Our Take: Amazon takes a U-turn and decides to shut down Amazon Care
Editor’s note: Our Take will not be published next week because of the upcoming holiday. Look for the next issue on September 12.
A year ago, Amazon said it planned to expand its combination virtual/in-person primary care service, Amazon Care, to 20 additional cities by the end of 2022. Those plans were still intact in February, when the company announced that Amazon Care’s virtual services were available throughout the U.S. and in-person care would be coming to the additional 20 cities by year-end.
But in an email sent to employees last Wednesday, Neil Lindsay, senior vice president of Amazon Health Services, said the company had determined that “Amazon Care isn’t the right long-term solution for our enterprise customers, and [we] have decided that we will no longer offer Amazon Care after December 31, 2022.”
“This decision wasn’t made lightly and only became clear after many months of careful consideration,” he wrote. “Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term.”
In September 2019, when Amazon launched the pilot program that became Amazon Care, it was a virtual health clinic for employees and their families in the Seattle area, with the option to access in-person care. By 2021, the company said it was expanding Amazon Care to all of its employees and to those of other employers.
According to Becker’s Hospital Review, Amazon Care has half a dozen corporate customers. It’s unclear how Amazon intends to handle closing out that part of the business.
Our Take: The news caught us by surprise, especially since Amazon just agreed to plunk down nearly $4 billion to acquire San Francisco-based primary care provider One Medical.
So now the question is whether Amazon will proceed with that deal. Even if Amazon does follow through, the acquisition is likely to face close scrutiny by federal regulators for potential antitrust violations. There’s no guarantee the deal will be completed.
Analysts have speculated that Amazon may have plans to use One Medical as a replacement for Amazon Care. They say it would be easier for Amazon to sell its health care services to large enterprises by using the One Medical name, which is already a known entity, rather than trying to convince them that the nascent Amazon Care can meet their needs.
Others have suggested that Amazon may have decided to cut its losses, though they’re not sure if that means getting out of the primary care business altogether or just switching gears. In its coverage of Amazon’s latest decision, The Washington Post reported that Amazon “moves quickly to kill projects that aren’t working.”
Further complicating the matter is the recent news that Amazon has placed a bid to buy Signify Health, a home health care provider (see the first news briefing in the section below for more on that). Also of note, Amazon Care just partnered with Ginger earlier this month to provide additional behavioral health services.
To us, this indicates that Amazon isn’t giving up but may instead be piecing together a comprehensive health care business by acquiring established companies with strong capabilities in different aspects of health care delivery. Trying to forge a viable health care services company from scratch may have proved to be too expensive, too slow, and/or too complex.
“Our work building Amazon Care has deepened our understanding of what’s needed long-term to deliver meaningful health solutions for enterprise and individual customers,” Lindsay wrote in the email.
Apparently, Amazon has learned some expensive lessons. How the company will use that knowledge remains to be seen in the months ahead.
Last month, when the acquisition of One Medical was announced, Lindsay said, “We think health care is high on the list of experiences that need reinvention.”
We’ll have to wait to find out whether Amazon will still have a hand in that reinvention.
What else you need to know
Amazon, CVS Health, Option Care Health, and UnitedHealth Group have all submitted bids to acquire Signify Health, a home health company based in Dallas, according to Bloomberg. The news drove Signify’s shares up more than 30% at the start of last week. Along with providing home health services, Signify partners with health plans in value-based care arrangements to provide analytics and financial models, with the goal of lowering costs. The company is for sale in an auction, with final bids expected around Labor Day unless an offer is accepted sooner. Signify acquired Caravan Health in March for $250 million, creating one of the country’s largest networks of providers engaged in risk-based payment models. Last month, Signify announced that it was winding down its episodes of care services segment and exiting CMS’ Bundled Payments for Care Improvement-Advanced program. Ensuing reports said the company planned to lay off nearly 500 employees, starting in October.
Novartis intends to spin off its Sandoz unit into a stand-alone company, the company announced Thursday. The plan is to incorporate Sandoz in Switzerland and list the company on the Swiss stock exchange. The transaction is subject to certain conditions being satisfied, as well as final endorsement by Novartis’ board of directors and shareholder approval. Novartis said it expects to complete the spinoff in the second half of next year, at which time Sandoz will become Europe’s No. 1 generics company (based on gross sales), according to Novartis.
ChristianaCare will not proceed with its plans to buy Crozer Health from Prospect Medical Holdings. The Wilmington, Del.-based health system and Prospect signed a letter of intent in February, but changes in “the economic landscape” since then have prevented the transaction from proceeding, according to the press statement about the decision. Crozer Health is a four-hospital system based in Springfield, Pa. Prospect acquired Crozer Health in 2016.
CommonSpirit Health is creating an internal nationwide staffing agency for nurses that will preserve their seniority and benefits while giving them the opportunity to work in any of the 21 states in which CommonSpirit Health has sites of care. The health system is also preparing to launch a nursing residency program that new CEO Wright Lassiter said in an interview with Modern Healthcare would likely be the largest and most comprehensive in the country. He said the one-year program aims to create an experience that will help keep more “new grad nurses” in the field of health care by better preparing them for what lies ahead.
Mayo Clinic will collaborate with San Diego-based National Resilience to manufacture new biotherapeutics for rare and complex conditions. Resilience said in a press release that the two organizations will build embedded process and analytical development labs at Mayo Clinic’s Center for Regenerative Medicine in Rochester, Minn., along with quality control labs. Their collaboration will focus on therapies derived from biologics, including cells, blood, enzymes, tissues, genes, and genetically engineered cells. Resilience said they hope to attract third-party biotech companies to collaborate with them on their process and analytical development, as well as those that might be interested in sponsoring clinical trials for new therapeutics.
Moderna sued Pfizer and BioNTech on Friday for patent infringement, alleging the two companies copied mRNA technology that Moderna developed years before Pfizer and BioNTech developed Comirnaty, the first vaccine to be authorized in the U.S. for COVID-19. Moderna said in a news release that it is not asking for Comirnaty to be taken off the market, nor is the company seeking an injunction against future sales of the vaccine. It does expect Pfizer and BioNTech to provide compensation for ongoing use of the technology and is seeking an undetermined sum in damages for use of its intellectual property starting in March of this year. A Pfizer spokesperson said in an email that Pfizer and BioNTech “are surprised by the litigation, given the COVID-19 vaccine was based on BioNTech’s proprietary mRNA technology and developed by both BioNTech and Pfizer,” Reuters reported.