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Amazon to Offer Telehealth Service to Other U.S. Firms This Summer

A new frontier for the do-everything e-commerce company.
(Sundry Photography)
(Sundry Photography)
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Amazon’s telehealth presence is growing, as the unit expands nationwide and opens it to other companies, WSJ reports.

Why It Matters: If it wasn’t already, Amazon’s ambitions in healthcare have become abundantly clear. Meanwhile, the Covid-19 pandemic has generated tremendous growth in the telehealth space. These companies are racing to add doctors and bandwidth while reaping gains. Teladoc stock, for example, is up 61% over the last 12 months.

How It Works: “Amazon Care operates on an app that facilitates video or chat appointments with medical professionals, as well as prescription delivery. Amazon said it intends to expand the in-person-care component to Baltimore, Washington, D.C., and other cities in the coming months.”

  • The program was launched in 2019 as a virtual primary-care service for Amazon employees in Washington state. It also featured an at-home care option, dispatching medical professionals to perform services like blood draws or listening to lungs.

Amazon has been working on its healthcare presence. It launched an online pharmacy in November and acquired a similar company in PillPack about two years ago.

  • It also spent billions of dollars setting up Covid-19 testing sites at warehouses to screen workers.

The Future: “Telehealth providers increasingly are expanding the range of services they offer beyond acute and primary care, with some pushing deeper into behavioral health, chronic condition management and specialties like dermatology. Many health practitioners say they expect patients to demand a mix of virtual and in-person care for years after the pandemic because of the convenience of remote care.”

Amazon’s Challenge: It’s a crowded field, even with its own resources. The collection of Teladoc, American Well Corp. and MDLive have a combined reach of more than 200 million Americans.

  • Remote-care industry executives interviewed by WSJ said, “The success of Amazon’s telehealth foray is likely to depend on its sales approach.”

Justin Oh:

I believe that, having bought PillPack, Amazon ($AMZN) will succeed at being a large player in the prescription delivery space over time. The biggest losers to this long-term trend will be in-person pharmacies located at Walgreens ($WBA), CVS ($CVS), Walmart ($WMT), and others.

But I also believe that there is room for multiple large players in the industry and many of the brick and mortar players already offer prescription delivery services. I also don’t think prescription fulfillment is as “easy” as regular retail because the doctor to pharmacy to fulfillment process is still very “high-touch”. I will be monitoring how well Amazon’s pharmacy product slips into the healthcare ecosystem. But if 1-800-Contacts can do it, I’m sure Amazon can as well.

I think it’s an even taller task for Amazon to break into the telehealth-enablement software space. Companies like Teladoc tailor their products to every provider specialty and have a high-touch B2B sales approach. Once locked into a tech platform, it is very hard to convince healthcare providers to switch.

That said, Amazon also has much more resources and the ability to undercut competitors on price. The true test might be Amazon’s long-term resolve to dominate this space when things get challenging.

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