Health Tech, Telemedicine

Amazon shuns per-employee fees with new telehealth business 

Amazon has announced its first customer for its Amazon Care telehealth business aimed at employers. While who the customer is not particularly notable, Amazon’s billing structure is – the ecommerce behemoth is moving away from the usual per-member per-month payment structure that many vendors still use.

Amazon brought on its first customer for its new telehealth business, Amazon Care. Photo credit: Amazon

If you were expecting Amazon to announce another Fortune 500 company as a customer for its new telehealth business, keep waiting.

Its first deal is decidedly smaller. Amazon will offer its telehealth service to roughly half of fitness equipment manufacturer Precor’s staff, an 800-person company that was acquired by Peloton last year, according to Insider.

The way the deal is structured, however, is more interesting. Instead of the usual per-member per-month fee charged by most telehealth companies, Amazon is reportedly charging companies based on how many of their employees actually use the app, according to the report.

For companies with lots of covered employees, this could be a more appealing payment model in the long run. But Amazon will still face steep competition, especially as most big companies already offer telehealth as a covered benefit.

One of Amazon’s largest telehealth competitors, Teladoc, has been sticking to the per-member per-month model since it went public a little over five years ago. But utilization had been a challenge until the pandemic. Last year, the company had a little less than 52 million paid members, and a total of 10.6 million visits, according to its most recent annual report.

By contrast, another well known telehealth brand, Doctor on Demand, has been outspoken about taking a different approach. Instead, it charges a flat fee per visit. Its recent merger with Grand Rounds would also pose a bigger threat by bringing together telehealth, care navigation and second opinion services.

In a recent interview with MedCity News, former Livongo CEO Glen Tullman said the digital health company also opted to forgo the per-member per-month model when billing for its services. He plans to take on more risk with his newest healthcare navigation startup, Transcarent.

“Employers love that, because they say now we’re on the same side,” he said. “… Why are we charging someone to help them use the system that we want them to use to stay healthier? That whole concept is going to change in a very big way.”

Amazon first began testing the waters for its telehealth concept a year ago, by rolling out virtual visits coupled with a home care service to its own employees in Seattle. Since then, the company has just begun to offer it as a benefit to other companies in Washington state, with plans to make it available more broadly across the U.S. this summer.