Amazon announces deal to acquire One Medical
Today, Amazon announced they are acquiring One Medical, a health care company, for $3.9 billion. One goal, they say, is to dramatically improve patient experience.
Health Care Friction
Health care in the U.S. is full of friction for the patient. Complex insurance plans. Confusing provider networks that lead to big surprise charges. Lengthy voice menus and interminable hold times. Websites that seem like throwbacks to the 2000s. Weeks of waiting to see a doctor. And forms. Lots of forms. Even in high-tech Austin, nearly every visit to a physician’s office begins with a clipboard full of forms and disclaimers.
Past promises of a less effortful experience have failed to deliver. Electronic records were supposed to follow the patient to every provider, avoiding the need for incomplete and inaccurate paper forms. Instead, we have a hodge-podge of incompatible, voluntary systems and no shortage of paper forms.
A Rare Amazon Failure
In 2018, Jeff Bezos, then Amazon CEO, joined with Jamie Dimon of JPMorgan Chase and Berkshire Hathaway’s Warren Buffet to form a non-profit venture to reduce healthcare costs. This effort seemed credible, and panicked sellers dumped shares of traditional health care firms.
Despite the pedigrees of the partners, within three years, their venture was shuttered. Even three incredibly successful leaders and three companies with enormous resources couldn’t make a dent in the health care ecosystem. Industry incumbents saw no benefit in reducing costs, and even the combination of three huge employers had insufficient leverage to drive change.
Emphasizing Patient Experience
While Amazon’s initial partnership was focused on cost reduction, the new venture seems to be focused much more on improving the experience of its patients and customers.
“We think health care is high on the list of experiences that need reinvention,” says Neil Lindsay, SVP of Amazon Health Services. Citing innumerable friction points in the process of scheduling appointments, visiting physician offices, and filling prescriptions, Lindsay notes, “We see lots of opportunity to both improve the quality of the experience and give people back valuable time in their days.”
Faster Than Buying Your Morning Coffee
One Medical’s approach to healthcare seems consistent with Amazon’s long-term emphasis on reducing friction in every aspect of customer experience. The health care firm’s website emphasizes features like fast appointment booking, same or next-day appointments, and seamless care.
The single testimonial One Medical features on its membership page isn’t from a patient praising the caring doctor, the helpful staff, or effective treatment. Rather, it’s from a patient who signed up, picked a doctor, and scheduled an appointment, “faster than I buy my morning coffee.”
In fact, One Medical lists six things that it claims to differentiate it from other primary care practices. Every item on that list relates to speedy, efficient customer service.
One Medical uses speed and efficiency to differentiate itself from other primary care services.
Clearly One Medical shares some corporate DNA with the creator of One Click ordering.
Second Time A Charm?
Amazon’s ecommerce growth will be slowed both by their current market dominance and the increasing sophistication of their competitors. Health care is an enormous market that may well be ripe for disruption. Amazon is serious about this segment, and is placing a nearly $4 billion bet on it.
After their abortive partnership with JP Morgan Chase and Berkshire Hathaway, this time Amazon is choosing to go it alone. And, this time, they seem focused on leveraging their greatest expertise: taking every bit of unnecessary effort out of their customer experience.
In my book Friction, I quote Jeff Bezos: “When you reduce friction, make something easy, people do more of it.” That philosophy certainly worked to encourage people to keep placing ecommerce orders. I expect it will work to pull patients away from other health care providers to a much less effortful experience at Amazon/One Medical.
The Biggest Winner
Even if Amazon doesn’t grow to dominate this part of the health care market, their new venture could have an important benefit. In ecommerce, Amazon raised the bar for customer experience. From One Click orders to two-day (or less) delivery, they forced every other serious market participant to invest in logistics and streamline their processes.
After the One Medical acquisition announcement, every smart primary health care provider is (or should be) looking at their processes to eliminate friction. Even if Amazon doesn’t get much traction, the big winner will be the patient.
