazon announced an agreement to buy One Medical, a concierge-type primary care organization. One Medical was a competitor of Amazon Care. Its nearly 800,000 members have access to both virtual and in-person care. Its members pay an annual $199 membership fee.

Amazon described the proposed acquisition as an opportunity to “transform healthcare and improve outcomes.”

“One Medical seems to be well developed and very similar to what Amazon would have to build,” Kalyanam said. “This could be a good accelerant, although I am not sure what value Amazon would bring to One Medical. They seem to have a pretty good model already.”

For now, the Federal Trade Commission is investigating the nearly $4 billion dollar proposed acquisition. The agency has asked both companies for more information about the merger.

The experts agree that with the COVID-19 pandemic, telehealth is here to stay and that’s bringing more players into the arena.

“A lot of employers and insurers are partnering with telehealth companies… which is great because that increases access to care,” Schibell said.

“There are going to be the ones that really have staying power. They are the ones that are offering a broad range of services” she added.

Abrams, however, worries about a for-profit provider like Amazon becoming too big a player in healthcare.

“You don’t want one purveyor of telephones in this country, right?” he said. “That’s why the ‘Big Bells’ broke up many years ago.”