Latest / CareTalk: Healthcare. Unfiltered. / What Is Amazon Doing In Healthcare?

Transcript

What Is Amazon Doing In Healthcare? · CareTalk: Healthcare. Unfiltered.

• 0:00
  - [David] Welcome to "Care Talk," America's home for incisive debate about healthcare, business, and policy.
• 0:05
  Or maybe I should say Amazon's home, but we'll come to that in a minute.
• 0:08
  I'm David Williams, president of Health Business Group.
• 0:11
  - [John] And I'm John Driscoll, the CEO of CareCentrix.
• 0:13
  David, Amazon does seem to live everywhere.
• 0:16
  - [David] Yeah, and we're primed to discuss it, John.
• 0:18
  I would say that they've made a lot of moves in healthcare.
• 0:21
  We've been talking about it since we actually started the show.
• 0:23
  We should be giving a little royalty to Mr. Bezos, because he gives us so much fodder, but no, in all seriousness, John, or at least in half seriousness, Amazon's been doing some big stuff in healthcare lately, and I think it's time to bring everyone up to date on it.
• 0:37
  - [John] Amazon is like the beast that ate retail, right?
• 0:40
  I mean, they're everywhere, they've revolutionized home delivery.
• 0:45
  They're chipping away at grocery, some of the biggest categories of America, but it's a monster-growth engine that needs monsters to grow.
• 0:57
  And healthcare at 20% of GDP is clearly a big target.
• 1:03
  And the other thing that's amazing about Amazon is anytime they go into a market, everybody's stock kind of flops.
• 1:11
  They're sort of the heavyweight wrestler in retail.
• 1:17
  They've won, in terms of cloud-based web services, which I know that you're gonna explain the technical details there.
• 1:26
  But to be fair, David, they have yet to succeed pretty much anywhere in healthcare, even though there are these waves of paranoia and fear.
• 1:36
  David, should people in healthcare be afraid?
• 1:40
  - [David] Well, John, I mean, I even had this question, you know, after we talked about, yeah, they do this and that.
• 1:44
  And someone said to me, even like,"Does Amazon do healthcare?" You know, or is it just, they just happen to be there and scares everyone?
• 1:50
  And what do you think at that question?
• 1:51
  I mean, the answer is clearly they're playing in some way.
• 1:53
  All right, so first of all, they purchased PillPack back in 2018, that's a big splash there, that's one of the times when, you know, all the stocks of the PBMs fell, Pharmacy Benefit Managers.
• 2:04
  'Cause they thought there was gonna be something, that hasn't been much.
• 2:06
  They clearly have the business actually selling supplies to doctors' offices.
• 2:11
  It's actually a decent-sized business,'cause those are small businesses and Amazon dominates that market.
• 2:16
  They had Amazon Care, which is providing telehealth and primary care.
• 2:20
  That is gonna be shut down, we're gonna talk about that.
• 2:22
  And then there's been Haven, which they did with JP Morgan and with Berkshire Hathaway.
• 2:27
  - [John] It's kind of a road of failures.
• 2:28
  Like, is that what you're saying, David?
• 2:30
  - [David] No, so they did Amazon Cares, John, and now they made a $4 billion purchase of one medical, and that is a membership-based, technology integrated, consumer-focused primary care platform, John.
• 2:42
  They're gonna have almost a million members to start with and 8,000 companies.
• 2:45
  So they're gonna shut down. Amazon Cares because it's mostly redundant, it's too narrow.
• 2:50
  It doesn't mean it was a failure, John, it means they've learned and they iterated, they moved ahead.
• 2:55
  You know, I don't know, like we're iterating, at least, like you moving toward the goal.
• 2:58
  - [John] So are you saying that one, overpaying for a bunch of doctors for, you know, a couple 100 doctor practices is a win?
• 3:08
  - [David] I say it shows that they have learned, and that they're gonna, and they've learned partly they're gonna buy something and run that, as opposed to just starting it up.
