Blog Post

Will Amazon’s Acquisition of One Medical Force Health Systems to Reinvent Their Primary Care Delivery?

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Primary care has been long overdue for a reset, and Amazon’s recent acquisition of One Medical is confirmation that innovative change can no longer be avoided. The $3.9 billion purchase of a technology-focused primary care company demonstrates Amazon’s desire to continue its foray into medical care delivery, with a committed focus on healthcare, wellness, and the customer experience.

While this is not Amazon’s first entry in the healthcare arena, it will be its most significant as it obtains a consumer-friendly model that can be rapidly scaled in communities across the country. One Medical is a membership-based service that offers patients both in person and virtual primary care physician visits, and its acquisition provides Amazon with a ready-built platform to immediately deliver care in many large markets across the country. One Medical’s significant growth over the past 15 years is attributed to its technology-focused care experience and low-cost footprint, achieved via strategic partnerships and investments. One Medical is built upon the premise of 24/7 primary care and mental health access based on a combination of on demand virtual care and same-/next-day appointments in busy locations.

While health systems often react to payer demands, it is consumers who drive primary care decisions, and Amazon is courting the wellness-focused millennials and Generation Z, who are the largest purchaser population. These consumers are increasing the demand for a technology-focused approach to wellness, which typically starts with primary care. This acquisition further reflects several trends that all suggest the traditional primary care delivery model will soon be forced to change.

  • Consumers increasingly value access and a seamless care experience. Most primary care networks are dependent upon personal provider relationships, but as Amazon has demonstrated with its disruptions to other markets, consumers are willing to shift loyalties for convenience, delivery speed, and ease of access. Health systems that want to stay competitive must reevaluate the unique needs of their patient population and offer tailored solutions.
  • Quality care at a reasonable cost is desired by consumers. One Medical’s annual membership fee of $199 not only grants access to concierge-like services, but it also captures patients who may be focused on wellness but are reluctant to engage with traditional health delivery systems. One in five millennials says they cannot afford basic healthcare services, whereas the average American spends $1,800 per year on supplemental health and fitness services.
  • Virtual care is not going away, particularly for primary care. An increasing number of tech-savvy consumers desire on‑demand services in the form of telehealth and mobile apps. Amazon’s large employee base could constitute a significant source of One Medical subscribers through an employer-sponsored subscription that would supply a ready-built consumer base in communities across the country. While this alone could significantly move markets, employer- and payer-based plans are also choosing convenience and ease over the more traditional primary care model.
  • Scalable primary care models require lower expansion costs. The capital investment requirements of a One Medical practice are significantly less than that of a typical de novo primary care start‑up because this operating model reduces space and staffing requirements by replacing typical front desk functions with app-based solutions supported by centralized staff. This allows One Medical to quickly move into new geographies based on consumer demand, often in low–square footage, leased spaces. Health systems must centralize administrative and clinical support functions where possible, creating economies of scale and making way for small-footprint clinical practices that can operate efficiently.
  • One Medical’s primary care model is also attractive to providers. New medical school graduates are increasingly prioritizing their lifestyle over the demands of building a practice. An on‑demand primary care model can be staffed by providers who desire a shift-based practice style with less panel accountability. This may not only be a recruitment draw for providers who are unwilling to commit to a traditional practice but could also give health systems the opportunity to create an alternative compensation methodology.

The imperative is clear. Healthcare organizations need to reimagine their delivery of primary care as soon as possible, and the speed of implementation will be critical so these entities can respond in a timely manner to market disruptors. Though most healthcare organizations have increased their focus on primary care in recent years, many would be challenged to quickly pivot to a nimbler model due to technology limitations, their dependence on current facility investments, and the perception that this type of concierge-like model might seem contradictory to their mission and vision. But whether new models are developed internally or partnerships with companies like One Medical are pursued, health systems will be forced to react.

The cost of waiting could be dire for health systems. Without this type of investment, an increasing number of physicians will no longer have traditional referral ties to a health system. Maintaining strong alignment with these providers, regardless of their employer, will be key to preserving an organization’s physician network. Yet even those health systems that are already pursuing innovative approaches may be years away from effectively developing primary care as a core service line.

What steps should health systems take immediately?

  • Ensure your existing primary care enterprise is accessible and convenient by directly addressing scheduling challenges and consumer barriers.
  • Consider potential bridge solutions to augment primary care delivery and capture potential target consumers of a subscription model.
  • Invest in both employed and aligned physicians who will play a critical role in the success of your organization’s primary care strategy by creating a provider culture that acknowledges and includes all styles of patient care delivery.
  • Evaluate options to rapidly expand primary care in vulnerable markets. Approaches outside traditional clinics may broaden both the geographic and demographic points of entry to a health system.
  • Pursue new care models both internally and through partnerships with outside organizations to ensure your health system’s primary care offerings are tailored to a variety of consumers and payer types.
  • Maintain a strong primary care presence and specialty referral base by aligning with community providers who have adopted innovative approaches to primary care.

  • New models that are more consumer focused are here to stay.

    Early adopters will be best prepared to react to market disruptors.

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