A Surprise Pivot: The Demise of Amazon Care

In an unforeseen move, Amazon has announced its intention to terminate its primary care delivery business, Amazon Care, by the end of this year. This decision has caught many by surprise and signifies an unexpected change in the tech giant’s healthcare ambitions.

Corporate Customers: A Lack of Value Perceived

According to an internal memo shared with Healthcare Dive, Amazon’s decision to eliminate Amazon Care stems from the fact that corporate customers did not perceive sufficient value in the product. This revelation has led analysts to believe that Amazon encountered challenges in running both Amazon Care and One Medical simultaneously, or perhaps faced difficulties integrating the two services. Consequently, Amazon has decided that acquiring healthcare services would make more sense than developing them in-house.

The Journey and Stumbling Blocks of Amazon Care

Launched in 2019 as a pilot program for employees based in Seattle, where Amazon is headquartered, Amazon Care initially offered a hybrid model of virtual and in-person primary care services, without any physical locations. As a result of increasing demand, it expanded its reach last year, catering to employers nationwide.

However, Neil Lindsay, Senior Vice President of Amazon Health Services, disclosed in the internal memo that Amazon Care is not the ideal long-term solution for their enterprise customers. Although enrolled members expressed satisfaction with various aspects of Amazon Care, it failed to provide a comprehensive offering that would satisfy their large enterprise customers and ensure long-term viability.

The Ripple Effect and Future Prospects

While Amazon has not revealed the precise number of employees affected, Lindsay stated that many Care employees would have opportunities to join other teams within Amazon’s Health Services organization, or explore roles outside the company. This news has had a positive impact on publicly traded telehealth companies, with Teladoc and Amwell experiencing premarket trading increases of 5% and 4% respectively. Other players in the digital health space, including GoodRx and Hims & Hers, also witnessed gains in response to the announcement.

A Halt to Amazon Care Expansion

Interestingly, Amazon Care’s dissolution follows a series of recent expansion initiatives. In February, Amazon stated that the program’s in-person services would extend to an additional 20 cities within the United States, and that prominent companies such as Hilton and Amazon-owned Whole Foods had embraced Amazon Care as an employee benefit. Additionally, Amazon was poised to enhance the program’s behavioral health features through a partnership with mental health company Ginger.

However, tension between Amazon and its medical staff recently surfaced, with concerns raised about how the tech giant was reconciling medical safeguards with its quest for growth. Furthermore, Amazon encountered difficulties in expanding the in-person benefits of Amazon Care due to a nationwide shortage of nurses, which undermined the product’s value proposition to potential new customers.

Amazon’s Healthcare Journey: More to Come

The shuttering of Amazon Care may evoke comparisons to the demise of Haven, an ambitious endeavor initiated by major employers, including Amazon, aimed at reducing healthcare costs for their employees. Nonetheless, analysts believe that Amazon’s exit from the Amazon Care venture merely marks the beginning of its healthcare ambitions. In a note released on Wednesday, Citi analysts assert that this decision is the precursor to more significant developments in Amazon’s healthcare endeavors.