• 3:16
  I think it's real, John, I think it's the real deal.
• 3:19
  I think it could, it's not necessarily gonna revolutionize healthcare in the US, but it's significant, and primary care is where the action is.
• 3:27
  - [John] What kind of action is that?
• 3:28
  - [David] It's the gateway, you know, it's the gateway to the system, and so-- [John] You're just talking, like, phrase, like gateway.
• 3:36
  It sounds like a consultant's deck about what Amazon should do next.
• 3:41
  Like it's, you know, I think the bottom line is they've really had a hard time breaking into healthcare, but what I find fascinating is they're relentless.
• 3:50
  I mean, PillPack has taken years to really integrate into, they've got hundreds of engineers working on it, to integrate it into the base site.
• 3:59
  They've quietly become a real force, to your point, in retail distribution to doctors' offices.
• 4:07
  And sort of transportable mail, things you can mail, in terms of durable medical equipment.
• 4:14
  I think they are, you know, where they've actually had a lot of success, Amazon web services, the dominant cloud software platform in the world is where they build, where they grow into healthcare from where they've already got an edge, whether it's their 1,800 distribution facilities.
• 4:33
  The fact that nearly everybody who's a relative middle-to-high income purchaser is in Amazon Prime, where they, distribution of stuff to doctors' offices and peoples' homes.
• 4:45
  I think where they've actually got a strong base they grow well.
• 4:49
  I think the message from what we've seen thus far, no Haven, Amazon Cares, a whole series of starts and stops is that A, they're relentless, and B, they're less successful where they don't start with a very strong base.
• 5:06
  And that may have as much to do with the culture of a large company as it has to do with the actual strategy.
• 5:13
  But while I'm poking at you for suggesting that they're gonna win everywhere, which they're not, I think it's worth thinking about what that track record shows, both about corporate personality, they're not going away, and their willingness to take risks, which they seem to be willing to do.
• 5:33
  But where their edge is not surprisingly where they're already strong.
• 5:38
  - [David] Well, John, let's look at sort of the big picture.
• 5:40
  Amazon is great at delivering all sorts of products to people, and helping them with, you know, with Prime and it's so convenient.
• 5:48
  You can get this wide array of stuff, and they know what you want and what you need, and so that's what they're really good at.
• 5:53
  If you look at healthcare, a reason that people in healthcare quake in their boots when Amazon does something, is they know how bad the healthcare system is to start.
• 6:01
  Now, mentioning boots for a minute.
• 6:03
  Someone told me the other day about how, you know, once they think, "Oh, I might need some new boots," then it's all over the place, suggesting all these boots, they knew the boots they had before, it's all over for eCommerce.
• 6:12
  And contrasting with a primary care physician, might have a patient on-board for a year before they know the patient has cancer, and is being treated by an oncologist.
• 6:21
  And so just the amount, the disconnect between how good the retail and e-commerce side of things are, and how bad the healthcare system is in sharing data, I think is a basis why people are always scared of the Amazon.
• 6:34
  'Cause you just do a little bit of what they, and others do, on the commerce side, you could really revolutionize healthcare.
• 6:41
  - [John] Well, think about how terrible the average, if you look at healthcare as a retail product, I mean, what retail product waits for you to try to connect with the product and service?
• 6:53
  And then you make them wait, you bury them with paperwork, and you make it hard to navigate.
• 6:58
  I mean, that's honestly what most people with chronic conditions...
• 7:01
  I mean, the money in healthcare is around folks who are older, or who have chronic conditions.
• 7:08
  And healthcare is the only retail-like service in America where the more you need, the harder it is to get what you need.
• 7:17
  And I think that that's where, to your point, Amazon really has an edge, in terms of just its approach to surprising and delighting the patient, or the customer and their family.
• 7:30
  But there's a, but I do think that they do not have an infinite, up and to the right, growth opportunity here.
• 7:37
  But there is a lot that conventional healthcare could learn from Amazon, just in terms of thinking about the patient as the primary customer, as opposed to what typically happens in healthcare.
