Telemedicine, Health Tech, Employee Benefits

Analysis: Amazon enters telehealth, but competitors “will not go quietly”

Amazon is rolling out a telehealth service for other companies to offer as an employee benefit. But scale alone will not help it to unseat well-known telehealth brands in an increasingly competitive space.

Amazon is making its telehealth platform, Amazon Care, available to other companies. Photo credit: Amazon

Telemedicine leaders like Teladoc and Amwell may have seen their shares dip after the news Wednesday that Amazon will be selling its telehealth platform to employers. But these are well-known, established brands and expect them to put up a fight as Amazon aims to gain a foothold in the employee benefits marketplace.

“Certainly the incumbents aren’t going to go quietly into the dark,” said Robert Garber, a partner at 7wireVentures, whose portfolio company Livongo was bought by Teladoc last year.

It’s no secret that Amazon has been plotting a move into telehealth. A little over a year ago, the company quietly rolled out a telehealth and home care pilot for its employees in Seattle.

Now, Amazon is shopping around the same service to other companies. Called Amazon Care, this service is being rolled out to other employers in Washington state, and the Seattle online retailer plans to roll it out across all 50 states this summer.

While Amazon could pose a threat, providing access to quality telehealth services is “the new table stakes” for healthcare delivery, said Lisa Suennen, leader of Manatt’s digital and technology group and its venture capital fund. It’s what’s wrapped around those services that counts.

“There are literally dozens of competitors and what will set any given one apart is what wraps around this core capability, which is rapidly becoming a commodity at its most basic level,” she wrote in an email. “It will ultimately be the added services, specializations and customer accessibility, convenience and affordability factors that make any telehealth offering competitive in a very crowded market.”

Through Amazon’s platform, patients can talk to a nurse for free, or they can have a video visit with a doctor or nurse practitioner for a fee, said an Amazon spokesperson, who didn’t want to be publicly identified, in an email. Rather than standalone urgent care visits, the service is built around care teams where patients interact with the same group of clinicians — a direction that many telehealth companies have taken in the last year.

Amazon also included house calls in its initial employee pilot, with providers going to patients’ homes to listen to their lungs or for a routine blood draw for lab testing. Amazon plans to offer this service in Washington D.C. and Baltimore first and later expand to additional markets.

This isn’t Amazon’s only healthcare effort. Late last year, it began offering prescription delivery, based on its acquisition of PillPack.

“That creates a nice suite of solutions,” Garber said. “But it remains to be seen how they will compete in the marketplace.”

Competitors won’t make it easy
Most large employers already offer telehealth as a benefit, and smaller and midsize companies have also built out coverage in the last year. With its current approach, Amazon will have to find a way to unseat the incumbents — and they’re not going to make it easy.

Companies are beefing up services for care coordination and managing chronic conditions through mergers — such as Teladoc’s acquisition of Livongo, MDLive’s merger with Evernorth and Doctor on Demand’s merger with Grand Rounds. And if Amazon’s efforts with Haven are any indication, scale and logistics alone are not enough to succeed.

Amazon will also be expected to integrate with companies’ other health solutions and navigate state licensing and other regulatory hurdles.

“That is the challenge for Amazon, who has not typically before played in the reimbursement side of the house,” Garber said.

Finally, Amazon will need to build out relationships with health plans and health systems, so it can have a referral network for patients who need to see a specialist.   Teladoc, for example, says it has partnerships with more than 50 health plans and 600 health systems, perhaps implying that it’s not going to be that easy.

“New entrants to virtual care will continue to confront many of the challenges Teladoc Health has overcome over the past decade as we have built worldwide capabilities to deliver, enable and empower whole-person virtual care,” a Teladoc spokesperson wrote in an email.

While that may well be true, what Teladoc and Amwell encountered and overcame was low utilization — something that Amazon won’t have to contend with given that Covid-19 has ramped up utilization and adoption sky-high.

It will be interesting to see the jockeying for market share, but no matter which company wins, telehealth has already come out on top.

“I don’t think innovation is over for virtual care. We’re probably at the front end of that,” Garber said. “There’s nothing like the footsteps of Amazon behind you to make you think about creating value for customers and end users.”