• 7:53
  Which is how you get paid, and whether you get paid, kind of drives all of the activity in the healthcare system at a patient level, which is crazy when you think about it.
• 8:02
  - [David] So, John, if you look at Amazon, they're both a tech company and also a retailer.
• 8:07
  And so how do you think about them, not just relative to the traditional healthcare providers, but compared to a CVS, Walmart, and Walgreens on the one side, on the retail side, and then compared to like a Google and Microsoft on the tech side, as it relates to healthcare?
• 8:23
  - [John] Well, I think that, from a tech perspective, they've got an edge in Amazon web services, which if they were to focus on some of the mundane challenges in healthcare, just taking out costs in transactions, helping organizations like hospitals and small doctors' offices actually manage their offices, they could be quite compelling and effective.
• 8:49
  I just don't know that that's honestly a big enough opportunity financially for them to really focus on.
• 8:56
  But it's the same problem that Microsoft, and Google, and others have faced, which is that they're, in some ways, the cleaning up the bureaucracy and simplifying the paperwork is really where we need to go, where the technology could add the greatest edge.
• 9:15
  But it's the least interesting, from a clinical perspective, or from a strategist.
• 9:19
  You get folks involved in these problems, and they want to cure cancer, which is obviously super important.
• 9:26
  Or, you know, remake physician workflow.
• 9:29
  And really what we need to do is make cost, and paper, and clutter go away, to make sure that patients get the care they need.
• 9:39
  But that's sort of ambition not matching ability problem for healthcare technology in general.
• 9:47
  You see it, Google has stumbled repeatedly in that area, and yet they have a real edge in terms of more information.
• 9:53
  I mean, in terms of information, and taking the clutter out of healthcare, no one's got a better edge than Google, and they've really not focused on it, and in fact, they're behind.
• 10:03
  I think on the retail side, there's going to be great movement on the part of all the retailers, Walmart, CVS, Walgreens, Amazon, to get into healthcare, just 'cause it's so large and there's such a big opportunity.
• 10:19
  I mean, the challenge is to sort of maintain your retail edge of understanding how to really delight and engage patients with a brand, and a customer experience that matters.
• 10:35
  A customer experience that, in many ways, is more consistent with whether it's the 200 million people a year who've walked into a Walmart, or the six or eight times a year the average patient, chronic patient, will go to their local pharmacy.
• 10:49
  Or the number of times someone will order something from Amazon.
• 10:54
  Retail's got an edge,'cause it's actually closer to customers and has a better relationship.
• 10:59
  But whether you can match that with solving healthcare problems that people really need solving, as opposed to just, you know, sending them all the ancillary stuff, that's the easy stuff.
• 11:09
  I mean, there's a, in a funny way, a corporate capability and market fit mismatch on both of these.
• 11:17
  The problems that tech can solve aren't...
• 11:21
  Tech has historically been not that interested in solving, and the place where retail has an edge isn't necessarily where kind of a lot of folks in healthcare are focused, so it's in both cases.
• 11:33
  But I think there's still a lot of, I mean, I was fetching about all the ways in which Amazon has sort of started and stopped.
• 11:41
  But it's gonna keep starting and stopping until it finds ways to break through.
• 11:45
  And I think Walmart's very similar, you know, Walgreens and CVS are very similar, they're coming for healthcare.
• 11:51
  And I think they will find ways to...
• 11:54
  I just look at Walgreen's investment in CareCentrix, and their desire to get closer to that patient in a post-acute setting.
• 12:00
  And the average patient leaves the hospital with five or six different discharge orders, whether it's to get a script, or get some durable medical equipment, or get some home healthcare.
• 12:10
  If that can be coordinated in a more effective way, and leverage the Walgreens, the Walmarts, and the CVS's of the world, you could create a much more consistent patient experience that would make it easier for caretakers and caregivers to, as well as patients, to navigate healthcare.
• 12:28
  You know, you think of what what happens to a typical kid whose family with a kid who's chronically ill, they're navigating way too many providers.
• 12:36
  And I think that's where retail has an edge.
• 12:39
  And healthcare is sort of still a little bit asleep at the wheel.
• 12:43
  - [David] Well, if you look at these hospital-dominated integrated delivery networks, you know, they'll have the patient when they're in the hospital, which is really, doesn't happen that often.
• 12:52
  And it really represents a failure, and most times somebody's in the hospital.
• 12:55
  And then they wanna keep 'em through the whole continuum of care.
• 12:58
  So they focus on, okay, more outpatient services and so on, but it's really not a very patient-centric kind of a focus.
• 13:04
  The retailers start from a very customer-centric focus.
• 13:08
  And the question is sort of like, as a patient though, like, how do you see this thing really changing?
• 13:12
  Like if you're ill, how much are you really ever gonna wanna rely on an Amazon or Walgreens, you know, compared to famous hospital-dominated system?
• 13:23
  You still gonna wanna go there?
• 13:24
  'Cause, okay, this is serious, I gotta, I'd be out of Amazon, out of CVS, and to doctor such-and-such.
• 13:30
  - [John] You know, I think you you go back to the lessons from innovators' dilemma from some of the early stages of other industries that have been disrupted.
• 13:40
  And what you see is innovation doesn't start at the core, it starts at the edges.
• 13:45
  And so that's why I think pharmacies is really interesting,'cause patients are already there.
• 13:50
  There's a trust factor, and a brand identification, and a, you know, ultimately proximity, being close to, in the neighborhoods, really does matter.
• 14:00
  And I think you're gonna see some really interesting, I think, experiments with digital-first interactions.
• 14:10
  Because everybody during COVID found that digital interactions with their doctors and hospitals were more effective.
• 14:17
  You're not gonna see it in the, when you're talking about integrated delivery systems, these large, mega hospital systems that have consolidated doctor practices and local hospitals into big brand names.
• 14:28
  Like, whether it's Intermountain, or Weill Cornell, or whatever, wherever you are, that there tends to be dominant hospital systems.
• 14:37
  I don't think you're gonna see innovation there, it's going to be in...
• 14:40
  That's one of the reasons why we're very focused on what's going on in post-acute.
• 14:44
  It's gonna be in innovative ways to interact faster and smarter by apps.
• 14:49
  That's why the one medical investment is really an interesting investment,'cause it builds on what Amazon is really good at, which is a digital-first innovation.
• 14:59
  - [David] All right, so John-(sirens)- [John] As those start to play out, David, I think they could be pulled through the system, but they're not gonna start in the big hospital systems.
• 15:08
  You're gonna see the innovation outside of that, you're gonna see it in your mailbox.
• 15:12
  - [David] John, I heard the siren going by, I thought the thought-police are finally coming after you, but we'll see where they pull up at the door.
• 15:18
  Final question, can Amazon fix healthcare?
• 15:22
  What say you?
• 15:25
  - [John] I think Amazon could help.
• 15:27
  I think all of the retailers could help.
• 15:29
  I mean, the customer experience couldn't get much worse.
• 15:33
  Retailers are focused on customer experience, a fair price, and staying close to the customer.
• 15:39
  If the rest of healthcare could actually tune itself into what patients need, which I don't think they're capable of doing, I think that it would be better.
• 15:49
  And I think the retailers, all in, including Amazon, with their digital edge, are gonna start to school healthcare and improve it.
• 15:58
  - [David] I think Amazon can.
• 15:58
  - What about you?
• 15:59
  - [David] I think Amazon can fix healthcare delivery, but we really need the federal government to fix healthcare payment, that's what I think, John.
• 16:10
  Well, that's it for yet another addition of "Care Talk." I'm David Williams, President of Health Business Group- [John] And I'm John Driscoll, the CEO of CareCentrix.
• 16:19
  If you like what you heard or you didn't, please subscribe on your favorite service.